Sakeliga Warns of Escalating BEE Enforcement in South Africa: The “Third Wave”

In a pressing alert for South African businesses, the business group Sakeliga has sounded the alarm over what it describes as the “third wave” of Broad-Based Black Economic Empowerment (BEE) enforcement. This new phase marks a shift from passive “administrative” BEE requirements, primarily affecting smaller businesses, to active enforcement of BEE policies across various sectors.

Understanding the “Third Wave” of BEE

Sakeliga characterizes this third wave as distinct from earlier waves that targeted major corporations and those engaged in government contracts. Recent developments involving the Property Practitioners Regulatory Authority (PPRA) illustrate this emerging trend, which Sakeliga claims signifies a strategic expansion of BEE compliance requirements across industries.

In September, Sakeliga celebrated a victory when the PPRA reversed its decision to enforce stringent BEE compliance for Fidelity Fund Certificates (FFCs). Initially, new regulations introduced in April 2024 mandated that property practitioners achieve a minimum score of 40 points (BEE Level 8) to qualify for these essential certificates. Those unable to meet this threshold faced exclusion from the industry.

Historically, the need for a BEE certificate has been present since the Property Practitioners Act took effect in 2022, but certificates were previously granted based on possession rather than strict compliance. The PPRA’s April policy signified a drastic shift towards rigorous enforcement, a move that Sakeliga argues is part of a broader plan to deepen BEE’s reach across sectors beyond real estate.

The Two Phases of the Third Wave

Sakeliga CEO Piet le Roux outlined the two-phase approach of this third wave. In the first phase, regulatory bodies redefine industry standards to expand their jurisdiction, setting the stage for the integration of BEE policies. This initial phase often involves compulsory BEE reporting that lacks punitive measures, creating an illusion of data collection rather than immediate compliance enforcement.

Once businesses acclimatize to this new reporting framework, regulators transition to the second phase, which involves active enforcement of BEE compliance as a condition for continued operation. This shift often occurs under the pretext of regulatory necessity, leaving businesses vulnerable to penalties if they fail to comply with escalating demands.

According to Sakeliga, this strategic progression is not accidental; it is a calculated effort to pull independent businesses into the BEE compliance framework without offering alternatives. The gradual increase in BEE requirements operates like a “Trojan horse,” where initial data collection initiatives mask the true intent of deeper regulatory compliance.

Expanding Impact Across Multiple Sectors

Sakeliga emphasizes that the implications of this third wave of BEE enforcement extend beyond the property sector. From health product regulation to agricultural businesses and legal practice codes, regulators are embedding BEE compliance requirements into the operational frameworks of various industries.

The PPRA’s enforcement of BEE standards exemplifies a broader pattern, indicating that South African regulators are actively expanding the reach of BEE compliance into areas previously unaffected by these policies. This strategy reshapes business compliance, potentially diminishing economic autonomy for private enterprises.

Consequences for Businesses and the Economy

The rise of this third wave poses significant risks for businesses in South Africa. As Sakeliga warns, should BEE enforcement continue its current trajectory, companies with no connections to government contracts may find themselves subject to increasingly stringent requirements. This shift could undermine operational freedom and threaten financial viability.

Sakeliga urges immediate attention to this issue, framing the situation as a critical tipping point that could lead to widespread disruptions if left unchecked. By highlighting the PPRA’s actions, the organization seeks to raise awareness of what it views as an orchestrated, pervasive approach to BEE compliance that could redefine the landscape for private enterprises in South Africa.

Sakeliga’s warning about the third wave of BEE enforcement serves as a call to action for businesses to recognize the potential impact of these policies on their operations. With the regulatory environment evolving rapidly, companies must navigate the challenges posed by this new phase of compliance, which threatens to extend BEE mandates across an ever-widening array of sectors, ultimately reshaping South Africa’s economic landscape.