ONKGOPOTSE JJ TABANE | BEE must be strengthened, not weakened

Since the recent Oval Office debacle, the conversation around Black Economic Empowerment (BEE) has reached a new crescendo. Those opposed to the policy seem to have found a new sense of courage to oppose it. But like any other policy, it makes sense to assess its implementation — what has worked and what hasn’t.

The reality is that given the gross exclusion of black people from economic gain and benefit, the purpose for which BEE was established is far from being achieved. The reasons for this are many, but they have nothing to do with the validity or necessity of the policy itself. Those so impatient with the policy must look to the idols in America who after 200 years are still grappling with the reality of affirmative action.

The crafters of BEE — such as our own President Cyril Ramaphosa, who is one of its most prominent beneficiaries — identified key areas where the policy must better integrate the previously disadvantaged into the economic mainstream. Yet 20 years after BEE was introduced, its core pillars — ownership, management control, employment equity and preferential procurement — show limited progress.

The Johannesburg Stock Exchange (JSE) offers the clearest indicator yet: ownership patterns in the economy have barely shifted. In a country where black people are close to 90% of the population, it is incredible that the ownership of the economy as represented by the JSE is dominated by the minority that represents 5% of the population. Those who want BEE expunged ironically use this same statistic to bemoan the lack of impact of the policy.

The reality is these statistics, along with painful economic indicators such as unemployment and inequality, show that there is still a dire need for intervention in redress and redistribution of wealth. The ownership patterns of the means of production are as good as we haven’t been freed. So few enjoy the fruits of economic freedom, rendering the political freedom of 1994 hollow for the majority who live below the bread line.

A 2009 KPMG report and a 2022 department of labour study both paint a bleak picture of employment equity in corporate South Africa: despite years of affirmative action, more than 70% of new appointments and promotions continue to go to white South Africans. An earlier report by JSE-listed Adcorp identified 800,000 qualified black professionals in the economy — debunking the claim by many white-owned businesses that they “cannot find” suitable black candidates to advance transformation.

These reports paint a picture of resistance to change. If anything, they show that most white-owned big businesses have defied the spirit of affirmative action.

Looking just at the core pillars — employment, employment equity and skills development — the failure of BEE is less about flawed policy and more about a resistant mindset within sectors of white business. Multiple credible reports highlight this systemic reluctance.

Midway through implementing the BEE policy, new legislation had to be implemented to stem the tide of fronting — a practice perpetrators employ as an attempt to circumvent black ownership. This correctly gave birth to Broad-Based Black Economic Empowerment. The target was to dilute ownership in the name of empowering the youth, women and other  groups. The downside was that companies used this to avoid having to deal with black owners in the boardroom and share real corporate power.

The tendency of white-owned businesses to resist transformation is not new. It led to exploitive practices in the past and today it's being emboldened by right-wing rhetoric such as the 'MAGA' movement

Given corporate South Africa’s history of ticking the boxes, are the current anti-BEE noises sending us back to an era when business would rather crook the system than comply honestly?

What boggles my mind is that globally, South African multinationals routinely comply with “localisation” or “indigenisation” laws, which are standard in many countries. In fact, many jurisdictions require at least 50% local ownership as part of their investment laws. That’s why the argument that BEE discourages investment is entirely false. If anything, South Africa’s “equity equivalence” legislation was a generous concession, allowing multinationals unwilling to cede ownership to locals to still participate in the economy.

Those who are serious about a genuine transformation agenda must remain firm and resist the growing backlash that seeks to discredit BEE just as its true impact is yet to be realised. The tendency of white-owned businesses to resist transformation is not new. It led to exploitive practices in the past and today it's being emboldened by right-wing rhetoric such as the “MAGA” movement.

We must remain vigilant and deepen our resolve to implement empowerment. The fruits will show in due course.

There are those who argue that a new policy of redress must be put in place. I am happy to listen to how such a new policy will make sure white-owned businesses integrate all South Africans into their ownership and boards.

That policy must get boards to instruct their management to hire some of the 800,000 black professionals who are loitering in the streets with qualifications.

That policy cannot ignore the skewed procurement policies and investment in skills development enterprise, development and community development.

That policy must take BEE to new heights and not seek to reverse the small gains of the last 20 years.

• Prof JJ Tabane is adjunct professor of Media Studies at the University of Botswana and editor of Leadership and Black Business Quarterly magazines.

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