What Are Disadvantages of Black Economic Empowerment?

By Staff WriterLast Updated Apr 7, 2020 6:36:39 AM ET

Disadvantages of Black Economic Empowerment include an unfair emphasis on race in workers, rather than qualifications and experience, and a shortage of essential skills, due to the flight and unemployment of skilled workers, which result in a weakened economy. BEE was introduced in 1994 by the South African government in an attempt to eliminate the social and economic inequalities among minorities thought to be a product of Apartheid.

While BEE resulted in an economic growth of about 3 percent annually, it would take nearly 25 years to double at this rate, according to South African Reserve Bank governor Gill Marcus, who points to an ideal target of 7 percent for increased efficiency.

As of 2014, Business Day columnist and economics expert Mark Barnes points out that the black middle class increased minimally over the last eight years under BEE. While total employment increased by 3.5 million since its 1994 inception, the figure represents just one-quarter of the population growth of the period.

Critics of BEE argue that efforts should instead focus on fixing education, freeing the labor market from excessive regulation, building international competitiveness and making the country more attractive to local and foreign investors. As important as it was to jumpstart the transfer of wealth in the country, now supporters need to keep the effort's goal in mind: real business development.