BBBEE's Betrayal: A vehicle for elite capture and capital flight
Opinion
In the three decades since South Africa’s democratic dawn, BBBEE has been heralded as the cornerstone of economic redress for the black majority.
Image: Ron / IOL
IF Broad-Based Black Economic Empowerment (BBBEE) has truly benefited and transformed the lives of black people, why is its loudest advocacy coming from the likes of Khusela Diko and Fikile Mbalula from the ANC NEC, and not from the millions of real black entrepreneurs who engage with this policy daily?
The answer is evident. Authentic black entrepreneurs have seen how these political leaders have systematically abused BBBEE for their own nefarious reasons and not for the people they claim the policy empowers.
In the three decades since South Africa’s democratic dawn, BBBEE has been heralded as the cornerstone of economic redress for the black majority. Yet, as we confront the stark realities of persistent poverty, unemployment, and inequality among black South Africans, a deeper interrogation reveals BBBEE not as a liberatory mechanism, but as a profound failure; one that entrenches corruption, fosters elitism, and perpetuates dependency on white-controlled economic structures.
This article, drawing from empirical evidence and strategic socio-economic analysis, illustrates why BBBEE has betrayed the black majority, why it serves as a vehicle for elite capture and graft, and why some within the ANC remain obsessively wedded to it despite its creation of criminal cartels and exclusion of the Black majority from full participation and ownership of the economy.
The most devastating indictment of BBBEE is not merely that it has failed, but that it actively functions as a sophisticated engine for capital flight. Billions of rand, earmarked by the state for the economic liberation of the black majority, are systematically extracted and funnelled out of the country, enriching foreign economies while leaving domestic poverty and dependency untouched.
This is the grand betrayal: A policy sold as a tool for building black wealth has been perverted into a pipeline that drains our national wealth.
This capital flight is not an abstract economic concept. It is visible in the grotesque spectacle of politically connected tenderpreneurs; the Edwin Sodis, Cat Matlalas, Motis and Maumelas who, upon looting state coffers through BBBEE contracts, immediately convert their spoils into luxury goods.
The expensive German cars, French handbags, Italian suits, private jets, and Swiss watches they flaunt are not investments in South Africa, even their partners “fix” their bodies in Turkey. They instantly transfer capital from our fiscus to the treasuries of European luxury conglomerates. The money meant to build local factories and fund black-owned value chains instead cycles back to the very nations our liberation movements once stood against.
The policy’s original sin was the creation of a narrow class of “blue-eyed boys” of capital, figures like Saki Macozoma, Tokyo Sexwale, Smuts Ngonyama, Patrice Motsepe and Reuel Khoza. This model was fundamentally built on a system of corporate ransom, applied not just to the state but to the private sector.
From its earliest incarnation as BEE, white and foreign companies were strong-armed into ceding equity to these politically connected individuals, who used their ANC ties as leverage and not the masses. The promise was always that this shareholding would pave the way for broad-based black beneficiation.
In reality, it was a smokescreen for a massive transfer of ownership to a select few, while the demands for genuine, large-scale economic participation, such as meaningful localisation, comprehensive skills transfer to the youth, and industrial supplier development, were sidelined.
These individuals used their political standing to amass billions, not by building new industries, but by becoming minority shareholders in existing white and foreign-owned companies. Their wealth, promised to be a vehicle for black upliftment, remained insulated, creating a gatekeeping class that perfected a model of enrichment without enterprise.
This template of extracting equity through political pressure, rather than creating value, directly bred the current generation of predatory tenderpreneurs. It taught the Cat Matlalas and Maumelas of this world that the path to riches was not the hard work of industrialisation or skills development, but the quick extraction of shares and tenders, holding the entire economy hostage for the benefit of a few.
This legacy of BEE remains a tool for a few connected individuals to extract shares, holding both the economy and the prospect of true transformation hostage. The billions change hands, but the foundational structure of the economy remains unchanged, leaving the black majority as spectators to a deal-making bonanza from which they are systematically excluded.
This reality exposes the profound hypocrisy at the heart of BBBEE in its current format. While party figures like Fikile Mbalula and Khusela Diko theatrically attack apartheid, “colonisers” and “imperialists”, in the court of public opinion in defence of BBBEE, the policy they so fiercely defend ensures that the ultimate beneficiaries of South Africa’s empowerment and redistribution spending are French, Italian, Swiss and German shareholders, as the large beneficiaries of BBBEE are also a consumer class.
These comrades are clearly creating a dramatic, public spectacle of fighting against Whites and foreign powers that are supposedly holding Black people back. However, the reality is that their own actions (and the BBBEE system they defend) are directly enriching those very same foreign economies.
