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South Africa’s flagship Black economic empowerment program is set to undergo changes aimed at increasing corporate participation and curbing exploitation of the system meant to address the country’s inequality. The African National Congress is facing pressure to uplift Black people who have been disadvantaged by years of white minority rule.

Introduced in 2003, the empowerment law includes a scorecard system that incentivizes companies to hire and promote Black individuals by offering tax breaks and access to government contracts. Despite these efforts, the country still faces significant unemployment and income inequality, with critics arguing that the policy has not been effective.

Tshediso Matona, the head of the Broad-based Black Economic Empowerment Commission, highlighted concerns about companies inflating their scores through practices like “fronting”, where Black individuals are falsely listed as managers. While the commission has received numerous complaints, no convictions have been made yet due to challenges within the criminal justice system.

Matona aims to strengthen incentives for companies to comply with the program and is considering penalties for those who fail to report their Black empowerment status. President Cyril Ramaphosa has emphasized the importance of Black empowerment, signaling a commitment to addressing racial inequality in South Africa.

Proposed amendments to the law may focus on encouraging skills development and enterprise growth rather than solely on ownership in existing businesses. While these changes may face opposition from some political parties, the government is determined to push forward with these reforms to ensure a more equitable economic landscape.

Critics have raised concerns about loopholes in the current system, such as “Blackwashing” practices that artificially inflate Black ownership figures. Matona acknowledges the need for better regulation to address these issues and is looking to prioritize skills development and training over mere ownership.

While some support these efforts to improve compliance, others believe that the law should be repealed to reduce bureaucracy and attract more foreign investment. Political analysts like Moeletsi Mbeki suggest that a focus on supporting entrepreneurs regardless of race may be a more effective way to spur economic growth in South Africa.

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