With growth in South Africa at around 1% of GDP (compared to 4.5% elsewhere in sub-Saharan Africa) and the unemployment rate at close on 34% (against a global average of 5%), the need to remove the Black Economic Empowerment (BEE) barrier to growth is becoming ever more urgent.
What then should replace it? Two points are immediately apparent. Any new empowerment policy must be non-racial, in keeping with the Constitution. It must also focus on promoting the investment, growth and employment essential to upward mobility. These changes would remove the BEE leg-iron and unleash faster growth. But what can be done to dismantle the dysfunctional schooling that also holds poor people back?
The IRR recommends a tax-funded school voucher system, similar to those found in many other countries. This would stimulate competition among schools, improve their quality and start equipping people with valuable skills. The voucher idea is thus a core component of the IRR’s alternative to BEE, which it calls Economic Empowerment for the Disadvantaged (EED).
Three core features
EED has three core features. First, it is non-racial and uses a means test in allocating school vouchers to the poor. Second, it replaces current BEE scorecards with a simple new one. This gives businesses (voluntary) EED points for all their contributions to investment, employment, tax revenues, export earnings, workplace skills, innovation and productivity. These contributions are essential to productivity, growth and prosperity and need to be rewarded, rather than discounted. Third, EED reaches right down to the grassroots by providing tax-funded school vouchers to poor families. (It proposes other tax-funded vouchers too, but school vouchers are the ones in issue here.)
Dysfunctional public schools
South Africa spends more on schooling than many other countries (R360bn in 2026), but results are generally dismal. Almost half of all pupils drop out of school without ever obtaining a National Senior Certificate. Many who gain this certificate (with the 35% average permitted) remain functionally illiterate and innumerate.
Public schooling in many other countries is also flawed. In 2019, a research report by the Institute of Economic Affairs in the United Kingdom (UK) found that public schools in developing countries are commonly plagued by “teacher absenteeism, bureaucratic corruption, and a lack of accountability to parents”. Developed countries have better education infrastructure and less corruption, but they are also “marred by problems of bureaucracy and the influence of special interest groups, such as teachers’ unions”.
These problems have arisen, writes David Boaz, a former executive vice president of the Cato Institute in Washington DC, because public schooling has largely become a top-down state monopoly. This is “centrally directed and bureaucratically managed” and “has little use for competition or market incentives”. The contrast between a state monopoly and competitive private provision is stark, as Boaz notes:
In the private sector, firms must attract voluntary customers or they fail; and if they fail, investors lose their money, and managers and employees lose their jobs. The possibility of failure, therefore, is a powerful incentive to find out what customers want and to deliver it efficiently. But in the government sector, failures are not punished, they are rewarded. If a government agency is set up to deal with a problem and the problem gets worse, the agency is rewarded with more money and more staff – because, after all, its task is now bigger.
In a state-run system, schools become inflexible and increasingly set in their bureaucratic ways. Adds Boaz: “A successful principal doesn’t get a raise; an unsuccessful one doesn’t get fired. The public school system poorly serves almost everyone: students are denied access to a high-quality education; parents are treated as nuisances…; good teachers are loaded down with bureaucratic red tape and paperwork and denied the chance to be creative…; principals are told to carry out the instructions laid down by a centralized bureaucracy; and the whole country suffers because students leave school uneducated.”
Private schools do better
Private schools in many countries – including very low-cost ones catering for poor pupils in slums and informal settlements – generally notch up better academic results. This is largely because classes are smaller, teachers work harder, and principals have the power to hire and fire. Private schools provide other benefits too, from effective discipline to an emphasis on hard work and self-reliance.
Low-cost private schooling has become widespread in 22 countries across four continents, writes James Tooley, vice-chancellor of Buckingham University in the United Kingdom, in his 2021 book, Really Good Schools. India alone has about 450,000 low-cost private schools teaching about 92 million children. Some 74 million children in Sub-Saharan Africa also attend low-cost private schools. These schools are particularly common in Lagos (Nigeria), Nairobi (Kenya), Accra (Ghana), and Kampala (Uganda), where 84% of children in poor areas are enrolled at private schools.
Private schools, which generally charge middling or low fees, are growing in South Africa. By 2025, private school attendance had risen by 200% since 2000 to reach some 760,000. Public schools in South Africa are mostly free (as they are in India and elsewhere), but demand for private schools is nevertheless rising. Parents know that the public schools perform poorly and are willing to pay out of their own pockets for better private education. But relatively few can afford it with the country’s unemployment rate so high. However, this obstacle could be overcome, if much of the current schooling budget – now being badly spent by bureaucrats – were to be redirected into tax-funded school vouchers for low-income families. These vouchers could be used in both public and private schools.
