JOHANNESBURG: South Africa Aims to Reform Black Empowerment System, The head of South Africa’s flagship Black economic empowerment plans to introduce additional incentives and potential fines to improve corporate participation and curb exploitation of the system meant to tackle the country’s gross inequality, he said.
The African National Congress, which had ruled unchallenged for 30 years until it lost its parliamentary majority in May elections, is under intense pressure to improve the lives of Black people left disadvantaged by decades of white minority rule.
The empowerment law enacted in 2003 created a scorecard system that encourages companies to hire and promote Black people by offering them tax breaks and access to government contracts.
Two decades later, unemployment is five times higher for Black people than for white people and income inequality is the worst in the world, according to the World Bank, and critics say the empowerment policy has not worked.
“There’s no society that can be viable with (this) level of inequality,” Tshediso Matona, head of the Broad-based Black Economic Empowerment Commission told Reuters.
Under the voluntary programme, companies earn points in categories such as Black ownership, management control and skills development.
However, Matona says some companies inflate their scores by falsely listing Black people as managers, a practice commonly known in South Africa as “fronting”, a crime under the law.
The commission, which refers cases of infringement to state prosecutors, has received 1,348 complaints of fronting since 2017, said Matona. In 2022, only 141 of about 400 listed companies submitted a report.
Matona said he hoped to enhance company incentives for compliance while “naming and shaming” and possibly fining those which fail to submit the reports.
“On this one (Black empowerment), we are unequivocal,” Ramaphosa told reporters over a week ago, describing racial inequality as an “existential challenge” for South Africa.
