Revamping South Africa's Black Economic Empowerment: New Incentives and Penalties Proposed

South Africa's head of Black Economic Empowerment plans to introduce new incentives and penalties to enhance corporate participation and reduce exploitation of the system. Amid rising inequality, the policy faces criticism for inefficacy and exploitation. Proposed changes could spark tensions within the ruling coalition.

The head of South Africa's flagship Black economic empowerment programme plans to introduce additional incentives and potential fines to enhance corporate participation and curb exploitation, he announced. The African National Congress (ANC), which has ruled for 30 years but recently lost its parliamentary majority, faces intense pressure to improve the lives of disadvantaged Black people. The 2003 empowerment law, offering tax breaks and government contracts, hasn't curbed inequality, critics argue.

Tshediso Matona, head of the Broad-based Black Economic Empowerment Commission, said the policy's voluntary nature leads companies to inflate scores through "fronting", a crime under the law. With over 1,348 complaints since 2017 but no convictions, Matona is pushing for amendments to enhance compliance and accountability.

President Cyril Ramaphosa supports demonstrating the advantages of Black empowerment, warning of penalties for non-compliance. As unemployment and income inequality remain critical, Matona aims to table law amendments within a year. The initiative faces potential resistance from the Democratic Alliance party, which argues against new punitive measures.

(With inputs from agencies.)