The need for broad-based economic empowerment was deemed sufficiently imperative to warrant specific mention in the Constitution of the Republic of South Africa. Section 9 of the Constitution authorises measures to be taken "to promote the achievement of equality by protecting or advancing persons, or categories or persons, disadvantaged by unfair discrimination".
The "National Framework Agreement on the Restructuring of State Assets" - agreed between Government and Labour - calls for restructuring in such a way as to "distribute wealth, boost the small and medium enterprise sector, have sustainable affirmative action implication and facilitate genuine black economic empowerment."The NEF Act was subsequently passed "to establish structures and mechanisms to redress the inequalities brought about by apartheid by facilitating the broader economic ownership by historically disadvantaged persons".
As an agency of government, the NEF falls under the Public Finance Management Act of 1999, which regulates public financial management and national and provincial government levels, and "ensures that all revenue, expenditures, assets and liabilities of those governments are managed efficiently and effectively."
The NEF is further governed by Treasury Regulations issued in terms of the Public Finance Management Act, and the dti regulations.