A recent article in BusinessTech titled “South Africa losing to one of the biggest competitors because of BEE [Black Economic Empowerment]”, has put a blame squarely on BEE policies. It clearly states that “BEE is seemingly becoming a source of policy uncertainty that is actively driving investment away”.
Business Leadership SA (BLSA) CEO Busi Mavuso, has been saying “Nissan’s decision to expand manufacturing in Egypt rather than SA reflects how global companies view local business conditions and accessibility”.
The article misrepresents what appears to be a global restructuring business decision.
Multiple reports, including from Reuters in January, indicate that Nissan’s exit from manufacturing at the Rosslyn plant formed part of a broader global restructuring strategy rather than a uniquely SA policy failure.
Reuters reported that Nissan was closing or consolidating seven plants globally as part of a turnaround plan after major financial losses.
The Rosslyn plant had already been struggling with declining production volumes after the discontinuation of the NP200 bakkie, leaving the Navara as the only model produced there.
Output reportedly fell sharply from over 50,000 vehicles annually a decade ago to around 17,000 units in 2024.
Rather than simply shutting the factory, Nissan, a Japanese manufacturer has sold the plant to Chinese automaker Chery, which plans to recommission and expand production in SA.
Reuters reported that Chery intends to retrofit the plant for hybrid and electric vehicle production, export vehicles into Africa and Europe, and potentially create thousands of jobs through local supply chains.
If SA’s policy environment were fundamentally unworkable, it would be difficult to explain why Chery is simultaneously increasing investment in the same facility and positioning the country as part of its global manufacturing strategy.
SA’s history makes it impossible to discuss economic policy without confronting the legacy of exclusion. Under apartheid, the majority of black South Africans were systematically denied access to land ownership, quality education, skilled professions, business opportunities, and capital.
The economy was deliberately structured to benefit a racial minority while excluding the majority from meaningful participation. To this day we are the most unequal society in the world.
In that context, BEE was not introduced as a punishment to business, but as a corrective mechanism aimed at expanding economic inclusion and creating a more balanced society.
Critics of BEE often argue that it drives away investment, creates policy uncertainty, and benefits only a politically connected elite.
Those criticisms are not entirely without merit. There have been cases where empowerment policies have disproportionately enriched a small group of individuals while broader structural inequality remains deeply entrenched.
However, reducing BEE to “elite enrichment” ignores the broader economic and social rationale behind transformation policies.
The central issue is that SA remains one of the most unequal societies in the world, and that inequality still largely follows racial lines.
A democratic state cannot ignore such realities without risking long-term instability. Government policy, unlike private business decisions, cannot focus only on short-term profitability. It must also consider social cohesion, economic inclusion, poverty reduction, and long-term national stability.
BEE must therefore be understood as part of a broader nation-building project. The inclusion of black professionals, women, and young people into ownership structures, management, and boards is not simply symbolic.
It expands participation in sectors that were historically closed off to the majority of citizens. Transformation also creates pathways for skills development, entrepreneurship, and access to funding opportunities that previously excluded black South Africans.
An important often overlooked point around BEE is that transformation can also create economic opportunities for businesses themselves. Many companies benefit from access to development finance institutions, pension-backed investments, and government procurement opportunities precisely because they meet transformation requirements.
Institutions such as the Public Investment Corporation (PIC) manage funds that largely come from ordinary South African workers, many of whom are black public servants such as teachers, nurses, police officers and so forth.
It is therefore reasonable for the state to expect businesses seeking access to public capital to reflect the demographics and developmental priorities of the country.
The economic argument for BEE is also tied to the concept of long-term opportunity cost. Choosing not to transform may produce short-term financial savings, but the long-term social and economic costs can be far greater.
Persistent inequality fuels unemployment, crime, social unrest, and political instability. The July 2021 unrest demonstrated that economic exclusion and frustration can impose devastating costs on both government and the private sector.
Supporting transformed businesses may sometimes involve higher upfront costs, but those costs can generate long-term returns through job creation, increased tax revenue, stronger local economies, and reduced dependence on social welfare.
Small and medium enterprises, particularly those rooted in local communities, have the potential to stimulate township economies and broaden economic participation. When more people enter the workforce and earn sustainable incomes, the benefits ripple across communities through increased spending, entrepreneurship, and investment.
Monwabisi Rhwexu writes in his personal capacity (Mthatha).
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