The voucher solution
The voucher idea is a simple one. Instead of funding public schools directly – and maintaining that funding year after year irrespective of how poorly those schools perform – the government works out the per capita amount it is spending on children in low-income families and allocates that amount to each child’s parents.
Explains Professor Tooley: “Parents choose a school for their child, and the funding goes with the child to the school of their choice.” Schools use the funding provided by parents to pay their operating costs, including teacher salaries. Adds Tooley: “In the competitive market for schools that results, popular schools attract more children… Importantly, schools become accountable to parents,” who can take their offspring elsewhere if dissatisfied. The introduction of vouchers thus “spurs competition and innovation in schooling, leading to great improvements”. Dysfunctional state schools also come under pressure to retain their pupils, prompting them to improve their performance.
School vouchers in many countries
A voucher scheme was introduced in the Netherlands in 1917, while in Denmark vouchers and school choice go back to 1849. The Czech Republic introduced vouchers for private schools after the disbandment of the Soviet Union in 1991. A year later, Sweden implemented a nationwide school choice and voucher programme, under which parents can choose between public and private schools, all of which receive equal per-student funding from the government. Vouchers are also available in Bangladesh, Chile, Colombia, Estonia, Guatemala, India and Pakistan.
India has the largest school voucher system in the world. This was introduced under the Right to Free and Compulsory Education Act of 2009, which requires all private primary schools to set aside a quarter of their places for disadvantaged students: those belonging to a lower caste or falling below a specified poverty line. For each voucher student, the government pays schools their tuition fees up to a voucher cap equal to the per-child cost in public schools. This programme has helped expand enrolments in private schools, improve grade point averages, shorten distances travelled, and reduce spending on education for poor families.
Chile’s voucher scheme, introduced in 1981, is a universal one under which public funds follow all pupils to the public or private schools of their choice. In 2008, a further reform introduced higher-value vouchers for families with lower incomes, along with additional financial support for schools with a higher proportion of low-income pupils. A 2017 analysis found “a positive and significant effect of the means-tested voucher policy on Math and Language achievement.” It also found that “the effect was much larger among private-voucher schools serving poor children.”
In the US, voucher and other school-choice programmes have grown significantly since the start of the Covid-19 lockdown in 2020. According to EdChoice, school voucher and similar tax credit schemes have been introduced in 34 states (along with Washington DC and Puerto Rico). Nineteen of these states (as well as Puerto Rico) offer school choice to all their K-12 students under universal access programmes.
In 2025 the US Congress introduced the first federal school voucher–style programme by enacting the Educational Choice for Children Act. This is a tax credit rather than a voucher scheme. However, it can clearly be used, says Professor Martin West, Henry Lee Shattuck Professor of Education and Academic Dean at Harvard Graduate School of Education, to “support private school choice – and that’s what makes it significant.” Adds Professor West: “It really does have the potential to turbocharge the movement to expand private school choice in the United States, which already had significant momentum at the state level.”
Popular support for vouchers
In the US, vouchers are particularly popular among black American families, who have used them since the 1990s – when the Milwaukee Parental Choice Program gained momentum – to remove their children from bad inner-city schools and enrol them in better-quality suburban ones. One recent opinion poll indicates that 79% of black families approve of school vouchers. Another puts support for school vouchers among black Americans at 74%.
In South Africa, the IRR’s opinion polls have often probed public views on the school voucher idea. In 2016 some 85% of black respondents expressed support for school vouchers. They also said that school vouchers would be more effective than BEE in helping them to get ahead. Subsequent IRR polling on these issues has shown the same pattern, with at least 80% of black respondents supporting school vouchers. In 2024 some 92% of South Africans favoured school vouchers, while 81% said that vouchers would help them more than BEE.
The value of all three elements of EED
Non-racialism and economic growth are indispensable to true transformation. So too, however, is the school voucher concept. Millions of poor people, long betrayed by the state’s effective monopoly on schooling, must have the opportunity to become literate and numerate, to benefit from the advances in learning that AI is providing, and to gain the skills needed for a shifting world of work.
BEE assumes that increased opportunities will in time trickle down to the poor from the serial enrichment of the black elite. That has not happened and will not occur. By contrast, EED offers an end to racial tagging, a return to faster growth, and the genuine empowerment that flows from self-reliance and real choice.
[Image: by monkeybusiness]
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