A Case Study about Broad-Based Black Economic Empowerment (BBBEE)
Introduction: South Africa’s 2003 Broad-Based Black Economic Empowerment (BBBEE) Act promotes the economic inclusion of the country’s black population through targeted government procurement. The legislation requires that public institutions take into account black economic empowerment activities when contracting with, purchasing from, or licensing South African businesses. Part of the ruling party’s national economic plan, this policy is a significant component of longstanding efforts to address inequities resulting from apartheid-era policies.
Policy Context and Development: South Africa is a nation of 49 million people, 90 percent of whom are black.1 Unemployment in South Africa is high at 25.3 percent, with 50 percent of the South African population living at or below the poverty line, and government spending accounts for less than 30 percent of annual GDP.2 In addition, one in four formal-sector employees works for the government or state-owned enterprises, and a substantial portion of the population is dependent on welfare. Three and a half centuries of British colonialism, white rule, and apartheid have created a racially divided economic system in which whites have higher incomes and stronger educational backgrounds than their black counterparts and are disproportionately represented in the leadership and ownership of South African companies and resources.
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