Author and founder of Democracy Works Foundation Professor William Gumede wants black economic empowerment (BEE) to be reformed to benefit community organisations.
Image: Etienne Creux
The government has been urged to reform the black economic empowerment (BEE), to empower community organisations and social enterprises directly instead of enriching a politically connected few.
Outgoing chairperson of ActionAid South Africa Professor William Gumede said the policy should be remodelled, adding that the current BEE private sector deals, largely empowers politically connected politicians, trade unionists and civil servants.
Gumede is an award winning author and founder of Democracy Works, the Little Black Book, a directory of Black professionals and entrepreneurs.
He said the policy also benefits politically connected trusts, business and deal-makers of all colours.
“BEE must be remodelled to become genuinely broad-based. Making civil society, community organisations and social enterprises core beneficiaries of BEE will help in making the policy far more broad-based than currently is the case,” he said.
He said the NGOs sector is in a major crisis because of the US aid funding cuts.
This is after the Donald Trump administration terminated the US Agency for International Development (USAID) and the President's Emergency Plan for AIDS Relief (PEPFAR) grants. The funding cuts, which began via US executive orders targeting South Africa, left an estimated R7.4 billion to R8 billion budget shortfall, threatening the collapse of critical social development and public health safety nets across the country.
As a result, over 15,000 healthcare and community workers were at risk, with up to a quarter of community-based organisations forced to restructure or lay off significant portions of their workforce.
Gumede said many private sector companies have transformation funds and that the state should allocate significant proportions of the funding to civil society organisations, community organisations and social enterprises.
While designed to empower the disadvantaged black majority, critics and investigative bodies, most notably the Zondo Commission into State Capture, have found that BEE requirements were often co-opted by a politically connected elite.
Government tenders and procurement processes were frequently awarded at inflated prices to politically connected individuals, often termed “tenderpreneurs”, sometimes to the detriment of quality and service delivery.
Former officials and political insiders used their status to secure massive shares in state and private contracts, which critics argue benefited a small, wealthy fraction while leaving the majority of the population in poverty.
Gumede added that the BEE companies, particularly of “a certain size”, must also be compelled to make funding available to civil society organisations, community organisations and social enterprises.
“Because they are BEE companies, such funding should not be given to politically connected ‘civil society’ organisations or on the basis of patronage to ‘civil society’ organisations linked to politically connected organisations and individuals, in return for state BEE tender contracts,” said.
Department of Trade, Industry and Competition (DTIC) spokesperson Kaamil Alli and National Empowerment Fund (NEF) spokesperson Dikatso Mothae had not responded at the time of publication.
Meanwhile, the National Association of Social Change Entities in Education (NASCEE) welcomed Gumede's argument, saying this is consistent with its purpose as an association of education NPOs working to strengthen collaboration, capacity and influence in the education sector.
The association’s board member Zonke Ngidi said if BEE is to be genuinely broad-based, then the system must reduce unnecessary barriers and create pathways for credible community organisations to participate.
“NASCEE also sees an opportunity to work with corporations to develop shared guidance and sector-wide standards that provide clarity on acceptable documentation, governance requirements, and impact evidence. This would reduce confusion, lower transaction costs, and make it easier for Socio-Economic Development (SED) funding to reach organisations that are creating meaningful social value,” she said.
Ngidi added that many smaller NPOs do strong work but struggle to package evidence in the format required by corporate donors and NASCEE’s role is to strengthen member capacity, support better-run organisations, and improve shared learning across the sector.
She said this includes helping organisations build practical systems for tracking beneficiaries, outputs, outcomes, governance documents, and impact stories, so that B-BBEE-driven investment can flow to organisations with both community legitimacy and credible evidence.
“The broader point is that education NPOs should not only be seen as recipients of charity. They are delivery partners in national development. B-BBEE SED spend can be far more impactful if it is channelled through credible civil society platforms that understand community realities and can account for impact,” she said.