One of the issues I feel most passionate about in South Africa today are the “remedial” employment and business ownership policies, which at face value claim to be addressing the disproportionate over representation of non-Blacks in the economy as created by apartheid policies, but in truth they are racist and undermine several constitutional rights of all non-Black citizens, and to make matters worse they have not delivered their intended purposes.
Past Wrongs
Let us remember at this point, South Africa has emerged from a traumatic past where racist policies were enforced in the most brutal of ways, we can never be allowed to forget that past or the people who gave so much to bring about change. Part of the effect of those policies was to create an economy where most of the non-menial jobs were held by Whites, some Coloureds, some Asians and very few Blacks. Of course this is unacceptable and had to be addressed in some way and, once apartheid had finally been put to pasture in 1994 it was unsurprisingly one of the key points on the agenda of the ANC when they assumed power. First to appear was AA which essentially promoted the idea that your workforce should be representative of the demographics of the country, later BEE was unveiled and this is concerned with the racial-make up of business ownership and essentially requires that a certain amount of the ownership/shares of businesses are in Black hands.
Two Wrongs Don’t Make a Right
It is indisputable that there were economic and financial imbalances that had to be addressed, but as the old saying goes “Two wrongs don’t make a right!”, bear with me while I expand on that point imagine for a moment that you are a parent of two children, they are absolute darlings with the older one 8 and the younger one 6, your spouse for some unknown reason spoils your younger child, despite your best efforts this continues for several years until tragically your spouse dies (hang in there almost at my point), the question is how do you treat the children from this point onwards? The only correct answer is that you will need to treat them the same and shower them with equal amounts of love any other approach will only further complicate the problem. This story may be to simple to accurately portray the complexities of the South African challenge, regardless of that AA and BEE have only served to further complicate matters.
Practical Implications
The first practical hurdle to the implementation of AA was that there simply were not enough skilled employees of the correct skin-colour or gender to meet the demands, then there was the resistance from employers who for several reasons; including not being able to source acceptable candidates, refusing to discriminate on race (had we not just defeated apartheid?) chose to ignore it, very few employers were constructive about the challenge and for all the blame that I’ll lay at the feet of the ANC, these employers should accept blame for not being pro-active and building the right candidates, through training and development programmes. Instead in the late 90’s the ANC government had to face the reality that AA had experienced very little success, until that point adherence had been on a self-regulatory basis – AA become compulsory and regulated, with a fines system introduced, a number of companies were fined substantial amounts for not meeting AA requirements, of course this money should be used constructively in training Black people, but the effect this had on the companies at the time was that if they could not find suitably skilled non-White candidates they simply did not hire, how many projects and how much potential growth was lost due to this unintended effect of AA?
Simply… Racist.
The effects of BEE have been far more serious, in principal the policy is even more insidious than AA, it does not attempt to introduce a balance in the economy it very simply attempts to give a share of the economy to Black South Africans, now as I discussed under AA there is a distinct shortage of skilled Black South Africans and this is true at every level of business including business leadership, with the effect that when non-Black owned and run companies started looking for Black partners the cupboard was largely bare and some very enterprising and astute Black business leaders realised they were in very short supply, so they formed companies and trusts who became specialists at being BEE partners, with the net result that much of the economy’s BEE representation is in a handful of BEE specialist companies, with the effect that the benefits of BEE are being passed on to a very small proportion of the Black community through an artificial and unsustainable mechanism.
Inequality in a post-Apartheid World
Both AA and BEE are wholly inappropriate for a post-Apartheid South Africa because they discriminate on race, not only does that fly in the face of the values and spirit of the constitution but it creates discord, with the result that as long as you are Black and legally in South Africa you have more rights and opportunities than non-Blacks, a Black British immigrant will have more rights than a 10th generation White South African, there is no justification for a system which promotes that level of inequality.
Hindsight brings 20/20 Vision
The true benefit and cost of these “remedial” programs will never be known, it is undoubted that they have achieved some of what they were intended for; more Black people have non-menial jobs and for many companies to remain in business they have to be largely in Black hands, of course the costs have been high too and it is undoubted that there has been a skills and brain drain which has been largely induced by these programs, this has been a large factor in restricting economic activity. I won’t be more critical than that because hindsight does give us 20/20 vision, all South Africans knew that things had to change in 1994 and, AA although not ideal seemed reasonable, but BEE has always appeared to be an ill conceived mechanism.
Give Me Solutions Not Problems
AA and BEE were ultimately intended to spread economic power and wealth to non-White people and in the case of BEE specifically Black people and, on this front these programs have failed, the latest studies show that the wealth disparity between the races has not changed significantly since 1994. The focus now must be economic growth driven by production, once there is a shortage of workers; economic forces will result in more jobs that will be filled by workers of all races.
Lessons From the Past
Indeed we hardly have to look back more than 30 years to see that one of the most effective mechanisms of the anti-apartheid struggle; the trade-unions were empowered because a booming economy drove employers to seek more Black skilled workers as the White skills base simply could not supply the amount of workers required.
So let’s learn the lessons from our past, divisive policies have not yet proved to meet their intended goals and are more likely to further complicate matters, policies that promote economic growth will naturally result in an increase of wealth that will ultimately be spread throughout the population.
Phew, what a post! If you’ve made it this far you’re obviously just as passionate about South Africa as I am and I’d love to hear your thoughts so please do comment.
Cheers, Ockert.
Boertjie Abroad 