Black Economic Empowerment in South Africa

Written by Richard Swaen November 2013. Posted in Leadership, Int. Skills

Black Economic Empowerment in South Africa

The economy of South Africa has been growing annually since the year 2000 with percentages by 2to 6%. The three biggest sectors in South Africa are finance, real estate and business services (21.2%),  government services (16.7%) and wholesale, retail and motor trade (16.2%). Before South Africa gained a democratic government in 1994, Indian, African and colored people had been excluded from meaningful participation in the country’s economy. In 2003 the government implemented an act to further realize the full potential of the economy. This act is known as the Broad-Based Black Economic Empowerment Act (BBE).

 The BEE aims to bring about more harmony among the different groups within the South African economy. There was no healthy balance between white and black employment and with this act South Africa wanted to change this balance. BEE wasn’t created to take wealth from one and give it to another, but it was created to get rid of inequality and to create new business and economic growth.

If you want to start up a business in South Africa as an entrepreneur, you need to be familiar with the objectives and codes/scorecard that go along with the BEE act. The codes are binding for all state bodies and public companies, so the government is required to apply these codes when making economic decisions. The first phase of the codes encourages all entities, both the public sector and the private sector, to implement proper BEE initiatives through the issuing of licenses, concessions, sale of assets and preferential procurement. The second phase of the code aims at the seven components of the BEE scorecard. If private companies want to do business with any government enterprise or organ they need to apply the BEE codes on their own company.


The objectives and codes make it very clear that the BEE act is not just an act but actually the new way of doing business in South Africa.  If you do not implement the act in the right manner, you will have a hard time establishing a company or doing business with other companies.

If you want to set up a company in South Africa as an entrepreneur, it is highly recommendedthat you seek out a professional who can help you with implementing this act. There are numerous of local companies that have the knowledge to help you with this. Do not try and figure this all out by yourself as this is very complicated.  If not done correctly it can mean the end of the business before you even started.