Elite empowerment, plus five talking points from Vrye Weekblad

Finance minister Enoch Godongwana’s first budget speech may impress those who place their hope in the Cyril Ramaphosa faction of the ANC, but nothing in it convinces me of stable economic growth and development. 

There is little broad-based black economic empowerment in this budget and no budget can address the structural problems of inequality and poverty without an effective empowerment policy. Black empowerment is a critical state intervention. 

There are nevertheless many reasons to be cynical about empowerment, especially if you add “the way it is implemented by the ANC government”.

Empowerment is the one variable that explains why SA is a net exporter of investment capital — in other words, local entrepreneurs would rather invest their surpluses elsewhere. In certain sectors, the SA economy has lost the ability to compete because cadre and elite empowerment have a negative impact on the cost of doing business. 

There are, however, a myriad of justifications for empowerment. There is sufficient consensus that black South Africans not only lost their assets during apartheid, but were statutorily excluded from the market economy. 

The scepticism towards the free market economy was deliberately induced by policymakers; it’s not an ANC ideological plot. Imagine what loyalty most South Africans would have to a market economy if black entrepreneurs had been treated with the same respect as white entrepreneurs during apartheid and if ownership hadn’t been determined by race. Ideologically we would have been in a different place.

During Thabo Mbeki’s presidency, the economy created on average 500,000 new jobs each year for four years. Trevor Manuel was in charge of the finance ministry and international investors, as well as local capital owners, were prepared to take risks in the domestic markets. A black middle class of about six million people emerged from the dust of apartheid. Granted, nearly half were civil service appointments, but the free market also created opportunities. 

The Jacob Zuma regime destroyed most of that. State capture piggybacked on empowerment legislation. The reason for the last decade’s enormous disinvestment and unemployment figures is not black empowerment. It is elite empowerment.

Our economy would have been different if black empowerment had created wealth instead of draining the coffers of the state. Not only would we have been better off financially, but in all likelihood more politically stable. 

Read the full article, and more news, analysis and interviews in this Friday's edition of Vrye Weekblad. 

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