Economic Development Minister Ebrahim Patel's New Growth Path document released on Tuesday is proposing a "major rethink" of South Africa's black economic empowerment (BEE) framework and policy.

The long-awaited document by the Department of Economic Development stated that current BEE provisions had, in many cases, failed broad-based empowerment, and had instead, imposed significant costs on the country's economy without supporting additional employment or creating growth.

"The present model remains excessively focused on transactions that involve existing assets and benefit a relatively small number of individuals."

It stated that a "substantial revision" of the broad-based black economic empowerment codes was needed.

The New Growth Path planned to strongly focus on the broad-based elements of regulations, including ownership by communities and workers, increased skills
development, and support for small enterprise and co-ops.

It would also support procurement from local producers and specific sector strategies to stimulate employment creation.

"Black empowerment should seek to empower all historically disadvantaged people rather than only a small group of black investors."

The document highlighted a number of shortcomings in current codes, including a disproportionate emphasis in ownership and senior management that created an environment for ‘fronting' and tender abuse, and inadequate incentives to promote and support small enterprises, local procurement, and create employment.

The regulations also penalised public entities as suppliers. "The democratic State owns public entities on behalf of our people yet the regulations do not count them as black empowered.

The Economic Development Department would work closely with other departments and the BEE Advisory Council to ensure the implementation of broad-based empowerment, instead of narrow BEE drives, which would be paired with a systematic assessment of the effects on the cost of capital and investment.