Prof. Bheki Mngomezulu
The advent of democracy in South Africa in 1994 did not just focus on reconciliation and nation-building. It also necessitated acknowledging the imbalances of the past which were based on racism. As such, the new political leadership had to enact laws and craft policies that would respond to this reality of racial disparities.
Within this political context, the new constitution was finalised and subsequently adopted in 1996. Among other things, it ruled against any form of discrimination which had been the characteristic feature of the apartheid regime.
In 1997, the Green Paper on Public Procurement Reform called for affirmative action. The Reconstruction and Development Programme (RDP) was adopted. All these initiatives were meant to benefit those who had been left out of the country’s economy.
One of the deliberate policies that were crafted by the ANC-led government was Black Economic Empowerment (BEE) which was deemed to be part of the broader basket of reparations meant to address the injustices of the past.
The policy was geared towards facilitating broader participation in the South African economy by the black majority who had been purposely marginalised under the apartheid system to keep them perpetually dependent on their white counterparts.
In 1998, the Black Business Council asked Ramaphosa to chair a BEE commission which defined BEE as “an integrated and coherent socio-economic process.”
As envisaged by the crafters of the policy, this aim was going to be achieved in part through preferential treatment in government procurement processes to those businesses that contributed to black economic empowerment according to set criteria.
Such criteria included partial or majority black ownership of those businesses, hiring of black employees as well as contracting with black-owned suppliers.
On paper, these criteria were unambiguous.
The seven elements of BEE were ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. These too were devoid of any ambiguity. As such, the implementation process was supposed to be smooth and effective.
However, from the start, BEE was not welcomed by all South Africans. Those who benefitted from the old system – mainly the white population, dismissed it together with Affirmative Action as discriminatory and divisive.
Some proposed that there should be a timeframe for this policy so that it would not be indefinite. Political parties such as the DA and Freedom Front Plus were vocal in opposing BEE since it was going to negatively affect their constituencies.
Conversely and not surprisingly, the black majority embraced and hailed this policy as progressive. They looked forward to its implementation so that they could reap the benefits.
Unfortunately, the implementation of the BEE policy did not live up to people’s expectation.
For example, it was open to abuse. Some white business owners decided to front with black faces so that they could get government tenders. Some high-profile black politicians also got their hands in the cookie jar by using unsuspecting black people to start companies they did not own but ran on behalf of the politicians. The same politicians who were behind the awarding of tenders became beneficiaries through their secret companies.
Therefore, while BEE was meant to benefit black people who had been pushed to the periphery by the white regime, it was used by some whites and influential black politicians to further suppress the intended recipients.
In other words, both black and white South Africans contributed to the failure of this policy to achieve its intended objectives.
Given this historical context and reality, in June 2021, President Cyril Ramaphosa made an announcement that South Africa’s BEE strategy and legislation would be reviewed.
The motivating factor behind this review was to ensure that BEE would not be exploited by a select few for corrupt purposes. This was Ramaphosa’s tacit admission that corrupt tendencies had derailed all the plans to use BEE to improve the lives of the black majority.
Indeed, on 24 October 2014, the Broad-Based Black Economic Empowerment Amendment Act, 2013 (Act No. 46 of 2013) came into effect. From BEE there was a move to B-BBEE with the hope that the impact would be positive this time around.
The stage for B-BBEE was set by the Preferential Procurement Act of 2000 which stipulated preferential treatment for historically disadvantaged groups in the distribution of state procurement contracts. The regulations which were promulgated in 2001 outlined a point system by which preference would be allocated in the evaluation of public tenders.
The five pillars of B-BBEE were listed as ownership, management control, skills development, procurement and socio-economic development. But what was not immediately clear was how the corrupt activities associated with BEE were going to be avoided.
In principle, addressing the economic imbalances of the past remains a necessity.
Therefore, BEE was a noble idea. What needs to be addressed is corruption which has derailed the BEE plans. The process should start with the politicians who have corrupted the system and then move to businesses that have used loopholes in the policy to advance self-interests.
Unless corrupt practices are addressed, BEE/B-BBEE will impede the country’s economic growth while also leaving out those who were meant to benefit from this policy.
Surely, the current framework has failed to achieve its initial objectives.
A review is necessary.
It would identify any loopholes, put strategies in place to eliminate and prevent further corruption, and ensure that the black majority benefit as was intended.
On the political front, the policy must be explained in a transparent manner to those political parties and individuals who view it with suspicion. The historical context must be more explicit, and the intended outcome must also be articulated.
Importantly, the implementation process must be closely monitored so that any glitches can be picked up on time before they escalate. Failure to do such a review and to implement the proposals made above would see this policy initiative failing to achieve its strategic objective.
Lastly, in the context of the multiparty coalition, the government should reach a consensus on the way forward regarding this key component of economic transformation.
* Prof. Bheki Mngomezulu is the Director of the Centre for the Advancement of Non-Racialism and Democracy at Nelson Mandela University.
** The views expressed do not necessarily reflect the views of IOL or Independent Media.