Freedom, not favour: Why South Africa needs real economic reform

This is not a call to ignore the injustices of the past. It is a call to reject solutions that entrench new injustices in their place.

Photo by Josh Appel on Unsplash

Solly Malatsi, the Minister of Communications and Digital Technologies in South Africa, recently released a policy directive that eases certain Broad-Based Black Economic Empowerment (B-BBEE) regulations to enable Starlink’s entry into the country. This move follows tech billionaire Elon Musk’s public criticism of the 30% black ownership requirement and comes against the broader context of renewed diplomatic engagement between South Africa and the United States.

On the surface, Malatsi’s revised framework appears to be a conciliatory gesture and a pragmatic attempt to unlock investment while retaining a commitment to "transformation". However, for those committed to a principled free market, this manoeuvre is neither a breakthrough nor a cause for celebration. It is, at best, a repackaging of the same race-based legislative machinery that has undermined economic growth for decades.

Malatsi’s party, the Democratic Alliance (DA), has long campaigned against racial legislation. It is currently challenging the Employment Equity Act in court, precisely because it believes that race should not be a factor in economic decision-making. Yet in this instance, he appears to be compromising. Whether this is a calculated gesture in the context of the Government of National Unity (GNU), or a case of political double-speak, remains unclear. What is clear is that his revised policy does not address the underlying problem, which is the entrenchment of racial thinking in economic law.

One cannot think for Elon Musk; perhaps he will take up the offer in gratitude for the loosened restrictions. Or perhaps he will reject it on principle and continue to call for the complete removal of all racial laws from the statute books. Either way, it would be regrettable if he accepted the proposal. Doing so would only reinforce the false narrative that he is a profiteer who is opposed to "transformation" and seeks to subvert post-apartheid reforms for personal gain. This narrative, while false, would gain traction if the rules are bent for him as an individual.

Musk, like any investor, wants to grow his business and there is nothing immoral about that. His investment in the country through Starlink could be groundbreaking for its economy by enhancing market competition and lowering prices for millions. But this should be allowed to happen on a level playing field and not a racially engineered one. Special treatment undermines the very principle of equality before the law and opens the door to arbitrary power.

Malatsi’s framework may be more flexible than that of the African National Congress (ANC), but it still fundamentally affirms the same premise that racial identity should determine access, opportunity, and legitimacy in the economy. It simply invites a different form of rent-seeking—one with perhaps more private-sector polish, but no less corrosive. Instead of creating an enabling environment, the state remains a gatekeeper that determines which businesses are allowed to thrive and on what terms.

BEE has failed if one measures its success by the collective economic advancement of black South Africans. Some may point to skills development or socio-economic development pillars as marginal gains, but even these are premised on coercive compliance. The ownership and management control pillars have created a class of politically connected beneficiaries who masquerade as entrepreneurs while adding little to the country's productive capacity. The enterprise and supplier development pillar has fed into a system of inflated procurement contracts and B-BBEE premiums that encourages wastage and corruption in the public sector. Genuine black entrepreneurship has struggled to emerge not because of racism, but because of the market distortions created by legislation that rewards political proximity over merit and risk-taking.

This is not a call to ignore the injustices of the past. It is a call to reject solutions that entrench new injustices in their place. If we removed the legislative burdens that stifle competition and free enterprise, the resulting surge in jobs, innovation, and opportunity would speak louder than any quota or ownership target ever could.

Imagine the economic revival that would follow if we fully embraced market liberalisation. Think of the black entrepreneurship that would explode if the state got out of the way, whether in agriculture, technology, or even cannabis, where current laws protect incumbents and shut out the poor. Growth is not abstract. It begins with removing the barriers that keep ordinary South Africans from participating in the economy, and it ends with dignity earned through free enterprise and not political patronage.

The DA cannot claim to defend liberal values while merely tinkering with an illiberal law. Now is the time to continue acting on principle. That means not watering down bad legislation but repealing it entirely. The fight against the Employment Equity Act must be matched with equal energy against B-BBEE. The country deserves more than cosmetic reform; it deserves true freedom.

Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.