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How SA slept through the BEE revolution

Book review: BEE: Helping or Hurting? by Anthea Jeffery.

When the term Black Economic Empowerment (BEE) first floated into the South African business and political lexicon in the early 1990s, there was some hopeful discussion that it would last just 20 years and then be phased out.

Well, 20 years have come and gone, and if anything, BEE has morphed into something more oppressive and outrageous than even the original architects could have imagined.

In the foreward to Anthea Jeffery’s book BEE: Helping or Hurting?, author Rian Malan writes that most journalists missed the most important story of the post-apartheid era. “By the time I reached the halfway mark I was trembling with outrage and bombarding friends with distressed SMSes and emails. Are you aware, I said, that the ANC government has drawn up a ‘final policy proposal’ allowing it to expropriate 50 per cent of farmland without compensation being paid to the farmers concerned? And that the Constitutional Court has already given its indirect blessing to such a move?”

South Africans of every colour need to face up to some harsh realities: white South Africans need to admit that they unfairly benefited from apartheid race laws that kept blacks out of the race; black South Africans need to recognise that the laws being drafted by this government in their name have the capacity to destroy our society “just as surely as the Xhosa nation was destroyed by the Great Cattle Killing of 1856 to 1957.”

There’s a whole library of laws on the table that will empower the government to plunder pretty much what it likes: the Expropriation Bill, empowering “thousands of officials at all three tiers of government to expropriate property of virtually any kind”; the Protection of Investment Bill of 2013, which denies foreign investors the right of international arbitration in the event the government decides to seize their assets; the Mining Amendment Bill, which gives the government the right to take control of privately-run oil and gas fields for whatever compensation it likes.

The consequences of BEE and associated laws are slapping us in the face daily, yet we choose not to notice: foreigners are investing in Kenya rather than SA; South African companies are shipping their money abroad as fast as possible. Sweeping amendments to BEE laws are tabled that will accelerate these trends, yet we yawn and pretend it will all come out alright. South Africans are truly sleeping through the revolution, as Malan points out.

Critics of BEE typically point to the handful of politically connected individuals who have been the primary beneficiaries of BEE, leaving the broad mass of South Africans in relative poverty. But there is no doubt the massive expansion of the black middle class (which now outnumbers the white middle class) is a major outcome of these policies. Free Market Foundation economist Loane Sharp argues that the black middle class will double over the next seven years to about 11 million, helping to pull the economy out of the mud.

Far less attention is paid to the costly and disastrous policies and laws that have been passed under the umbrella of BEE. Take Outcomes-Based education, one of the costliest social experiments in the post-apartheid era. The teaching of reading, writing and arithmetic were down-played, and in 2010 The Times reported that five million pupils leaving the school were unable to read or write adequately. African drop-out rates at university were 50% according to a 2013 Council on Higher Education report, while just 16% of the 2005 intake completed their three years degrees within the designated time. Pass rates were dropped to make the graduation figures more commodious for the education bureaucrats. All in all, a shockingly poor return for what is one of the biggest expense items in the budget.

This book is not a pleasant read. But to flinch from this touchy subject is fatal, because the technocrats drafting some of the crazy laws that Jeffery dissects have no intention of stopping here. They want to go all the way, wherever that may be. Many of these technocrats are ideologically-driven fellows of the Marxist-Leninist school who harbour a secret admiration for Robert Mugabe. Others are dirigistes who would leave no human endeavour untouched by the supposedly benign hand of government.

Criticising BEE exposes one to charges of racism, if white, or sell-out, if black – which is precisely why so many destructive laws have been allowed to pass in almost total silence.

Most South Africans in the 1990s conceded that it was not enough to simply repeal discriminatory laws, but that remedial action would be needed to overcome the legacy of past discrimination. Hence the Constitution in 1996 was anchored in the concept of non-racialism and equality before the law, with a sub-section authorising the taking of “legislative and other measures designed to protect or advance persons…disadvantaged by unfair discrimination.”

But elements within the ANC were more committed to the national democratic revolution, which they believe exempted them from the Constitution and the negotiated settlement thrashed out between the ANC, its allies and the National Party. Their goal was eliminating property relations and ensuring demographic representivity in every sphere of society.

Who would have thought South Africans entering university would still have to declare their race, nearly 25 years after the Population Registration Act was abolished? The declared intent of the Employment Equity Act is to end racial prejudice, instead it feeds it by entrenching racial consciousness.

The use of racial quotas was always going to be messy, and so it has turned out. Coloureds in the Western Cape (where they account for nearly half the population) have been over-looked for promotion in the Department of Correctional Services because national demographic quotas require Africans to make up the numbers. In Krugersdorp, the SA Police Services promoted a less qualified African male over an Indian woman with 24 years’ experience, until this was overruled by the Labour court. It is left to the courts to wade through the bizarre calculus of racial quotas and make determinations on who gets the job.

Jeffery provides an interesting expose of “inappropriate appointments” made possible by a provision in the Employment Equity Act allowing the appointment of black people with no proven capacity but “the potential to acquire the ability to do the job.” This soon became the favoured loophole behind which kin, friends, and comrades were favoured over more competent applicants. A 2012 report by the state-funded Human Sciences Research Council warned that “the ANC’s deployment strategy systematically places loyalty ahead of merit and even of competence and is therefore a serious obstacle to an efficient public service.”

BEE is great for the connected elite. Mathews Phosa, former national treasurer of the ANC, until recently sat on more than 80 company boards, Cyril Ramaphosa, deputy president of the ANC, sat on more than 50, though said he planned to resign from many of them to concentrate on his political duties.

