The World Bank has identified South Africa's burdensome regulations and Black Economic Empowerment (BEE) laws as key obstacles to economic growth, contributing to stagnation, high unemployment, and persistent inequality.

The decay of the rail, health, power, education, and port systems was a constant theme, but recommendations focused on conservative and low-level interventions that would not drastically alter the country's trajectory, such as increased access to government tenders for large companies ("public-private partnerships") and an increased use of performance targets and economic incentives to align individual behaviour at the institutional level.

Criticising the country’s use of Black Economic Empowerment, the report suggests three changes - replacing BEE with equity equivalent investment, special economic zones, and lowering the cost of business financing:

“...generalizing the use of the Equity Equivalence Investment Programs by the Department of Trade and Industry instead of the hard complex conditions associated with Black Economic Empowerment policies [of BEE]. The Special Economic Zones can be reconfigured, as successfully done in Asia, to reduce the costs of doing business, while promoting the creation of jobs through linkages with public- private partnerships […] relax access to financing by start- ups and small firms — the biggest constraint to their development, as shown in recent surveys. […] small firms generally are not considered by commercial banks, even if they are innovative. One measure could be to reduce the cost of financing, which remains prohibitive for many small firms, by diversifying the options.”

The Department of Trade and Industry's Equity Equivalent Investment Programmes are already implemented in some cases for international investors:

“The value of these EE contributions may be measured against 25% of the value of the Multinational’s South African operations or may be measured against 4% of the Total Revenue from its South African operations annually over the period of continued measurement. Equity Equivalent would entail a public programme/scheme and/or private programme/scheme designed to fulfill the requirements of B-BBEE ownership. Equity Equivalent may also entail a programme targeting investment or any other programme that promotes Socio-Economic advancement/ development within the South African Economy. Such a programme needs to be approved by the Minister of Trade and Industry in order to qualify for ownership points on the scorecard.”

South Africa’s economy grew by less than 1% annually over the past decade, weakened by corruption, mismanagement, and bailouts for state-owned enterprises. The current economic model, the Bank argues, needs reform to encourage investment, reduce market barriers, and ease entry for young workers.

The report cursorally mentions skills deficits in key areas, though only in passing. They also suggest incentivising labour participation for state grant recipients, and standardising measurement of education outcomes:

“The education and training sectors in South Africa should also put more emphasis on results by re-instituting national learning assessments in basic education and creating a system to track employment outcomes of TVET and university graduates. In social assistance, there are potent ially large efficiency gains — in better targeting and coverage — through the establishment of a social registry and better interoperability of the current social assistance data system, which could link cash grants with labor market services.”

The Bank’s criticism coincided with stalled negotiations between South Africa and SpaceX over the launch of Starlink, as Elon Musk condemned BEE regulations as “openly racist” and a barrier to entry.

‍