Bee: Helping or Hurting?. Anthea Jeffery
However, the media has shown singularly little interest in exploring the national democratic revolution and its significance. This means that most South Africans have little information or understanding about the ANC’s commitment to continuing revolution. This helps explain how a supposedly limited form of affirmative action has quietly morphed into a complex set of employment equity, BEE, and land reform rules that are cumulatively eroding business autonomy, undermining property rights, crippling public service efficiency, choking off direct investment, retarding economic growth, and adding to a crisis of unemployment within the country.
These outcomes fly in the face of what BEE is intended to achieve. Empowerment policies are supposed to be key levers for putting millions of black South Africans on the path to prosperity, but instead their benefits have gone mainly to a relatively small black elite – many of them well paid but often ineffective public servants. Though BEE has thus helped to expand the black middle class, it has also fostered a toxic mix of inefficiency, waste and corruption that frequently causes great harm to 19 million poor South Africans heavily dependent on the state for schools, hospitals, houses, water, and other services.
At the same time the vast majority of these truly disadvantaged individuals have little or no prospect of ever gaining the management posts, ownership deals, preferential contracts, or new small businesses that BEE provides to the privileged few. Most of the poor are unskilled, while more than 8 million of them are also unemployed. Moreover, within the low-growth economic environment that empowerment policies have helped to bring about, few have realistic prospects of finding regular work or otherwise climbing the ladder to success. Hence, far from making it easier for them to get ahead, BEE is harming rather than helping the great majority of black South Africans.
The evolution of BEE
This book sets out to explain the evolution of empowerment policies in all their different aspects. Relevant laws include the Employment Equity Act of 1998, the Preferential Procurement Policy Framework Act of 2000, the Mineral and Petroleum Resources Development Act of 2002, the Broad-Based Black Economic Empowerment Act of 2003 and its generic codes of good practice, and a series of land reform measures already implemented or in the policy pipeline.
This account breaks new ground in pulling all these laws together and describing the relevant legislation in accessible layman’s terms. In doing so, it helps provide a broad overview of what the rules say and how they have been implemented. In this respect, it is a simple but essential ‘everyman’s guide’ to BEE.
However, the book also canvasses the difficult issues that most commentators downplay or avoid. Instead of ignoring the ruling party’s commitment to a national democratic revolution, it shows how BEE in all its aspects is helping the ANC realise its revolutionary goals. It also points to the many negative consequences of these increasingly dirigiste interventions – especially for the 19 million truly disadvantaged South Africans unlikely ever to benefit from racial targets and set-asides.
In addition, the book shows how empowerment goalposts are steadily being changed. This is not happenstance, but what the national democratic revolution requires. For example, most firms subject to the BEE generic codes have put huge efforts into compliance – so much so that their BEE ratings average around 70%. But the BEE generic codes are nevertheless now being ratcheted up to make compliance far more difficult. In addition, executives will soon face jail terms of up to ten years for ‘undermining’ BEE objectives. These changes are likely to provide a further barrier to direct investment and worsen unemployment, thereby adding to ‘revolutionary potential’.
Many other empowerment laws are also being tightened up – particularly those dealing with employment equity in the private sector and BEE in the mining and oil industries. In addition, despite the failure of some 90% of land reform projects, the supposed need to speed up land transfers is being used to justify a comprehensive assault on property rights which, in the end, will by no means be limited to agricultural land.
Even in the education sphere, the stated need for faster ‘transformation’ is being used to serve NDR goals. This justification has already been used to give the minister of higher education (also the general secretary of the South African Communist Party) extraordinary powers to fire university councils and bring the country’s autonomous universities under an unprecedented degree of state control.
In very many spheres, the pattern is the same. The need for remedial measures to help overcome apartheid injustices is being used by the ruling tripartite alliance to implement the national democratic revolution. Yet the media largely persists in turning a blind eye to this process and what it portends. As John Kane-Berman, consultant to the Institute of Race Relations, has recently written, ‘the commentariat is sleeping through the revolution’.
A lack of critical scrutiny
The silence from most commentators points to another problem – a lack of critical scrutiny of BEE in all its aspects. This is partly because of its supposedly remedial aims, which tend to be taken at face value, so limiting proper evaluation. In addition, the fact that BEE is based on racial identity makes the system still more difficult to criticise for fear of being labelled a racist or apartheid apologist.
The playing of the race card to discourage and deflect criticism has been present from the start. It first emerged in 1997 when the Employment Equity Bill was unveiled – and those who spoke up against its likely damaging impact were castigated as racists and ‘sirens of self interest’. Yet these critics included the Institute of Race Relations and its then vice president, Helen Suzman, both renowned around the country and the world for their fight against racial discrimination.
The racial foundation of BEE has had other consequences too. In particular, it has breathed new life into the Population Registration Act of 1950, under which all South Africans were previously officially classified as African, coloured, Indian, or white. The National Party government repealed the statute in 1991 as part of the political transition. But in 2014, almost a quarter of a century later, university students (most of them born after the statute was abolished) are still being asked to classify themselves into the very same apartheid-era categories. So too are public servants, private sector employees, applicants for jobs, and business people seeking procurement contracts from the state or other firms. Without BEE in its present form, racial classification might by now have become a distant memory: something that older generations had been obliged to endure but which ‘born-free’ South Africans could escape. Instead, current BEE rules keep racial tagging alive.
Though racial goodwill has greatly improved since 1994 and remains yet strong, BEE’s emphasis on racial identity reinforces racial stereotypes and fosters polarisation around race. It also undermines the core values of non-racialism and equality before the law, and opens the way to racial scapegoating. South Africa, of all countries, should know the risks here. The ANC is also well aware of them, as it made clear in 1994 when it warned that affirmative action, if poorly implemented, could ‘redistribute resentment … and destroy social peace’.
Overall, BEE in all its diverse aspects has become very different from the limited measures advocated by the ANC back in 1994. Yet critical assessment of this shift in policy and practice has largely been lacking. This book aims to fill that gap. By bringing all the relevant material together, it seeks to make it easier to grasp all the BEE rules, assess the impact they have had, and understand the bigger NDR picture of which they form so vital a part.
Anthea Jeffery
Head of Policy Research and Dick Gawith Fellow, IRR
1. The Rationale for Racial Laws
South Africa has arguably the most comprehensive and challenging affirmative action policies of any country in the world. The relevant rules cover not only affirmative action in employment and procurement but also land reform and various other components of black economic empowerment (BEE). Such policies have steadily expanded in the 20 years since April 1994, when the country’s first all-race general election brought the African National Congress (ANC) to power as part of a government of national unity committed to providing redress for decades of statutory racial discrimination.
Racial discrimination under the National Party government was profoundly