National Empowerment Fund rejects DA's proposal to scrap race from empowerment policy

The National Empowerment Fund (NEF) has rejected the Democratic Alliance’s (DA) proposal to remove race as a factor in South Africa’s empowerment framework, warning that such a move would undermine the country’s constitutional commitment to redress and equality.

This follows the gazetting of the DA’s Economic Inclusion for All Bill, which seeks to replace Broad-Based Black Economic Empowerment (B-BBEE) with a “race-neutral” and “needs-based” system aimed at tackling poverty and promoting “economic inclusion for all.”

The ANC said this week that BEE would not be scrapped. 

The NEF said it “outrightly rejects the notion that removing race as a determining factor will advance inclusive economic growth”.

The fund argued that “the economic exclusion of black South Africans was neither accidental nor short-lived,” and that “pretending that racial demographics no longer shape opportunity is to deny this economic reality.”

The NEF said its constitutional mandate was to accelerate the participation of black people in the economy because “access remains unequal.”

“Since inception, the NEF has approved over R15.5 billion to black-owned and managed enterprises across all provinces,” the statement said. “A recent independent study confirms that for every R1 invested in transformation projects, the NEF generates R2.21 in economic return.”

It added that transformation efforts should be strengthened rather than scrapped. “Where transformation efforts have fallen short, the cause is often fragmented implementation across the broader ecosystem, not the principle of redress itself,” the NEF said.

The fund warned that abandoning race-based redress “would undermine our very constitutional democracy.” It cited Section 9 of the Constitution, which “explicitly empowers the state to take legislative and other measures to protect or advance persons disadvantaged by unfair discrimination.”

The DA, however, has defended its Bill as a corrective to what it calls the failures of BEE.

DA Head of Policy Mat Cuthbert MP said the gazetting of the Bill marked “the first step in the legislative process that will bring South Africa a new, inclusive empowerment model ending decades of BEE failure.”

“BEE has turned ANC insiders into billionaires, while 44 million South Africans have been relegated to poverty, and 12 million are trapped in unemployment queues,” Cuthbert said. “We need to dismantle this exclusionary system that has seen the same ANC cadres re-empowered time and time again.”

Public comments on the DA’s proposed legislation are now open. The bill can be accessed here. 

THE MERCURY