South Africa Needs a New Kind of Broad-Based Black Economic Empowerment

By Dale T. McKinley · 8 Oct 2013

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Picture: World Bank/Flickr
Picture: World Bank/Flickr

Given the just-concluded Broad-Based Black Economic Empowerment (BBBEE ) Summit, it is a good time to take a critical look at this flag-bearer of government’s approach to post-apartheid racial and economic ‘transformation’. It is not a flattering picture.

To start with, the entire edifice of BBBEE is based on the notion of ‘transformation’ being realised through the gradual expansion of private involvement and ownership of business (whether that is through share schemes, deal swops, joint ventures, partial buy-outs, setting up of individual small businesses etc.). By necessity then, this approach can never result in broad-based empowerment precisely because those that ‘qualify’ or who have the requisite connections to get in the door are a small minority of blacks.

New changes to the BBBEE policy (e.g. a new Commissioner, revised codes etc.) will, it is argued, prevent much of the ‘fronting’ that has been widely practiced wherein existing and/or new companies and entities claim black ownership and/or beneficiaries but have none or very little. However, the real issue is not whether actual and potential recipients are BBBEE policy ‘pure’ but whether the whole programme is itself a massive exercise in ‘fronting’?

Whether it is politically-connected corporate capitalists, union investment companies or just individual local businesspersons/entities (SMMEs), the bottom line is that the pool of possible BBBEE beneficiaries is limited to those who already either have the means and capital and/or those who are eligible simply because of their political and socio-economic positionality and connections. 
Further, the trumpeting of the growth of the black middle class since 1994 tends to completely ignore or underestimate the degree to which that growth (for a majority of that middle class) has been and remains dependent on, easy credit as well as expansion of the government’s bureaucracy and subsequent spending patterns . 

As such, one of the key pillars underpinning the socio-economic base of BBBEE represents not a transformation of wealth and ownership in the South African economy but rather a double-dependency; on ever-increasing government spending and employee growth as well as on the vagaries of capitalist financial/credit markets.

On both counts, both past and present evidence is quite clear in confirming that neither is a sound basis for social and economic transformation that benefits the majority of a population (i.e. the poor and working class). Indeed, given the extreme volatility of contemporary (capitalist) finance flows, investment and credit markets there is every reason to believe that the intensified pursuit of the present BBBEE programme will result not only in a failure to meaningfully redistribute wealth and opportunity for the majority but simply catalyse already highly unequal  levels of concentration of ownership within the black population.

Tied to the above is the reality that until and unless there is a sea-change in exposing, combatting and pulling out the ever-expanding weeds of corruption, incompetence, greed and mismanagement that blight both the public and private sectors, any BBBEE programme will simply end up reproducing its existing and largely elitist, anti-development character.  Government can cite all the statistics it wants to purportedly showcase the achievements of BBBEE but these mean very little unless they are accompanied by empirical evidence to show how it has transformed the lives of the poor majority in a mining community, in a rural farming village or in an urban informal settlement.

Anyone - other than those born with a silver spoon in their mouths - who has (either successfully or not) started up any kind of service/enterprise will tell you that it is virtually impossible to get out of the starting block without access to capital. Ergo - a fundamental problem with BBBEE is that capital is simply unavailable for the vast majority of the ‘previously disadvantaged’. 

The present reality is that this majority is thus forced to wait in the government’s interminable ‘capital queue’ (like the same for a RDP house), try and get something out of the donor sector and/or get in with those lucky few who are politically connected or who have existing pools of start-up capital. None of these options has delivered. Alternatively, it is the government which has the largest pool of available/liquid capital; the question is how does it use/spend it in order to deliver on the country’s core developmental priorities, one of which is for the majority to be productively engaged?

It is not so much about government itself creating jobs, although it should do so in direct proportion to what is required to effectively manage and deliver quality public services and goods. It is also not about party political and patronage dominated use of government tenders to act as the vehicle for ‘empowering’ select black capitalists and a few ‘lucky’ smaller entrepreneurs. And, it is even less about private corporations and big capitalists creating jobs – something that is merely an occasional, exploitative and reversible by-product of their endless pursuit of profit maximisation by whatever means necessary.

It is centrally about making use of people’s capital (for that is what capital controlled by government in a democracy is) in a way that provides the base foundation for people themselves to become the owners/drivers of socially and economically productive capital. This would further apply to capital that belongs to organised workers in the form of pension funds and union investment companies. Capital for collective industrial enterprises, for urban and rural cooperatives, for public-public works infrastructural and service projects, for community-managed and driven education and skills programmes … and the list could go on.

In other words, BBBEE must become a vehicle for strategic, non-capitalist and productive (social and economic) investment of capital. It is this kind of investment that can be truly transformative because it is aimed at changing the heart of existing patterns of ownership as well as control and management of capital itself.  In simple terms the pursuit of a programme for catalysing the socialisation of capital - i.e., for creating a system of dual power. Such an approach opens up the possibility for the ‘broad’ majority to fundamentally alter the way in which capital is produced (a productive/ownership challenge) as well as the way in which capital is circulated (a distributive challenge). As a favourite alter-capitalist globalisation activity slogan says – ‘this is what democracy looks like!”  

The present BBBEE programme on the other hand, is predominately aimed at creating more black capitalists/industrialists, at changing the colour of some of those occupying the seats at the bosses table whilst the people who actually need to be ’empowered’ - the broad, black majority - scramble for the crumbs. All the latest changes to the BBBEE codes and processes do, is to better ensure that those occupying the newly acquired seats sit in them for longer and slightly amplify the amount of crumbs falling from the table.

What is actually required is the creation of an entirely new table and accompanying seats. It will certainly take a long time and much effort to build, to overcome inherited challenges and to sustain; but if South Africa is serious about social and economic transformation then there is little choice. The time-bomb of poverty, inequality and exclusion is ticking.

Dr. McKinley is an independent writer, researcher and lecturer as well as political activist.

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