The head of South Africa’s flagship Black economic empowerment program is proposing significant reforms to address its shortcomings and improve corporate participation. The program, designed to tackle the country’s deep-rooted inequality,has faced criticism for its perceived ineffectiveness.
Tshediso Matona, head of the Broad-based Black Economic Empowerment Commission, announced plans to introduce additional incentives and potential fines to encourage companies to comply with the program’s requirements. The move comes amid growing pressure on the ruling African National Congress to deliver on its promises to uplift disadvantaged Black South Africans.
The program, established in 2003, offers tax breaks and government contracts to companies that meet certain criteria for hiring and promoting Black people. However, critics argue that it has failed to significantly reduce unemployment and income inequality.
Matona acknowledged that the program’s voluntary nature has allowed some companies to manipulate the system through practices like “fronting,” where Black individuals are falsely listed as managers. The commission has investigated numerous cases of fronting but has faced challenges in securing convictions due to limitations in the criminal justice system.
To address these issues, Matona proposed enhancing company incentives for compliance, while also implementing penalties for non-compliance. He also emphasized the importance of shifting the focus from ownership to skills development and training.
However, these proposed reforms are likely to face opposition from some businesses and political parties. The Democratic Alliance, a coalition partner of the ANC, has expressed concerns about the potential for excessive regulation and its impact on foreign investment.
Despite the challenges, Matona remains optimistic about the potential for the program to deliver positive results. He believes that by addressing its shortcomings and encouraging greater corporate participation, the program can play a crucial role in addressing South Africa’s deep-rooted inequality.