BIG READ: BEE is why we are the most unequal country in the world

This article was motivated by a thoughtful and truthful letter to the editor in February, “BEE bars investment, boosts poverty and fuels graft” by Peter Samson. However, it is indisputable that as a supposedly transformative concept and tool in postapartheid SA the origins of BEE ironically lie not in the liberation movement, led by the ANC, or in the black consciousness movement, founded by Steve Biko in 1968. No, it lies in the circles of the late Harry Oppenheimer and his Anglo American empire, on the eve of the watershed 1994 democratic and nonracial elections.

Oppenheimer and Anglo, which in the early 1990s owned and controlled about 75% of the JSE, in probably the most glaring concentration and centralisation of wealth in the world, was understandably nervous about the future of SA and its own interests after Nelson Mandela was released from prison in 1990, the ANC and other organisations were unbanned and the negotiations process to create a new and different SA began in 1991.     

As the most powerful company in SA — and in fact in Africa — Anglo was keen, if not desperate, that the baby of capitalism, which brought it  enormous wealth, not be thrown out with the bathwater of racist apartheid in the transition to a new SA the ANC and the National Party (NP) regime were going to negotiate. It was always understood by both the ANC and the NP that what happened to the SA economy was critical to the success of the negotiations and transition process and to the future of SA.

It was precisely to that end that Oppenheimer, Anglo and other large companies on the JSE began to urge political reforms after the 1976 black student uprisings, which shook SA like nothing before. So important were reforms for Oppenheimer and Anglo that they initiated talks with the ANC in Lusaka in 1985.

After 1994 BEE and affirmative action were the legislative instruments through which both a tiny black elite and the more numerous and stable black middle class were intended to be created, which the NP and what was called white monopoly capital (WMC) had hoped would serve as a buffer between the boisterous majority black working class and themselves in a new nonracial and democratic regime, led by the ANC.

At the outset, therefore, the myth that BEE and affirmative action were ever intended to fundamentally transform the lives of the black working class majority must be dispelled, which is why the black townships, where they still reside, are arguably worse off today than during the apartheid period. Instead, those were legislative and policy tools with which to create and incorporate a tiny black elite and the black middle class into a putatively deracialised but capitalist-based democracy, akin to preserving capitalism but throwing out the bathwater of racist apartheid by producing a nonracial constitutional democracy. But one in which private property, the historical bedrock of capitalism, and its protection at all costs, is enshrined in our constitution.

The NP and WMC had learnt the truism that who owns and controls the economy of a country largely controls its society, which is why colonies in Africa and other developing countries were allowed to gain political independence from the late 1950s onwards, but the colonial powers retained control of the levers of economic power. That was the strategic essence of what was called neocolonialism. It is within such a wider context that we must situate the purpose and trajectory of BEE from its origins in the 1990s and conduct a critical analysis of its results after its existence of two decades. 

The myth that BEE and Anglo were ever intended to fundamentally transform the lives of the black working-class majority must be dispelled

Extending economic ownership and control in the “transition” in SA and its associated “transformation” of the economy was not only important but it was the strategic bridgehead of BEE, including its extension in the Broad-based Black Economic Empowerment (BBBEE) Act of 2003, whose aim was to “advance economic transformation and enhance the economic participation of black people in the SA economy”. Significant, because the ANC and WMC came to realise that until then BEE was a flagrantly elitist phenomenon, which it was widely criticised to be.

But given those aims there can be little or do doubt that, independent of the designs of the NP, Anglo or more broadly WMC, these legislative tools were exactly what the ANC itself would have wanted if it became the governing party after the 1994 elections.

In this respect the strategic interests of WMC coincided with those of the ANC. However, through such legislation the ANC hoped that it will change its elitist character into a more broad-based version, to enhance its prospects of attracting greater public acceptance and support.

However, almost 20 years later the fact is that BBBEE did little to alter its essentially elitist nature. That fact is more evident today if we look at the deeply systemic and unprecedented socioeconomic crisis in black working-class townships across SA. Black poverty, unemployment and social inequalities are worse today than during apartheid and this was the situation even before the onset of Covid-19, which aggravated a multifaceted crisis. It is these striking contrasts that answer the question of who has benefited from BEE. It is not the black working-class majority.

To worsen matters it is already painfully evident that the situation in black townships has been considerably worsened by the Russian invasion of Ukraine, the widespread negative ripple effects of which will remain with us for a long while. But it is what has happened to BEE or its BBBEE version of the past decade in particular, which coincided with increasing corruption in both BEE deals and in the ANC government, mainly through its notoriously corrupt cadre deployment policy, that is pivotal to my critique.  

The success of BBBEE would have been shown in a huge expansion and in fact thriving of small and medium businesses in black townships especially, but that did not happen to the extent necessary — far from it.

More importantly, while BEE enriched many black people often connected to the ANC, the majority have been mired in ever-worsening poverty, unemployment and related social misery in townships, lacking access to the most basic services people anywhere in the world rely on daily, such as adequate water, sanitation, electricity, housing and health services.

This is the biggest failure of ANC rule since 1994, which is why we are the most unequal country in the world, and its protest capital, which are causally and essentially two sides of the same coin. But the ANC has dismally failed to acknowledge and appreciate these very clear links.

