Are black businesses worse off for funding than before BEE?

Businesses owned and led by black people are in a far worse position now in terms of accessing funding than they were before the implementation of broad-based BEE (B-BBEE) about 20 years ago, with these businesses facing a hefty funding gap of $45bn, a study has revealed.

The study, commissioned by the UK’s development finance institution, British International Investment (BII), and its Swedish counterpart, Swedfund, found the black-owned and led businesses are concentrated in the small businesses segment, with most of them failing to graduate from SMEs into larger, more established companies.

This failure is more pronounced in South Africa than in the other countries surveyed: Nigeria, Kenya, Ivory Coast and Senegal.

The report attributed it to a pattern that reflects a combination of historical and structural factors, including the “enduring legacy of apartheid on business ownership” and access to capital.