The delivery gap is the story at the heart of South Africa’s black economic empowerment debate. A policy built to redistribute opportunity has, on the evidence now available, delivered concentrated gains to a small group of participants while the machinery meant to provide schooling, housing and health care to the poor continues to underperform. That mismatch between what was promised and what has actually been delivered is driving the intensifying criticism of BEE that marked 2026.
The clearest evidence comes from a recently surfaced 2015 report showing that some 60% of the net value redistributed by pre-2014 ownership deals in mining went to around 46 BEE companies or participants, each of whom probably gained between R2bn and R3.7bn. Against that, most black South Africans continue to be hurt by BEE rules in mining and elsewhere. These costly requirements curtail investment, growth and job creation, and they have helped push unemployment to 33.6%, against a global average of 5% in 2026.
The operational consequences are visible in the investment pipeline. BEE ownership rules effectively require 25 to 30% black ownership, with no equity-equivalent option in mining and telecoms. This demand deters the fixed investment into infrastructure, mines, factories and machinery that is needed to raise economic productivity. Without a near doubling of fixed investment, from 13.9% of GDP in 2025 to the global average of 26%, South Africa cannot lift its growth rate to the 4% to 5% average long achieved by emerging market peers.
The United States ambassador to South Africa, L Brent Bozell III, has put the delivery problem bluntly: “South Africa desperately needs… investment. We have companies waiting in the wings with billions of dollars ready to invest.” Those companies, however, are concerned about BEE and particularly its ownership requirements. The Trump administration has responded by announcing visa restrictions barring South Africans responsible for enacting or implementing “race-based discrimination” from entry to the US. The ANC has reacted with outrage, stressing that South Africa is a sovereign country and its BEE policies will remain unchanged, while the Thabo Mbeki Foundation has warned of a “social explosion” if BEE is abandoned.
Yet the ANC’s insistence sits uneasily with what most black South Africans themselves say they want. Opinion polls conducted for the Social Research Foundation and the Institute of Race Relations in 2024 and 2026 make this plain. In 2024, the SRF found that 68% of all respondents, and 60% of ANC voters, supported doing away with race-based appointments in the public service so that all officials are appointed only on merit. Some 63% of all respondents, and 52% of ANC voters, supported an end to race-based public procurement so that all state tenders are issued only on merit. And 73% of all respondents, with 63% of ANC voters, agreed that any business should be allowed to operate freely, regardless of whether it is black or white-owned, so long as it pays tax and helps create employment.
The IRR’s March 2026 poll reinforced the pattern. Some 70% of respondents said the government should no longer use apartheid race categories to decide who qualifies for business and job opportunities. A striking 89%, up from 84% in 2025, agreed that the different races need each other for progress and that there should be full opportunity for people of all colours. On procurement, only 10% backed the current system, which allows inflated tender pricing in pursuit of transformation. By contrast, 45% wanted value for money prioritised, and 82% wanted the government to establish how much BEE premiums in the form of inflated tender prices are costing.
In 2026 the SRF tested a concrete alternative. Respondents were asked about a Democratic Alliance proposal to replace BEE with an empowerment policy using poverty, not race, to determine who needs upliftment, on the argument that BEE has been abused to benefit an elite few. Some 63% of all respondents supported it, as did 60% of ANC voters and 55% of black voters.
The IRR has developed its own alternative, Economic Empowerment for the Disadvantaged, which has three core features. It is race-neutral, targeting the poor so its benefits cannot be captured by the black elite. It promotes investment, growth, employment, innovation and free market competition, all vital to upward mobility. And it recognises that many poor South Africans are held back by bad schooling, housing and health care, needs that must be addressed efficiently and cost-effectively.
Delivery, not money, is the binding constraint here. In the 2026/27 financial year the National Treasury budgeted almost R700bn for public provision in these three spheres, an amount comparable to what other emerging markets generally spend. But the state’s top-down delivery system is so dysfunctional that outcomes are extraordinarily poor. With public debt exceeding 77% of GDP, budgets cannot be increased; the key need is far better value for every tax rand spent. The IRR argues this can be achieved by redirecting revenue now badly used by bureaucrats into tax-funded schooling, housing and health care vouchers for the poor. Low-income households would then have real choices, and schools and other entities would have to compete for their custom, keeping prices down and pushing quality up. Similar voucher schemes in a variety of other countries confirm the gains.
South Africans back the idea consistently. In 2016, some 85% of black respondents supported school vouchers, while 83% endorsed healthcare and housing vouchers, and 74% said vouchers would be more effective than BEE in helping them get ahead. Subsequent polling has repeatedly shown at least 80% of black respondents supporting school, health and housing vouchers. In 2024, 92% of South Africans favoured school vouchers, 83% health vouchers and 80% housing vouchers. Asked whether vouchers would help them more than BEE, 81% said yes and only 12% said no.
As criticism has mounted, the ANC and other proponents have begun to concede that BEE’s practical outcomes have disappointed, while claiming there is no credible alternative. That claim is false. Workable alternatives exist in the DA’s proposals and the IRR’s EED framework, and majorities support both. The ANC can no longer pretend that race-based rules provide effective redress, or that prosperity will trickle down from the wealthy black elite to millions of unemployed and destitute South Africans. Instead, it should heed the popular will, jettison a policy that enriches the few at the expense of the many, and embrace the transformation most South Africans clearly want.
Dr Anthea Jeffery, Head of Policy Research at the IRR, sets out these arguments in her report Breaking the BEE Barrier to Growth, released on Tuesday, 20 October, as part of the IRR’s Blueprint for Growth series, with an online discussion alongside fellow Daily Friend writer Terence Corrigan. She explores the topic further in her book BEE: Helping or Hurting. The article was first published on the Daily Friend.