There is no quarter of the economy that is not skewed by racial profiling and BEE points, quotas and policies. New procurement regulations have been tightened to stop the “fronting” (or “renting of black faces” as Cosatu calls it), but this raises the costs for businesses, and ultimately consumers. BEE equity deals on the JSE in the decade up to 2008 were valued at about R600 million.

“BEE ownership deals are thus imposing an enormous cost on a country struggling to maintain or expand essential infrastructure…,” says Jeffery.

Land reform has been an admitted failure, with 90% of land reform projects unable to produce a marketable surplus. So government has spent billions of rands in taxpayer money to take hundreds of farms out of production, costing thousands of jobs and billions more in lost revenue.

And so it goes on. This is the ANC’s 20 year scorecard on BEE, as presented by Anthea Jefferey, and it scores an F. It’s time to look past the racial sensitivities and get a real national debate going on this subject before the race engineers annihilate what’s left of the economy.

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Thanks for having the courage to speak out – we should be debating this issue.

BEE is being misused to favour the connected elite. It has no hope of being a mean to a sustainable end. It merely feeds on the already built and, if allowed to continue in its present form, will result in most of us equaly sharing a poor and ineffective economy; while a small elite is disgustingly rich. Free handouts and improper incentive to work and produce can only destroy industriousness in the long run.

History show us that liberation movements never make good governments. The ANC continues to create stereotypes on African rule. It doesn’t have to be that way considering the skills this country has available to it. These skills however are ignored and those that think they know best will bumble on forward despite the writing on the wall.

What I don’t get from this article is, what is your proposal for a solution?We havehad 450-plus of white rule, and nearly as many years of white cumulative advantage, with few if any whites complaining about it. We have years of systematic land dispossession, with whites being given stolen land for a song, or no song at all. And when the government seeks to remedy this, what happens, we have whites complaining and raising prices of land to ridiculous heights. The government, has the mandate and the support it needs to expropriate land if need be. The majority of whites were opposed to equality with the native people of this land, from 450 years ago, and the majority never really supported efforts to change from apartheid, and it would be foolhardy to suddenly believe that many are onboard. For the past 20 years, whites in this country have not even come to admit that apartheid was wrong. How do you bargain and build trust and good faith in such a climate? You see, white people trying to ‘beat the system’ by fronting. These efforts tell you there is no good faith, but self interest, rules and governs all aspects of life. Where the problem lies, is with the ANC government, and the HRSC’s observation is spot on. Selecting incompetent people to do a thing that requires competency, especially high levels of competency, is a recipe for disaster, as has been evidenced by how many of the SOEs are collapsing. As for the middle class, it is expanding, but not all of us made money from BEE, some of us made our money abroad, where we have lived for the past 20 or so years, so that we start afresh and not be annoyed with some of the richest white people, with the best facilities, and lifestyles complaining about not having enough. It is time government sped up reforms in land, mining, financial services etc. Our people don’t want to wait until they are dead, before the enjoy the fruit of freedom. Its way past time. Let’s stop whinning and come up with practical and feasible solution that lifts everybody out of poverty!!!

One of the deadly sins of the bible is “sloth”. South African’s have become lazy, idle and useless. Forget BEE etc. Everyone must roll up their sleaves and work, even if it means no or little pay.

“It is time government sped up reforms in land, mining, financial services etc.” Isn’t this exactly what BEE was supposed to do, starting 20 years ago?

and

“Our people don’t want to wait until they are dead, before the enjoy the fruit of freedom. Its way past time. Let’s stop whinning and come up with practical and feasible solution that lifts everybody out of poverty!!!” (sic)

Which is precisely what any sensible businessman (white or not) wants here and hoped for from 1994, but has been hamstrung by the political attitude and ineptitude of the ANC, which you have acknowledged as being incompetent, and who will not be voted out in the near future. So who do we go to for a solution? Julius Malema?

Sadly, in a country where the President assigns control the national air carrier to an ex-girlfriend who has his illegitimate child (http://mg.co.za/article/2014-11-06-jacob-zuma-links-to-untouchable-saa-boss) and milks the taxpayers to keep it afloat, the only solution is to hand over control to Corporate South Africa who have the expertise and the skin in the game to change things for the better. But will that happen? No.

So now what?

Agree, speed up land reform. It worked so well in Zimbabwe. The people are now free to enjoy starvation . There is no short term solution. You can’t grow an economy without capital. Due to ridiculous new and existing legislation, SA won’t see much new investments.SA needs large amount of foreign investment , corruption-free environment, skilled workforce, low tax rates and advanced infrastructure. SA is falling behind in all five categories. Unfortunately the average voter and government official thinks exactly like you, and that’s where the core problem lies.

Is it convenient to be naive? You ask for a solution but yourself offer nothing except “it’s the white’s fault” card. Wake up. Ask yourself why, when the “whites” long ago landed on our shores there was such a gap in the relative development? There’s only one way to sustainably enrich yourself, and that’s to work. No amount of BEE, or “reforms” or handouts will ever lift the masses, except maybe the few newly previliged such as yourself. Free enterprise, hard work, well governed capitalism and adherence to the principle of accountability are the only way. Unfortunately freedom with no work bears no fruit.

Nothing new here and preaching to the converted.

Waste of time buying/reading a book where we have all known the contents years ago.

All absolutely blooming obvious. I clearly remember all those enthusiastic symposia etc. pre-1994 wherein we were exhorted to “grow the pie”, not cut it up into ever smaller pieces. But that of course is exactly what is happening: the ANC hasn’t a clue on how to grow an economy, only how to loot it.
The only way to reverse this otherwise inevitable decay into universal poverty is for each of us to resist it, in any and every way we are able, each at his or her own level.

And to think 5 % of the population is the cause of such poverty and decline in this country. The more this segment of the population become smaller the more they are the cause.

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