SA doesn’t have a transformation problem. It has a growth problem. And until we begin with that obvious, unavoidable truth, every new policy paper, every lofty acronym, every “R100bn” silver bullet aimed at fixing our economic past will simply yield the outcomes we have always got over the past 30 years of trying.
Three recent developments encapsulate the dysfunction at the heart of our transformation agenda: the controversial Employment Equity Amendment Act, the still-hazy R100bn Transformation Fund, and Daybreak Farms. Each in its own way reveals a state intent on tightening its grip on economic levers it does not fully understand, while preaching the language of empowerment, but practising the politics of patronage.
Let’s start with the act, now the subject of heated legal challenge and growing corporate anxiety. Much of the public backlash has centred on “sectoral targets”, which, despite government protestations to the contrary, walk and quack enough like quotas to spark real concern. While the state insists these targets are flexible guidelines, not rigid prescriptions, the devil, as always, is in the implementation. And in the case of the department of employment & labour, implementation tends to mean a mixture of bureaucratic incompetence and ideological rigidity.
I recall hosting a panel with Thembinkosi Mkalipi, chief director of labour relations at the department, on business to BDTV a few years ago, with labour law doyen Johnny Goldberg. Goldberg implored Mkalipi to treat business as a partner and drop the combative stance but was met by an ideological brick wall.
The department has historically been too useless to enforce even existing law, and now, facing mounting political pressure, has defaulted to a scorched-earth approach. There is no nuance, no trust-building, and certainly no meaningful dialogue with business. Just a ham-fisted attempt to impose demographic mirrors on workplaces, with no regard for market realities or skills availability.
But perhaps the greater concern is not the presence of quotas, but the absence of trust. Instead of approaching employers as partners in transformation, willing but overwhelmed partners who have to deal with a litany of state-induced operating challenges from failing power and water infrastructure to the scourge of illicit activity and extortionist business mafia, the state treats them as ideological enemies who must be browbeaten into submission. This is not how you build a capable, inclusive economy. It’s how you chase away capital, erode meritocracy, and harden racial fault lines.
Now to the Transformation Fund. Minister Parks Tau insists it is not a raid on private sector enterprise and supplier development budgets, but a voluntary, complementary mechanism to accelerate inclusive growth. Yet no-one, perhaps not even Tau himself, can clearly articulate what problem this fund is solving that isn’t already being tackled, however imperfectly, by the National Employment Fund (NEF), Small Enterprise Finance Agency, the Industrial Development Corporation, or existing corporate supply-chain programmes.
As Edge Growth’s Nabeela Vally noted in our recent conversation, the intention behind the fund, to improve access to finance and support black-owned SMEs, is noble. But it is also maddeningly vague. The fund’s impact objectives remain undefined. Its governance structure is unclear. And its custodianship by the NEF, an institution that has managed R1.5bn a year and will now supposedly scale to R35bn, given the NEF’s track record is just reckless.
The fund is a centralised solution to a decentralised problem. Empowering SMEs is not a matter of cutting bigger cheques; it is about walking longer roads. Building trust-based, sector-specific interventions. Providing patient capital with high-touch support. You don’t fix a fragmented transformation ecosystem by pouring all the money into a single pot and hoping for magic. You do it by working with the institutions, ecosystems, and entrepreneurs already making an impact. That requires humility and collaboration, two qualities our policymakers seem to ration with great care.
But here is the bitterest irony of all: the Employment Equity Act and the Transformation Fund are framed as tools of inclusion. Yet both could entrench exclusion, by alienating skilled professionals, scaring off investors, and suffocating the very spirit of entrepreneurship we claim to champion.
And nowhere is the peril of empowerment without accountability more visible than in the slow-motion train wreck of Daybreak Farms.
Daybreak was hoped to drive state-led transformation in the poultry sector, but has descended into a galling nightmare. More than 350,000 chickens were culled due to starvation with reports of cannibalisation rife, the situation was so desperate. Workers unpaid. And while the farm literally went to rot, the chair of the board, Bojane Segooa, quietly collected a R625,000 payout and resigned, stage left.
The Daybreak fiasco should be a national scandal, but instead it’s just the latest footnote of the transformation tragedy, in which investment committees are stuffed with cadres, not capital allocators, and transformation becomes a euphemism for capture.
None of this is to deny the urgency of redress. We inherited an economy built to exclude. But transformation must not be code for economic vandalism or racial essentialism. As the likes of Singapore, Malaysia and South Korea have shown, inclusive growth depends not just on policy but on trust. Trust that institutions are fair. Trust that merit matters. Trust that rules won’t change overnight to suit political expediency.
A recent video series by Nick Binedell and Adrian Saville of GIBS unpacks lessons from Southeast Asia’s economic miracles. Binedell is at pains not to offer copy-paste solutions. But the single most consistent ingredient across those success stories? High-trust societies.
The substance of our debates shows how dangerously low our reserves of trust remain, 30 years after apartheid ended.
To move forward, SA must rediscover the soul of its constitution: nonracialism, dignity, equality, and opportunity for all. That means building an economy that grows first, and grows in a way that naturally draws more black South Africans into the centre, not by replacing one gatekeeping elite with another, but by expanding the size of the pie.
I have long preferred the word “normalisation” to transformation. Because at some point, a society must move from justice as reaction to justice as stability.
Let us stop pretending the solution lies in more rules, more funds, and more quotas. The real work is harder, slower, and more honest. It is about building an economy of mutualism, not mandates.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at Badger@businesslive.co.za.
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