There is little doubt that transformation has failed dismally — today, South Africa is a more unequal society than it was 29 years ago. Our Gini coefficient, a tool to measure inequality, rose from 0.64 in 1995 to 0.67 in 2018 despite the introduction of legislation such as BEE and employment equity.
Unemployment is worse than in 1994, our education system is in tatters and access to opportunities has declined. In all indicators, we have gone backwards.
Therefore, the remarks in Business Times last week by the newly appointed commissioner of broad-based BEE, Tshediso Matona, and businessman Reuel Khoza that stronger BEE legislation is needed, veer towards ignorance. It is often written that insanity is doing the same thing over again and expecting different results. Why then do we still expect BEE to deliver better outcomes than when it was first introduced in 2003?
Matona is particularly wrong when he says we need to keep the “tool” of BEE to address the persisting problem of inequality. What we need is an entirely new tool; what we need is an entirely new approach because what we have done in the past has simply not worked.
Almost all economic bodies, including the World Bank, agree that what BEE in South Africa has created is a small black elite with interests in a number of listed companies. Instead of wealth creation for the majority of South Africans, we have seen the rise of the likes of Cyril Ramaphosa, Patrice Motsepe and Tokyo Sexwale, who received beneficial shareholdings in enterprises. While the rich get richer, the majority of black South Africans remain poor — with BEE failing to make a dent in poverty. Botswana, Eswatini, Lesotho and Namibia all have better Gini rates than South Africa. Clearly, we are doing something wrong.
When I launched Black Like Me in 1985 together with Afrikaner Johan Kriel and Joe Molwantwa, I did so despite government hostility. There was no incentive to improve our BEE status. Instead, we were allowed to focus on our core competency, and we hired more and more South Africans to work in our factories. Today, too many South Africans are hampered by BEE and employment equity legislation: forced to take their focus away from their core operations to improve their compliance. In doing so, they lose opportunities to grow their business and hire more people, which could improve the lives of many.
To achieve meaningful transformation, we need to assist South African businesses to be as successful as possible and create as many jobs as possible. If we can create more jobs for the black poor, inequality will naturally shrink as more people gain access to resources.
Corporate working places will be forced to transform as there will be a scarcity of skills - thousands of black accountants, lawyers and nurses will be hired. And pay levels will rise in tandem with the demand for skills
Corporate working places will be forced to transform as there will be a scarcity of skills — thousands of black accountants, lawyers and nurses will be hired because there will be a need for their skills. And pay levels will rise in tandem with the demand for skills. But, in an environment of slowing economic growth and worsening unemployment, South Africans are forced to compete in the same labour pool — thereby increasing racial tension.
Redress means ensuring that all South Africans can exploit their talents in an environment where success is determined by our own efforts and not by the circumstances of our birth. This means that instead of focusing on racial quotas, we level the playing field by giving previously marginalised groups access to opportunities to develop the skills they need to compete.
Achieving this is no easy task and requires leaders who are committed to a long-term vision that will empower our nation through quality education, addressing spatial inequality and removing the barriers to commercial success entrenched by years of ANC policy confusion. At our inaugural policy conference in September, ActionSA will be unpacking solutions to the challenge of inequality and its racial dimension in greater detail.
The role of the government is to create an environment for businesses to create as many jobs as possible, and to provide marginalised groups with access to opportunities such as quality education. The government needs to be able to address continuing problems such as load-shedding, water outages and a disintegrating logistics network while training a skilled workforce for businesses to sell their goods, and create jobs. None of these things can be achieved through top-down legislative shortcuts that rely on the concept of trickle-down economics.
When the government fails in its key functions, unemployment skyrockets, as we have seen with South Africa’s shocking 46.5% youth unemployment rate. Where the government gets it right, unemployment and inequality decline: Singapore’s unemployment rate currently stands at 1.8%, and the Gini coefficient stands at 0.36 — roughly half South Africa’s rate, despite the island state having started from a situation similar to the one in which we find ourselves now. The ANC and proponents of stricter BEE regulations, it seems, are incapable of understanding the root causes of South Africa’s inequality, and thus resort to lazy measures that allow them to be seen to do something, when in fact, they are merely trying (and failing) to address the symptoms of inequality.
I yearn to live in a nonracial South Africa where my two children are not judged based on the colour of their skin but on their skills and competencies. But we will only achieve that when we can create more opportunities by growing the economy and creating jobs instead of fighting over a declining pool of resources. BEE and employment equity have failed to address inequality in South Africa; in fact they have made it worse.
Let us explore new tools to achieve the change we seek, an environment in which business thrives and our people have jobs. Don’t be deceived by those who say stricter BEE regulations will lead to different outcomes. A better future is possible, if only our leaders were willing to do the hard work necessary.
Mashaba is the president of ActionSA.
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