Free market purists decry BEE as a drag on business, but the trajectory of two home-grown financial champions — Capitec and Discovery — tells a different story.
On the surface the idea — the biggest cheerleader of which is Elon Musk — that BEE only undermines true meritocracy sounds appealing. It promises the holy grail of public policy: a single, simple rule that treats everyone the same, cuts out carve-outs and special-case bureaucracy. That neatness feels like better value for every unit of public effort — no winners and losers, just pure performance.
Still, underneath this veneer of tidy rule-making lies a reality as stark as the landscape. In a country ravaged by generations of exclusion, “colour-blind” regulations simply lock in existing disadvantage. Real value for money is earned by pumping resources where they are most needed, cultivating talent that markets have long ignored.
In practice, strategic equity injections into skills funds and affirmative hiring create new consumers, employees and entrepreneurs, and deliver returns that far outstrip the initial outlay.
Capitec and Discovery’s explosive growth is a striking example of the payoff. Neither Capitec nor Discovery grew in a vacuum. Their ascent was as much a result of clever market positioning and visionary leadership as it was of state-driven efforts to dismantle historical exclusion.
Transformation policies such as employment equity, the National Skills Fund and broad-based BEE charters created the very conditions that allowed a black middle class to emerge in postapartheid SA.
From 2004-12 alone, the black middle class more than doubled to just more than 4-million, according to the Unilever Institute’s “4-Million & Rising” report. This cohort was forced through expanded access to tertiary education, employment equity hiring practices and targeted enterprise development.
When Capitec opened its doors to low-income South Africans, it was meeting a demand that had been structurally cultivated by national policy. When Discovery launched products for health-conscious young professionals and sought out diverse shareholder partners, it was tapping into a demographic shift engineered by hard-won reforms.
This is why it’s misleading to assess transformation solely through the lens of procurement premiums or ownership quotas.
Far from being a burden on firms, it has actively contributed to expanding the talent pool, enlarging consumer bases and establishing markets in which these firms operate. To pretend otherwise is to erase the connection between public investment in human potential and the private success stories that flourish in its wake.
Viewed through any lens, the SA experience offers a case study in the intersection of policy and market outcomes. Instead of viewing BEE and related social justice policies as a regulatory burden, Capitec and Discovery, to name just two, treated them as catalysts for fresh ideas and new customer bases.
The result is that two national champions have either outpaced or shared the stage with many peers in more laissez-faire environments. Crucially, none of this required abandoning profit motives or coddling inefficient enterprises — the usual fears trotted out about BEE.
In an age in which investors increasingly talk up inclusive growth and shareholders hold companies to higher social standards — ESG investing in corporate parlance — Capitec and Discovery show how to get it right. Far from sacrificing competitiveness for compliance, they achieved competitiveness through compliance, aligning commercial strategy with the national interest.
This alignment could become SA’s competitive edge. A bank that brings affordable finance to every township, and an insurer that makes wellness universal — these are business models with exportable expertise. As Discovery’s expansion into Europe, Asia and the US demonstrates, ideas forged in an inclusive context at home can shine on the world stage.
Inclusion, in short, is proving to be good business. The next Capitec or Discovery may already be in the making, fuelled by the idea that when you empower more people to participate in the economy, everybody wins.
• Motsoeneng is Business Day acting editor.
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