Only a few among us would deny that our economic transformation regime has been a disappointment. Yet, even fewer would argue for a South Africa without it or some form of economic redress for the sustainability of the democratic project.
On Monday, we published a story based on an address made by Joel Netshitenzhe, an accomplished intellectual-turned director of companies and founder of the Mapungubwe Institute for Strategic Reflection, at the Black Economic Empowerment Commission, the BEE watchdog.
As well as calling out the critics of the policy — which has been law for decades now — Netshitenzhe challenges the judges, juries and executioners and those who contrived the cost of BEE to “weigh the cost of not having it. Besides betraying the constitutional imperative, failure to implement corrective action — and do it in a proper manner — would delegitimise the democratic polity and entire social system.”
These words may sound alarmist, but they are not. Those who know Netshitenzhe, a former senior official in Nelson Mandela and Thabo Mbeki’s administrations, would recall him as one of this country’s foremost strategic bureaucrats.
In the past few months, BEE and other transformation laws have come under sustained attack. Much of this has not been without merit. But turning understandable failures into a political football has been unfortunate and unwarranted.
Both sides, opponents and proponents, have admitted to their disappointment at the implementation of the transformation laws.
Some, such as the equity equivalent mechanisms, are under review, while others, such as the employment equity regulations, are facing litigation.
Away from formal processes, other processes are at play. The DA, for example, has called for the scrapping of BEE and tabled alternative proposals. Add to that mix, the government is launching an ambitious R100bn Transformation Fund.
Admittedly, the first phase of BEE, which preceded the policy and legal framework, was flawed. It consisted mainly of handshake transactions among the elite of a few politically well-connected individuals, on the one hand, and large companies on the other.
However, the second generation of the transactions was structured in a manner that sought to give expression to the BEE law, albeit in its watered-down version. In this category, communities and employee share schemes were built into the transactions. Most mining companies took advantage of such arrangements.
Still, these didn’t resolve shortfalls in the economic transformation regime. One of the many shortcomings was the overdesign of the regulations after the dilution of the law. A case in point was the introduction of the codes of good practice. And then there was the inclusion of BEE verification agencies.
It’s regrettable that a subject as crucial as BEE has been turned into a political football. The timing of the debate is inopportune.
These incidentals created new intermediary industries for work that ought to have been carried out by the state, in theory at least. Out of the state’s control, a new industry of corruption and fraud developed.
In a disingenuous way, BEE opponents have also conflated other issues in attacking BEE. The law has eased income inequality at the top end, but it hasn’t done so across society. Significantly, it was never meant to be a cure-all policy, a point that Netshitenzhe emphasises in this timely intervention to the discourse.
To be clear, BEE was never meant to end poverty, unemployment and inequality. No enterprise is ever set up with these ends in mind. Otherwise, none of the risk takers would inject their savings and borrowings.
It’s regrettable that a subject as crucial as BEE has been turned into a political football. The timing of the debate is inopportune. Coming as it does before the municipal elections, it is unlikely to be evidence-based.
In principle, BEE is worth supporting. The promise of the democratic project can only be realised through an inclusive economy that works for all.
Within this framework, we have also conditionally supported the idea of the Transformation Fund, provided it doesn’t undermine other existing efforts.
Finally, for BEE to succeed and work for all, we need a capable and ethical state, and it would be foolhardy to ignore Netshitenzhe’s warning about the absence of BEE.
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