South Africa: State Participation, Indigenisation And Economic Empowerment In Africa

Last Updated: 15 May 2013
Article by Sébastien Thouvenot

Most Read Contributor in South Africa, November 2017

What does it all mean?

History is constantly repeating itself and hopefully with each cycle we correct at least some of the mistakes of the past. This effort can be seen in the case for economic empowerment policies in Africa. The issue of State participation, indigenisation and what has come to be known as economic empowerment was immediately raised as African states gained independence, mainly in response to their colonial history and resulting economic systems, such as the example of apartheid in South Africa, which saw economic participation determined along racial lines. Today this topic remains at the heart of many economic policies.


State-participation can be defined as a mere obligation that private companies which operate in certain reserve a shareholding to public entities. This participation is generally attributed at the creation of the company and cannot be diluted. State participation can also be decided at a later stage through nationalisation, giving the right to indemnities.

Economic empowerment, in this context, refers to the goal of restoring economic power to sections of the population that social discrimination processes had previously excluded from decision-making based on race and gender among others.

Indigenisation is one mechanism by which governments may seek to achieve economic empowerment. It defined as the increase of local participation in or ownership of established entities. Indigenisation has proven to be one of the most popular measures of implementation of economic empowerment to the previously disadvantaged through either the granting of shares to national individual or entities in a company or obligation to reserve a certain quantity of employments to nationals or reserves certain commercial or industrial activities to nationals.

Many states in Africa have at one point or another tried to implement one or several of the above measures and today some of them seem to tend towards a new model inspired by South Africa's Broad-Based Black Economic Empowerment (BBBEE) policy.

In the past Indigenisation has been expressed as a return to African identity as well as the idea of restoring the economic power taken from African peoples by their colonisers. This was the case in Zaire (Democratic of Congo) through "Zairisation" and in Cote d'Ivoire through "Ivoirisation". The result of these policies much more than a series of nationalisations, giving birth to huge state-owned companies, in all sectors, including agriculture, industry and services.

Apart from a few exceptions, these state-owned companies did not have enough experience to successfully meet the economic challenges of the 90s and this lead to significant restructuring, liquidation or privatisation. To this extent therefore, these policies failed and gave birth to a situation that is, at best, opposite to their original intent.


It appears that State participation, indigenisation and economic empowerment are still applied in various parts of the continent in a manner distinctive to each region, possibly as a result of the different historical backgrounds of the countries in which they are implemented. As a general overview, indigenisation does not seem to exist in Francophone Africa and more generally in West and Central Africa. In these countries, State participation seems to be mandatory only for companies created for the operation of mining projects. This is the case for all member countries of the West African Economic and Monetary Union (UEMOA) where the State must have a shareholding of 10 per cent (Benin, Burkina Faso, Mali, Niger, Senegal...). This is also the case in Guinea, where this shareholding may be as much as 35 per cent, 5 per cent for the DRC or 15 per cent for the Central Africa Republic.

Indigenisation and economic empowerment appear to be a trend in Southern and Eastern part of Africa and although several colonial influences exist in these regions, the Anglo-Saxon and Portuguese heritage remains a common feature, as does the fact that colonialism lasted far longer in this region than elsewhere on the continent. As a result, these States faced severe and potentially destabilising disparities of wealth and resources between rich and poor at the attainment of their independence from colonial rule which, because of the economic policies of colonialism, was based on the colour line. This has been the case in the more commonly discussed examples of South Africa and Zimbabwe, but also to some extent in Namibia, Botswana and Indigenisation, such as in Zimbabwe, aims at giving a "controlling interest" of not less than 51 per cent of the shares or interest in an enterprise to black indigenous Zimbabweans. Every company in respect of which 51 cent of the shares or a controlling interest is not held by indigenous Zimbabweans and whose net asset value is above certain thresholds (depending on the industry) must submit an indigenisation plan detailing how and when a controlling interest of its business will be transferred.

Indigenisation in other countries has been a relatively smooth process. In Angola, the "Angolanisation seeks to ensure preferential treatment of Angolan Businessmen and also stipulates that companies must conform to a ratio of 70 per cent national workers to 30 per cent foreign workers.

In Botswana, the Government proactively encourages Citizen Businesses and Entrepreneurs. Certain of tenders are restricted to Citizen-owned companies only and Citizen-owned or Majority Citizen-owned companies enjoy preference during tender evaluations. Certain manufacturing activities are also restricted to Citizens and Citizen-owned companies. The Government has set up the Citizen Entrepreneurial Development Agency to provide fledgling citizen-based companies with technical, financial and managerial assistance. Other countries tend to apply this policy for very specific and strategic sectors. This is the case in the DRC where land concessions for agriculture shall only be granted to Congolese individuals or companies having the State or Congolese individuals or Companies as shareholders.

The more sophisticated policies appear to be Namibia's New Equitable Economic Empowerment Framework (NEEEF) which aims to provide a clear overarching policy framework into which all other policies will promoting transformation in business through the five pillars of: Ownership, Management Control and Employment Equity, Human Resources and Skills Development, Entrepreneurship Development and Community Investment; and of course South Africa's BBBEE.

We will, however, continue to keep an eye on the evolution of the Economic Empowerment Policy in Tanzania and Zambia's Citizen Economic Empowerment, which seem to be very influenced by the South African system. These trends are a good sign and show that States have learnt quickly from the past, seeking to amend policies to take cognisance of previous successes and failings in implementation elsewhere on the continent. In the rise of African States will go hand in hand with their re-appropriation of their economies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions