Broad-Based Black Economic Empowerment, or BEE, is a governmental tool in South Africa that facilitates the economic participation of key demographic groups in its economy; it is governed by multiple legislative frameworks, including the Broad-Based Black Economic Empowerment Act of 2003 and sector-specific Codes of Good Practice.

The extent to which a potential organization can enter and operate successfully in the country depends on the BEE rating it is able to meet. In some industries, the license to operate might not be granted if the BEE level falls below a specific threshold.  For example, the Mineral and Petroleum Resources Development Act of 2002 requires that an entity have a BEE level equivalent to 26% Black ownership for it to be issued mining rights. Similar or more stringent requirements may need to be met for it to obtain additional concessions, such as exporting rights. Furthermore, governmental entities issuing request for proposal for any work to be extended to the private sector might allocate as much as 20% of the total bidding-score to the bidder’s BEE rating. Thus, a high BEE score can mean the deciding factor between two equal proposals at similar price-points. In some cases, certain governmental bodies will not consider bids from organizations with a low BEE rating. 

Matter of fact, it is this unique mechanism that makes it difficult for international organizations to gain a footing in the country; Ludwig Hermansson, Trade & Invest Commissioner for Business Sweden in South Africa, points to BEE as the source of “challenges for Swedish and other foreign companies to do business in South Africa.” Ms Carmen J Smidt, South African Ambassador to Finland and Estonia, echos Mr. Hermansson’s emphasis on BEE and how “finding and working with a local partner will be important” to succeed in the South African market.