Government announces BEE review

1 December 2025 – What should be read into the government’s decision to review BEE? Why is South Africa’s economy expected to crawl in a region where others are sprinting? How will a proposed new business licensing law affect SA’s growth prospects? How low can the US-South African relationship go? If AGOA comes back, why will SA potentially be excluded? What do the US want from SA?

Government announces BEE review

Persistent criticism of South Africa’s race-based laws from domestic and foreign sources is striking a nerve in the African National Congress (ANC). Some senior party leaders now believe that reform is essential for investment, jobs growth and to reverse the party’s electoral decline.

Last week, the trade and industry minister, Parks Tau, announced that the government would be reviewing its broad-based black economic empowerment policy (B-BBEE). The announcement comes some weeks after the ANC’s deputy president, Paul Mashatile, suggested that B-BBEE legislation be reviewed.

The first phase of the review will be conducted by Mr Tau’s department. It will focus on regulations, codes of good practice, guidelines and practice notes. This phase is set to be concluded by the end of March. It will also link BEE to a proposed Transformation Fund.

The second phase, for which no timeline has yet been announced, will review the B-BBEE Act for “substantive amendments”.

That a review has been announced is significant. It reflects recognition that B-BBEE is flawed and has not fulfilled the hopes placed in it. It also marks a distinct shift from past practice, where the ANC would flat-out refuse to countenance even the slightest deviation from its race-based policies.

However, lest hopes be raised that South Africa will imminently adopt a non-racial, growth-friendly empowerment programme, Mr Tau was at pains to point out that the ANC remains wedded to the use of race-based laws and has no intention of jettisoning them. It merely wants to adjust them to make them work better.

Yet minor tweaks will not be enough to unlock the investment that South Africa urgently needs – or create the economic growth that will lift the ANC’s electoral prospects. If confronted with sustained pressure, however, the party might in time see itself forced to move away from race-based laws, although it will prefer to do so in a gradual fashion to save face and keep political rivals at bay.

Africa surges, SA lags

Global financial organisations are forecasting a widening growth gap between South Africa and its African peers. S&P Global Ratings is the latest to join the chorus, projecting a median 4.5% growth rate for Africa over the next three years, with South Africa at just 1.8%, less than half the continental rate.

This is in line with earlier forecasts from the International Monetary Fund and the World Bank, which expect the economies of sub-Saharan Africa to expand by between 4% and 4.5% in the medium term, versus South Africa at below 2%.

Economic growth in Africa typically lifts on the back of stronger demand for commodities, then slumps when demand dries up. The current bullishness is driven by record gold prices, surging metals and strong portfolio inflows. This should, however, not be misconstrued as structural transformation.

The South African economy has the potential for much faster growth. But it remains hamstrung by anti-growth policies including threats to property rights, race-based laws and a high crime rate. Its growth outlook therefore remains subdued and represents a drag on the entire region’s growth average.

Small business department proposes more regulation

In this context, the Department of Small Business Development has proposed new legislation which, if passed, will make doing business in South Africa even more onerous.

Under the new law, all businesses would potentially require a licence to operate, unless specifically exempted. Licences would be issued by municipalities, many of which are notoriously dysfunctional. They would expire every five years and would be required in addition to sector-specific licences already provided for in areas like banking, mining, and broadcasting.

Implicitly, the bill’s licensing provisions are also intended to expand the implementation of BEE.

In a parliamentary submission, the Institute of Race Relations (IRR) described the bill as “one of the worst interventions that could possibly be made”; the Centre for Development and Enterprise (CDE) called it “not salvageable”. Both organisations are calling for the bill to be withdrawn.

SA-US relations plumb new lows

The relationship between South Africa and the United States (US) has reached a new low. Indications are it will deteriorate further.

The two countries used the G20 leaders’ summit as an opportunity to engage in unseemly squabbles. After the US withdrew from the event at President Donald Trump’s direction, South Africa rallied a coalition of the wounded to pass a summit declaration in defiance of US warnings that such a declaration should not be passed in its absence.

Next, a delegation from the US embassy, sent to receive the G20 presidency handover, was locked out of the summit and told by South Africa that it could come collect the papers from the international relations department the following week.

In response, Mr Trump announced that his country would not invite South Africa to attend the 2026 G20 summit scheduled for November in Miami.

In his official reply to Mr Trump, President Cyril Ramaphosa wrote: “South Africa is a sovereign constitutional democratic country and does not appreciate insults from another country about its membership and worth in participating in global platforms.”

The spokesperson for the South African Presidency, Vincent Magwenya, told the Daily Maverick: “We should, by now, accept that at the highest level of political leadership there won’t be a reset of the relationship, notwithstanding the attempts and numerous efforts we have undertaken to get a reset in the relationship.”

Statements such as this, read with reporting in the Sunday papers, suggest that the South African government is throwing in the towel on salvaging relations.

AGOA 2.0 on the cards – without South Africa

The African Growth and Opportunity Act (AGOA) expired on 30 September 2025, after 25 years of providing eligible African countries – including South Africa – with duty-free access to the lucrative US market. A pathway for AGOA revival remains but looks likely to exclude South Africa.

The Department of Trade, Industry and Competition revealed in a parliamentary portfolio committee meeting that US Senator John Kennedy had introduced a bill to extend AGOA for two years. The bill was only introduced on 8 October, after AGOA had expired, because the US government shutdown had shifted legislators’ attention to domestic issues.

Notably, Mr Kennedy incorporated key elements of his earlier “US-South Africa Bilateral Relations Review Act”, examined in the Risk Alert of 22 September, into the new AGOA bill.

It directs the US administration to assess whether Pretoria has acted against US security and foreign policy interests and to compile a list of senior government and ANC officials suspected of corruption or human rights abuses.

It is unusual for a preferential trade programme to single out a specific country, let alone a governing party. Senator Kennedy’s approach highlights Washington’s sustained focus on South Africa and underlines that both Congress and the administration remain highly critical of ANC policies and postures.

US piles on the diplomatic pressure

Exclusion from AGOA and the withdrawal of US financial support, among others in the fight against HIV/AIDS under the PEPFAR programme, along with tariffs, the refugee programme, and the G20 snub, are forms of diplomatic pressure described by a US State Department spokesperson in March 2025 as intended to “encourage a change in policy and posture”.

Washington’s key demands are political: classifying farm attacks as a priority crime; publicly condemning the “Kill the Boer” chant; reversing the Expropriation Act; exempting US firms from BEE requirements; and shifting South Africa’s international relations posture towards key actors such as Iran and Israel.

Pretoria has so far been unwilling to budge on any of these issues, which represent dealbreakers from the perspective of Washington. Yet smart movement on these issues would be in South Africa’s own interest, shifting it closer towards creating the pro-growth environment the country needs.