Tuesday, June 24, 2008

To BEE or not to BEE...

Black Economic Empowerment (BEE) is regarded as either holy or evil by South Africans, depending from which vantage point it's looked at. For non-South Africans who may not be in the know - BEE refers to affirmative action policies, which are driven first and foremost by Government through legislation, as well as through so-called BEE Charters agreed to between Government and Business (mostly by specific industry's, e.g. Tourism).

While race plays a major role in how BEE is perceived in South Africa, it would be a mistake to believe that all whites are against it and all blacks for it. BEE was always going to be a necessary evil at best and at worse reverse* discrimination (*against whites as opposed to previous discrimination against blacks). It can probably be argued that it will always be both... My own preference has been towards labelling it a 'necessary evil'. That is, BEE should be seen against the country's history of colonisation (±300 years) and formal Apartheid (±40 years), which robbed the black majority of opportunities for education and development. To address these past injustices, a degree of discrimination is needed in the present day (affirmative action).

However, about a decade of BEE has caused many to re-evaluate their stance on this thorny issue. To be fair many, myself included, had a lot of caveats regarding support for BEE / affirmative action to begin with. These now strongly come into play, given the history of BEE thus far. In short a smallish group of the (mostly) political well-connected have benefited hugely from BEE. Some black labourers benefit indirectly through union participation in BEE deals, although the empowerment effect thereof at ground roots level is questionable. The vast majority of black South Africans are not really in a stronger position to advance up the economic ladder - some even argue that most are in a worse position today.

There are a few aspects of the current BEE experience that troubles me greatly. These include:

  • The small number of people actually (disproportionally) empowered by BEE, as referred to above.

  • It seems that the main focus is on filling top, influential, highly paid positions, with black faces - i.e. following a top-down approach.

  • The previous point suggests that the only way to empower blacks is by getting rid of whites... That is, whites can't be trusted in playing a part in the great empowerment project. It has to be driven by blacks in high positions, by extension by driving out whites currently filling those positions. This is gross generalisation on my part, but it represents at the very least a worrying perception.

  • BEE in South Africa, in my view, is based too much on the redistribution of wealth rather than the creation of wealth. In other words cutting the proverbial economic pie in smaller pieces, so that everyone can get a bite - rather than baking a bigger pie. (Obviously the 'shareholding' in a bigger pie can remain in the same lily white hands, which won't help either.)

  • An experience which is bothering me more and more is listening to black commentators matter-of-factly stating that black South Africans must eventually dominate business, because of the demographics of our population. There is a culture of entitlement in these pronouncements that bugs me. If I as a white person build up a family business from scratch with years of blood and tears, am I required to simply hand over a majority stake to someone else, because of his black skin colour? Why can't a family business remain exactly that, irrespective of the family's race?
It would be naïve to expect that after 350 years of discrimination against blacks in this country an ANC Government would not opt for fast track empowerment, as they've done. But one would hope that this will be coupled with a similarly aggressive drive to empower blacks to compete on merit, not to be mere recipients of what virtually amounts to hand-outs? I fear this has generally not been the case.

The main failing of the ANC Government in my view has been the complete failure to deliver, or at least begin to deliver, quality education at (primary and secondary) school level. The fortunate black students that make it into universities (these days a very sizable portion of university populations) are either those who were able to get into historically white schools or the exceptional few who managed to reach the bar despite attending the average black township school (the average black township school being poor to useless).

At present universities attain their high percentage of black students not because of population demographics naturally leading to it. Rather, it is manipulated by setting different standards for different race groups. The bottom line is, if you're white you have to outperform black students by a clear margin in order to make it to university. Worse, if you're black a mediocre school performance will often do. The reason for this is not that black kids are lazy or have a lower intellectual capacity. It is rather that Government fails them - mostly in the poor execution of education policy -; school principals who are either unable to manage or don't care fail them; and ill qualified, poorly motivated and often totally uncommitted teachers fail them.

The baggage of school boycotts in the Apartheid era is also haunting us today. I'm amazed at how (black) school children still feature as cannon fodder in political struggles. Whether it be protests against poor service delivery by municipalities, provincial demarcation disputes or micro issues with particular education representatives the fact is that school children should be in classrooms being equipped for their futures - not out on the streets protesting. Parents and community leaders should ensure that children don't get dragged into these matters.

Yet, businesses are pressed continuously to promote black employees, often in preference of better qualified and experienced white co-workers. How can this be, if black schools are continuously allowed to sink further and further into the gutter? It all smacks of political expediency rather than a true commitment to empowering black South Africans. If you're serious about 'BEE' you need to empower black South Africans, first and foremost through dramatically improved school education, to compete.

The litmus test for BEE lies in abolishing affirmative action and then seeing whether you're doing enough for black school education to enable black children to naturally progress in big numbers into university and careers beyond. Blacks have the ability, as do any other race, to compete. They should be allowed to do so!

I didn't really have the stomach to wander into the above topic, but a talk by Moeletsi Mbeki (the brother of our infamous President...) got me fired up. While I've read about some of M Mbeki's opinions lately, I'm not able to vouch for his general positions, as they are mostly unknown to me. However, on this issue I think he's spot on. We need more (black) commentators who come out and address this important issue. I'm just hoping that enough do so to bring real change in BEE policies before my eldest child, born a decade after 1994 'democratic revolution', matriculates in about 2023... I'm not too hopeful though.

Below follows a report on Moeletsi Mbeki's talk as featured on News24.com:

'BEE no solution to poverty'
Johannesburg - Wealth redistribution is no solution to poverty, political analyst Moeletsi Mbeki told a conference on the world economy in Johannesburg on Tuesday.

"Redistribution can actually accentuate poverty and create social conflict," he said.

"I was one of the first to oppose Black Economic Empowerment (BEE), because if they're going to redistribute wealth, who is going to get what? Where are you going to get that wealth from?"

Broad Based BEE had only benefited top ANC leaders, Mbeki said.

"It benefits the people in power, but what about the poor? BEE is more of a problem than a solution."

He suggested that the government look at wealth creation rather than "fight the ghosts of the past. The ANC expends a lot of energy with BEE in an attempt to correct the past".

The only way to go bridge the gap between rich and poor was to sort out the education system and concentrate more on the development of small and medium businesses.

"BEE stops black from becoming entrepreneurs," Mbeki said.

"Black people are not necessarily against capitalism," he said, adding that it was only the model of capitalism that the apartheid National Party had promoted that blacks did not like.

He was however unsure if the ANC could market capitalism to the electorate.

"The ANC leaders are afraid of the unions - groups like Cosatu and the SACP - they think these groups deliver a huge constituency but they don't."

He said that the ANC had been "very good" at establishing a political system and the Constitution, but had not done well in economics.

"I never expected them to because they have never run a business."

He said that at least he and his brother, President Thabo Mbeki, had worked in the family's spaza shop as children.

"But when my brother gets kicked out as head of government, you won't have anyone there who has actually managed even a spaza shop."

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