Come clean on BEE cost to jobs and investment, IRR urges governmen

The Institute of Race Relations (IRR) has written to key members of cabinet to request them to urgently clarify the cost to jobs and investment imposed by BEE barriers to economic growth in South Africa.

The IRR has written to ministers Parks Tau (Trade, Industry, and Competition), Nomakhosazana Meth (Employment and Labour), Stella Ndabeni-Abrahams (Small Business Development), and Ronald Lamola (International Relations and Cooperation). On the issue of attracting job-creating investment into South Africa in particular, these ministers form part of the framework of BEE compliance, and the cost of this to ordinary people.

Says IRR Campaign Manager Makone Maja: “For an ailing economy that is in desperate need of growth as a means of achieving empowerment through employment, attracting foreign direct investment (FDI) is a critical ingredient. Despite this national priority, the number one priority for most South Africans, we see countless government policies putting up barriers to economic growth and job-creating investment. BEE has evidently become such a barrier. South Africans, particularly those struggling to find jobs, deserve the truth about why these ministers choose BEE, an inherently elitist and pro-poverty policy, over investment and job creation across our country.”

On 11 March, JP Morgan, one of the largest banks in the world, downgraded South African equities, citing the anti-growth effects of policies like BEE. Mere weeks earlier, a World Bank report came to a similar conclusion on BEE.

The IRR has long warned of the catastrophic impact of race-based policies and their inherently exclusionary and anti-growth effects. In May 2024, as part of its Blueprint for Growth series, the IRR published a report titled Breaking the BEE barrier to growth − recently shared with the World Bank – in which IRR head of policy research Dr Anthea Jeffery exposes the extent to which BEE has not succeeded, and cannot succeed, in the aim of real economic empowerment for the vast majority of South Africans.

Says Maja: “The reality is that BEE is inherently an elitist policy. It is based on the assumption that hiking up costs to business and taxpayers to enrich a small class of connected millionaires will magically help the millions of black South Africans who see no direct benefit from this blatant elite enrichment. In fact, where BEE does affect the lives of South Africa’s poorest, it is destructive: sabotaging value-for-money service delivery, wasting taxpayers’ money, and limiting the extent and quality of services that should, by rights, anchor the upliftment of our communities.

“South Africans are increasingly coming to understand that politicians are making a deliberate choice – instead of doing all they can to remove barriers to economic growth, those in power are opting to continue enriching those at the top, while using the suffering and poverty of the poorest as a convenient smokescreen.”

In its letters to the ministers on the cost of BEE, the IRR asks:

• How many jobs and investments have been lost because of BEE?
• How many companies, like Starlink, have effectively been blocked from investing in South Africa by BEE?
• Why does the government insist on prioritising BEE over mass job creation?
• Why should South Africans accept race-based policies that keep them in poverty?

The IRR has requested answers from these ministers by 27 March, after which further actions to uncover the truth about BEE will follow. All correspondence will be published on the IRR’s various social media accounts to ensure transparency and accountability on this vital issue.

Media contact: Makone Maja, IRR Campaign Manager Tel: 079 418 6676 Email: makone@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za