The gap between the intent of B-BEE and lived outcomes is where the debate should be, new research suggests. Jon Foster-Pedley and Monde Ndlovu investigate…
When you stand at the JSE to talk about transformation, something clarifies. Not because the room is clever, although it usually is, but because the building is honest in its way. Capital gets priced there every day. Narratives don’t move tickers; performance does. And when performance disappoints, the market doesn’t argue; it marks you down and moves on.
That’s why the venue mattered when we launched new research on B-BBEE and business performance recently.
The study, conducted by Henley Business School and the Black Management Forum, supported by Standard Bank and Brand South Africa, surveyed 527 managers and followed up with ten detailed interviews. The question asked was straightforward: How do managers perceive the relationship between B-BBEE and business performance? Not the principle, nor the politics. The performance.
And what came back was nuanced enough to be useful, which is more than you can say for much of what gets said publicly about this subject.
What the data says about B-BEE
On a five-point scale, with three as neutral, managers’ average perceptions of B-BBEE’s impact on business performance sit below the midpoint across almost every dimension measured. Business processes: 2.37. Competitiveness: 2.38. Financial performance: 2.42. Even the highest scores remain below neutral: market access at 2.82, human development at 2.65.
Those numbers will be read in predictable ways. Some will treat them as proof that B-BBEE “doesn’t work”. Others will dismiss them as resistance with footnotes. Both readings are too easy, and both miss the real story. Because the most useful finding isn’t the averages. It’s what explains the spread.
Perceptions are significantly more positive in highly compliant firms and among historically disadvantaged managers. Not marginally more positive, but meaningfully more. And the dividing line isn’t firm size, or sector, or the neat categories we reach for when we want the argument to stay simple. It’s implementation quality, and lived economic position.
Where B-BBEE is implemented with genuine organisational intent, integrated into strategy, applied with rigour, verified against outcomes people can actually feel, then perceptions improve. Where it functions as a compliance ritual, satisfying audits on paper while operational reality stays unchanged, perceptions of efficacy fall.
The scorecard fallacy
One of the driving factors behind these low perceptions, we believe, is that we keep treating the B-BBEE scorecard as if it’s the thing itself. But are points the same as productivity? Does a rising compliance number automatically produce suppliers who can deliver, managers who can run complex operations, and firms that can win contracts on substance?
In a system with enforcement, high trust and a relentless focus on productivity, results and effectiveness, those things can track together. In a tick box system where compliance is seen as the outcome rather than a potential leading indicator towards higher productivity; they come apart.
This is why practices like fronting are not just wrong, they are corrosive. When black ownership exists on paper but not in substance, or where skilled people are not the priority, transformation doesn’t merely fail to happen; the signal itself gets contaminated. Every weak verification process, every procurement decision that doesn’t probe beyond the certificate, every compliance structure that grows while
capability stays flat—these don’t just waste time. They compound costs. Lost contracts. Crowded-out enterprises that could do the job. A credibility deficit that makes the entire framework harder to defend.
And this is where the research becomes uncomfortable in a useful way: managers describe significant administrative burden from B-BBEE while perceiving below-neutral impact on the things that keep businesses competitive—productivity, operational excellence, and financial performance.
You can’t wave that away. When the gap between effort and perceived outcome grows too wide, trust erodes. And trust, once lost, is expensive to rebuild.
Shifting geopolitics makes it more urgent
The global context doesn’t make this easier. It makes it sharper. The world hasn’t become more patient with emerging economies. It has become less patient. Supply chains are being redesigned around geopolitics. Technology compresses timelines.
Capital is cautious in ways that no amount of historical context will soften.
The international order isn’t interested in our domestic arguments about transformation, it prices performance and moves on.
That doesn’t make transformation less necessary. It makes getting it right more urgent.
South Africa needs economic inclusion. That’s not politics; it’s structural reality. The legacy of exclusion shows up in capital access, networks, ownership patterns, and who gets the benefit of the doubt. B-BBEE was designed to address that reality—and the reality hasn’t disappeared.
So the question isn’t “should transformation continue?” The question is whether our current implementation is building firms that can win in genuinely competitive environments; and keep winning when protection falls away.
A reset of B-BBEE: Stop confusing the instruments with the outcomes.
The strategic lesson isn’t to abandon B-BBEE. It’s to stop confusing the instruments with the outcomes. If implementation quality determines legitimacy, and legitimacy determines whether the system is treated as real or as theatre, then three shifts follow.
First, a shift from scorecards to outcomes. A rising compliance score doesn’t automatically produce rising productivity or supplier competitiveness. We need to measure what matters: supplier survival and growth, leadership depth, operational performance, technology uptake, not just points accumulated through verification.
Second, we need to shift from entitlement to excellence. Empowerment has to mean empowerment to compete, in hard markets, in an increasingly unsentimental and transactional world dominated by power politics, against real benchmarks, without indefinite protection. That requires genuinely accessible skills development, especially for smaller firms. It requires governance that holds everyone to high
standards rather than relaxing them. And it requires procurement due diligence that verifies capability, not just credentials.
Third, there’s a shift from suspicion to shared responsibility. Government needs to strengthen enforcement and verification, particularly in procurement, where policy becomes real and weak due diligence does lasting damage. Business needs to stop treating transformation as a parallel track managed by compliance departments.
Inclusion has to sit inside procurement decisions, leadership pipeline development, supplier relationships and capital allocation.
You can’t build legitimacy without enforcement. And you can’t build outcomes without integration. The goal is a hybrid: a disciplined spine (serious verification, real consequences for fronting, ethical red lines, clean procurement, and flexible limbs (sector-realistic pathways, practical supplier development, partnerships that build capability rather than paperwork).
What’s at stake? Africa has real assets right now: expanding markets, young demographics, entrepreneurs of proven resilience, and executives who can compete globally. If we build transformation that genuinely broadens the base of capable businesses and widens access to capital and networks in ways that stick, we strengthen South Africa’s position. We reduce fragility. We lower risk premiums the hard way: by becoming more investable.
The research gives us a workable frame. Managers broadly accept the purpose of transformation. What they don’t accept is that the current implementation improves performance. That gap—between intent and lived outcome—is where the debate should be.
Because transformation that builds genuine competitive capability will endure. Not because politics protects it, but because broader-based competitiveness is good economics, and good economics, as the JSE well understands, has ways of defending itself.
Jon Foster-Pedley and Monde Ndlovu