Resetting the B-BBEE debate: New research offers measured insights for investors

Few aspects of South Africa’s policy landscape generate as much debate among international investors considering South Africa – as an investment destination – as Broad-Based Black Economic Empowerment (B-BBEE). For some multinational stakeholders assessing inbound investment opportunities, the framework is viewed as a necessary instrument of socio-economic redress; for others, it is perceived as a complex regulatory hurdle that can complicate market entry and operational planning.

As the SA Trade Desk, we have been closely monitoring this debate, mindful that clarity – rather than rhetoric – is what global partners require when making long-term capital allocation decisions. Against this backdrop, new empirical research provides a timely, measured perspective that moves the conversation beyond ideology toward practical reform.

Research calls for overhaul of implementation

As the Black Management Forum approaches its 50th anniversary, a major research report produced in partnership with Henley Business School Africa — with support from Standard Bank and Brand South Africa — has issued a challenge to both government and business leaders: B-BBEE remains vital to economic transformation, but its current implementation is failing to translate into improved business performance.

The report, The perceived impact of Broad-Based Black Economic Empowerment on business performance in South Africa, surveyed more than 500 managers to assess how transformation policies are functioning on the ground. While respondents broadly support the principle of economic inclusion, many believe the current compliance-driven approach has devolved into a “tick-box” exercise that does not deliver meaningful economic justice.

According to Monde Ndlovu, the policy was always intended as a long-term mechanism to reshape the economic landscape following 1994, rather than a once-off intervention. However, the research suggests that the framework may not be achieving its intended outcomes at the pace or scale required.

Jon Foster-Pedley of Henley Business School Africa emphasised that the research aims to inform democratic debate on whether the policy remains fit for purpose — and, crucially, how it can be refined to benefit both business performance and broader societal goals.

The implementation gap

The study combined quantitative surveys with qualitative interviews across companies of varying sizes. Respondents included executives from small enterprises (44%), medium-sized firms (30%), and large corporations (26%), with the largest geographic concentrations in Gauteng and the Western Cape.

Key findings highlight a significant implementation gap:

• Muted business impact: Across most performance indicators, perceptions fell below neutral. The strongest perceived benefits were in sales and market access, as well as human development and staff morale — but even these were modest.
• Structural obstacles: Corruption, fronting practices, and heavy compliance requirements were cited as major impediments.
• Due diligence shortcomings: Weak verification processes in tenders and implementation were identified as undermining credibility and outcomes.

Notably, perceptions were more positive among highly compliant firms and historically disadvantaged managers, suggesting that effectiveness depends heavily on how and where the policy is implemented. Where organisations approach B-BBEE with genuine intent rather than minimal compliance, outcomes appear more favourable.

From compliance to impact

For trade partners and multinational investors, the most significant aspect of the report may be its forward-looking recommendations, which seek to reposition B-BBEE as a performance-enhancing framework rather than a regulatory burden.

Key proposals include:

Stronger due diligence in public procurement
More rigorous vetting of companies bidding for state contracts to ensure they possess the capabilities and resources required to deliver.

Expanded skills development
Greater investment in training — particularly in finance, governance, and business management — aimed at strengthening small and emerging enterprises.

Collaborative implementation
Regular multi-stakeholder engagement between government and business to shift perceptions of B-BBEE from threat to opportunity.

Improved governance and enforcement
More robust reporting mechanisms and decisive action against non-compliance to rebuild trust in the system.

Implications for international investors

For global partners evaluating South Africa as an investment destination, the report offers an important signal: the domestic conversation is evolving from whether B-BBEE should exist to how it can function more effectively. This distinction matters. Policies that are transparently implemented, consistently enforced, and aligned with economic growth objectives are far more predictable for investors than those characterised by uncertainty or uneven application.

The research ultimately concludes that while opinions on effectiveness are divided, the underlying objective — building a more inclusive and representative economy — remains central to South Africa’s long-term stability and growth trajectory.

From the SA Trade Desk perspective, this study provides precisely the kind of measured insight that international stakeholders have been seeking: evidence-based analysis that acknowledges both the policy’s necessity and its shortcomings, while outlining a credible path toward reform.

As South Africa continues to position itself as a strategic gateway into Africa, the evolution of B-BBEE from compliance exercise to genuine economic catalyst will be closely watched — not only domestically, but by capital markets and trade partners around the world.

The full report is available for download here.