The “enemy” they talk about is a phantom, a distraction, because their real actions show a cosy relationship where they send South Africa’s wealth to foreign countries.
Corruption also thrives within BBBEE’s opaque frameworks. The Maldlanga Commission has exposed how BBBEE compliance is being weaponised to siphon billions through fraudulent deals. These cartels do not create value; they redistribute existing wealth upwards, leaving the black majority reliant on trickle-down crumbs. Why, then, does the ANC’s National Executive Committee (NEC) remain obsessed with BBBEE and redistribution over genuine ownership?
Are they selling the black majority a fluke, policies packaged as beneficial but designed to sustain white dominance while placating a compliant black elite?
Reports from various economic analyses consistently show that black South Africans, despite numerical representation in workplaces and boardrooms, hold minimal stakes in the commanding heights of the economy.
Black ownership of JSE-listed companies has stagnated or declined, with less than 10% effective control in key sectors like mining, finance, and manufacturing. This is not empowerment; it is illusory inclusion that masks a deeper dependency on white capital for jobs, tenders, and opportunities.
This has also created a perverse environment where both domestic and foreign investors are continuously held hostage. They are publicly demonised as anti-transformation and obstacles to progress, a political smear campaign that only ceases once they capitulate and transfer equity to a narrow, politically anointed circle.
This cycle of demonisation and coerced share transfer has become a standardised shakedown, masquerading as empowerment. The outcome is never the creation of new factories, new industries, or new skills; it is merely the re-assignment of ownership on a balance sheet to a few individuals, leaving the underlying economy starved of the broad-based, productive investment it desperately needs.
This obsession with BBBEE raises profound contradictions and ironies. Redistribution via BBBEE quotas and procurement preferences appears transformative on paper, but in practice, it reinforces white ownership. White companies retain core assets, complying minimally by appointing black figureheads or selling minority stakes at premiums funded by state loans.
The black “beneficiaries” become junior partners in ventures they do not lead, perpetuating a master-servant dynamic akin to modern slavery. Opportunities accrue to a few elites, those with ANC patronage, while the majority are conditioned to seek employment in white ecosystems rather than building independent value chains.
Black entrepreneurs struggle for capital, skills, and markets, starved by a system that funnels resources to connected tenders. Why is the current NEC led by Fikile Mbalula prioritising short-term political gains and elite and criminal networks’ enrichment over the long-term liberation that comes with ownership and production?
The black majority’s exclusion from production is BBBEE’s gravest sin. Africans need to build their own industries: agro-processing hubs in rural areas, tech startups in urban centres, and manufacturing cooperatives that export globally.
Yet BBBEE ties empowerment to white Companies, including white start-ups that are also struggling. Supplier development mandates force black firms into subcontracting roles for white giants, extracting margins without equity. This creates a society reliant on white benevolence, where black economic activity is parasitic rather than symbiotic.
The regression of black business is telling: despite decades of policy, black-owned enterprises contribute minimally to GDP, while the black middle class has been decimated.
In conclusion, BBBEE has failed black people by entrenching corruption, elitism, and dependency. It is not empowerment but a tool that benefits a few while chaining the many to white structures. The ANC’s obsession with BBBEE over ownership raises alarms. Black South Africans deserve a system that liberates, not one that perpetuates bondage.
Transformational reforms beyond BBBEE are imperative. We must transition to a model grounded in President Oliver Tambo’s vision of “People’s Power”, self-reliance through skills, ownership, and productive capacity. This means investing in black-led value chains: funding community-owned factories, mandating technology transfers in deals, and prioritising black entrepreneurship in strategic sectors.
Policies should emphasise merit-based redress, skills academies tied to ownership stakes, not just quotas. Black people must become producers: owning land for commercial farming, controlling mineral beneficiation, and dominating digital economies. This ends dependency, dismantling the slavery of seeking white approval for everything we do.
This generation of Black South Africans is ready to roll up its sleeves and build, to add value, and to turn this country around through productive force, not political favour. We do not seek a seat at their table; we want to build our own economy and build our country. We seek to add value to the economy itself, not merely to benefit from a redistribution policy that perpetuates our dependency on white economic ecosystems.
We don’t need BBBEE, and the policy is certainly not the saviour it is portrayed to be by this ANC NEC; it is a policy that has infantilised the black majority, no different to social grants.
Black people deserve better!
* Phapano Phasha is the chairperson of The Centre for Alternative Political and Economic Thought.
** The views expressed here do not reflect those of the Sunday Independent, IOL, or Independent Media.