So, what has the worst socioeconomic crisis arguably ever in SA got to do with BEE? A great deal, I argue. What is starkly evident, which the commission of inquiry into state capture chaired by judge Raymond Zondo, has painfully, shockingly and often graphically exposed, is the central role the ANC itself, through its cadre deployment policy, and prescriptive BEE and affirmative action laws, has played in the massive corruption in the ANC government at all levels and especially in its state-owned enterprises (SOEs) of many years, alongside widespread, palpable and deeply embarrassing ANC incompetence in many areas of governance.   

The most damning evidence of crony capitalism has been evident through BEE, affirmative action and ANC cadre deployment. Virtually all of government business with the white-dominated corporate sector is through these mechanisms, especially that of SOEs. In fact, it is exactly through such legislation and related prescriptive codes and quotas that the SOEs conduct their businesses, including preferences for procurement from black-led companies, itself a consequence of BEE laws.

That is why there has always been howls of protest from the white corporate world, including foreign investors, about having to comply with BEE laws, which they argue undermine their businesses and prevent open and free market competition. 

But if you listen carefully to the testimonies at the Zondo commission, the structural links between corruption on one hand and BEE and ANC cadre deployment on the other is unquestionably clear and in fact endemic.

What is even more conspicuous is how the ANC government, at all levels and in all SOEs, consciously used BEE and affirmative action to mostly advance the elitist and middle-class aspirations of the ANC and those they deployed, through ANC cadre deployment, which after the evidence at the Zondo commission is irretrievably tainted by corruption.

What this situation inevitably means is that there are strong and compelling arguments to be made about the clear causal relationship between BEE and Anglo and the systemic increase in black poverty, unemployment and social inequalities and the extensive corruption the commission has unearthed. But much more striking and indeed shocking, as bad as things already were, was the discovery by the Special Investigating Unit of how these notoriously corrupt so-called ANC cadres even stole public funds meant to purchase special protective equipment needed to combat the Covid-19 pandemic.

But don’t be surprised. Through the cover of BEE, affirmative action and ANC cadre deployment they’ve stolen public funds meant for schools, water and sanitation, electricity, health, and virtually everything we can think of. Nothing — no matter how important for the satisfaction of the basic needs of the poorest, most needy and vulnerable black people — was exempted in endless sprees of corruption of many years.

There are strong and compelling arguments to be made about the clear causal relationship between BEE and Anglo and the systemic increase in black poverty, unemployment and social inequalities

This is precisely why in his letter to the editor Samson asserts that “BEE, preferential procurement, affirmative action, the Employment Equity Act and race-based quotas and targets and charters all created an umbrella under which theft and corruption on a grand scale continues to thrive”. Who in their right minds can argue with that fact? Unsurprisingly, he goes on to conclude that “there is extensive evidence of this. The government, municipalities and SOEs all pay hugely inflated prices for goods and services, hampering service delivery and bankrupting several SOEs.”

When its history is written, the most distinguishing feature of BEE, including BBBEE, will be how the massive wealth the tiny black elite accumulated though its laws and regulations was accompanied by and sharply contrasted with arguably the worst black poverty, unemployment and social misery among the working-class majority ever.

Worse still is that if you research this matter fully you will find that the communities in the townships those “cadres” come from generally suffer from those same social scourges and are in fact worse off today than they were under apartheid.            

If all that is true, why has the ANC remained in power, though with huge electoral declines of the past decade? Black working-class people have been voting for the ANC, not because of the virtues of the ANC in power, but in spite of the lack thereof, because there is no alternative and credible mass-based party strong enough to win their support, except to some extent the EFF.

Over the past decade the ANC’s stark degeneration, to a considerable extent through corruption, is a palpable and irrefutable fact, as is the explicit betrayal of the wishes and needs of the black masses of that same period.

What has all that got to do with WMC, that opportunistic bogeyman of the fictitious radical economic transformation group aligned to former president Jacob Zuma and suspended ANC secretary-general Ace Magashule, and its designs after 1994? Little or nothing.

In fact, as the wealthiest and most economically advanced country in Africa, and the enormous fiscus that fact made possible, the ANC government had the resources with which it could have made massive strides in dealing with and denting chronic black poverty, unemployment and social inequalities it inherited from apartheid.

Besides, the designs of WMC had to do with increasing black participation in the economy through BEE and indeed even to create a black elite, but these are wholly different matters. The ANC, through its access to state power and an astronomical fiscus at its disposal from the most powerful economy in Africa, exploited these resources in the interests mainly of its leaders and “cadres” at various levels and in different spheres of the state and thereby ultimately against the basic interests of the black working-class majority in the townships.    

If there were any doubts about these claims, what the Zondo commission has uncovered shows that the ANC had evidently other self-serving designs on the power the black masses gave it in 1994. The commission has shown that the ANC used its access to massive state resources not to advance the basic needs and interests of the black masses, including its own members and supporters in the townships, but to enrich its leading “cadres” it “deployed” to the state in all its forms, or what Ann Bernstein has called an “increasingly criminal elite”.

And if there were any further doubts about the justification of this severe indictment by Bernstein, read part 3 of the Zondo reports. It describes the wanton corruption at Bosasa, involving senior ANC leaders, as a “corrupt business model”. It is arguably the worst experience of state capture and corruption to date in SA. Can there be a bigger betrayal of the black masses who loyally stood by the ANC through its worst moments during the anti-apartheid struggles? I doubt it.

• Ebrahim Harvey is an independent political writer, analyst and author of ‘The Great Pretenders: Race and Class under ANC Rule’, published by Jacana in May 2021.