Friday, 23 August 2013

Black Economic Empowerment: What Went Wrong?

I’m all for black economic empowerment. What’s the alternative? A society where most are miserable and have neither prospects nor hope is not a friendly place to live. The haves live in cages. The have-nots rattle the cages, when they are not too hopeless to do anything. So why has BEE not delivered?

A huge part of the problem is the ANC’s top-down approach, strangely similar to Reagan’s trickle-down economics. Like Reaganomics, top-down BEE doesn’t work. In the US, the already rich became richer. Here, equality ended when we equalized the number of billionaires.

In a stark example of what’s wrong with BEE, I recently read an application for a gambling license for a small Eastern Cape town. The application in effect said, “This town lacks the economic base to sustain entertainment businesses, so we are filling the gap by offering the community drinking and gambling.” If you sit back and think about this, the notion is pretty obnoxious. A town that lacks the base of disposable income to support entertainment would, you’d think, not be able to support the proposed business – unless its clientele spend money on drink and gambling that’s not disposable income. In other words, they go home broke and the family doesn’t eat that week.

That though is not my main point about this proposal. One of the “key persons” listed is a car factory production line employee who is interested in getting into the gambling business.

Why would someone with no relevant experience be a “key person”? Because of a BEE requirement for earning a license. So why is this bad?

A black person who already has a job and therefore is a lot better off than the average in a poor province stands to get rich. Many other black people, should the application and similar ones for other poor towns be granted, stand to move from poor to destitute. How is that black economic empowerment?

But it gets worse. Why has the gambling company nominated someone with no relevant experience? Because their new business partner is going to sit in the background spending his new wealth and not interfere with the white baas. How can he interfere when all he knows is car parts?

Zoom out from this one example to the big picture. The faustian deal the ANC made when taking power nearly twenty years ago was that its favoured people would become instantly wealthy, and the needs of the poor would be parked indefinitely. BEE is the “fix” that hides this sorry fact. BEE that takes the form of deliberate promotion of black incompetents to prevent real transfer of control is directly related to lack of delivery. Both in government appointments and in choice of government contractors, this same game is being played. It suits both sides. The ANC can cement its base by patronage, and the old baasskap players can carry on much as before with a little camouflage.

The sad thing is this is not really in anyone’s interest. While it’s true that some people have become obscenely rich in a relatively short time, that wealth cannot really be enjoyed if you have to live in a cage. The white population, the newly empowered black population and those who have managed to rise above poverty without suckling on the BEE teat are living on borrowed time. Sooner or later, the excluded masses will demand their share. In the meantime, our cages are rattled harder and harder.

So what’s to be done?

The ANC is so steeped in the politics of patronage that it’s hard to see it changing, which is sad given the party’s history. Past the 20th anniversary of ANC rule, I expect an increasing fraction of voters who did not grow up with apartheid to be open to other options. The DA doesn’t have a narrative with mass appeal. The smaller parties show no signs of rapid growth. What of the newer players? Malema’s notion of economic freedom ends when he’s liberated wealth in his direction. Agang still needs to hit its stride. I don’t know what it stands for aside from “ANC bad”. A party that promises to do roughly what the ANC stands for but do it right could be in with a chance. On the other hand, Mamphela Ramphele was a senior executive at the World Bank, and I have not heard her repudiating its disastrous structural adjustment jihad. Agang is holding a policy workshop this weekend, so let’s see how that foes. I’d rather judge on results than history, since the ANC has amply demonstrated that history has little influence on how you behave now.

My fear is that all this will lead to another Arab Spring movement – a mass uprising driven by youth with cell phones, with a clear idea of grievance but no clear sense of what to do about it. What South Africa desperately needs now is a clear lead on what to do post-ANC. And that time is fast approaching.

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