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Mail & Guardian
4 days ago
- Business
- Mail & Guardian
BEE is essential for economic growth
Analyses of racialised disparities in both labour and product markets illustrate the need for strengthened economic redress. Photo: Delwyn Verasamy/M&G The debate about racialised socio-economic redress is at the centre of South African public policy debates. It has even permeated trade relations with the United States, which ironically has its own version of economic redress for minority groups in certain states. Yet US President Donald Trump is challenging redress policies in a country that has systemic racialised class and gender socio-economic inequalities. His views are echoed in Professor William Gumede's intervention in this debate. His article, which appeared in the There is general consensus in society that the current black economic empowerment model has largely failed to produce the intended socio-economic outcomes. But this does not mean the constitutional and policy imperatives underpinning redress should be abandoned. Several researched analyses of racialised disparities in both labour and product markets illustrate the need for strengthened economic redress. Gumede's extreme position overlooks this empirical evidence and draws on the following flawed arguments. First, he uses the term 'political capitalists' to describe individuals or enterprises that obtain state contracts or private equity in firms without any knowledge of business operations. These political capitalists are described as inherently parasitic by Gumede and he further suggests that they all have connections to the ANC-led political alliance. This generalisation is problematic because it assumes that only black-owned businesses obtain state contracts and established white corporations do not rely on state procurement. Policy and basic market intelligence reports refute this claim and illustrate how large corporations equally benefit from government contracts. Additionally, the term 'political capitalists' is conceptually and theoretically flawed because it creates a superficial divide between political and economic actors in a society. Political economy studies highlight that business and state relations are inherently connected in economic history. In simple terms: there is no Chinese wall between political and economic developments in a society. The second problem with Gumede's view is that he says BEE is primarily responsible for structural issues such as deindustrialisation, poverty, inequality and unemployment. This proposition is not backed up by evidence and he does not explain how he arrived at this conclusion. Research literature on economic trends challenge Gumede's position. Deindustrialisation in South Africa has been caused by structural changes in the economy, especially since the early 1990s. Trade and financial liberalisation exposed our domestic manufacturers to competition in key sectors such as textiles. In addition, the country's financial sector has prioritised short-term investment returns and implemented investment risk strategies that make it difficult for enterprises interested in long-term economic activity associated with sustaining South Africa's industrial base. Furthermore, there are several studies on the causes of poverty and inequality. This research explores multidimensional causes and does not cite economic redress policy as an impediment for addressing systemic socio-economic exclusion. In other words: there is no factual basis for Gumede's proposition on the causal link between BEE and the economic structural fault lines cited above. Another flaw in Gumede's article is the erroneous and sweeping generalisation about corruption. He attributes corrupt or patronage-based networks in the economy to the creation of BEE. This narrow approach is not based on a holistic understanding of corruption in the economy. The Zondo Commission Report and other authoritative market behaviour investigative accounts elucidate illegal economic activities that go beyond the scope of BEE policy implementation. For example, practices such as price collusion, tax evasion and dividing product markets. Actually, some of the established multinationals that Gumede and others laud were cited as facilitators of corrupt dealings in these reports. Corruption is a significant impediment for inclusive growth in South Africa. But it is incorrect to suggest that it is solely caused by BEE. Economic rents such as incentives, subsidies and preferential procurement policy instruments are used across the world successfully. These measures are not abnormal or inherently corrupt if used for developmental purposes. Dr Khwezi Mabasa is a part-time sociology lecturer at the University of Pretoria and Economic and Social Policy lead at Friedrich-Ebert-Stiftung South Africa.
Mail & Guardian
27-05-2025
- Business
- Mail & Guardian
Ramaphosa: Racial redress is not stunting growth
President Cyril Ramaphosa.(@PresidencyZA/X) Racial redress is not a hindrance to Ramaphosa told Freedom Front Plus leader Corné Mulder he failed to understand how those who questioned affirmative action could not see the real problem is black people do not own a big enough share of the means of economic production in the country. 'I am rather surprised and taken aback when I hear that policies of black economic empowerment militate against the growth of our economy. That, I find quite surprising because I work from the starting point that our economy was held back over many years by the racist policies of the past,' he said. Apartheid prevented the majority of South Africans from playing a meaningful role in the economy, he continued. 'Black people were brought in as hewers and wood and drawers of water and they were just brought in as labourers. They were not even seen as consumers. They were not seen as active players in the economic landscape of our country.' Mulder had suggested that the government should rewrite economic policy to create growth, and in that process abandon affirmative action and the concept of expropriation without compensation because it was not serving the country. Ramaphosa countered that the reality of apartheid, including the wholesale exclusion of black South Africans from the economy, could not be forgotten as if it were merely 'a bad dream'. 'You would never see a black person being made to advertise either soap or milk or anything. Today every advert you look at has got black people because it is now being realised that it is black people who are the consumers.' But, he added, there must be a realisation that black South Africans must moreover command the levers of the economy to reduce inequality and poverty. 'So I am really baffled, I am baffled by people who still hanker for policies of the past and to have you, Sir, say black economic empowerment is holding our economy back,' he said. 'It is the partial and exclusive ownership of the means of production in our country that is holding this economy from growing. 'Why can't black people be made to own productive aspects of our economy, why can't they be rich as well?' The national debate about affirmative action has been revived by the The Democratic Alliance's court challenges to the In Tuesday's question session, MPs from the Patriotic Alliance (PA), uMkhonto weSiswe party and African Christian Democratic Party challenged the president about the racial classification in South Africa 30 years after the end of apartheid. The PA's Marlon Daniels demanded to know why coloured, Indian, Khoisan and white South Africans were not deemed African. Ramaphosa said it was regrettable that racial classification endured, but that the very aim of redress was creating a society where it no longer had any place. 'It is most unfortunate that the classifications that we have inherited from apartheid have tended to continue and our clear intent that we should see those classifications of our people withering away because we are all Africans, we are all South Africans. 'To rid ourselves of that form of classification we do need to take steps to say this group, and that group and that group were previously disadvantaged and we therefore have to take steps to ensure they are put in a better position.' It did not imply discrimination, he said. 'There should never be a sense that there is any group that is more special than any other, we are all equal. As we move forward, our objective is to consolidate the unity of our people as one people, as Africans.' He said those who argued against affirmative action were trying to put a plaster on the deep wound inflicted by apartheid. 'That sore does need to be lanced, it needs to be properly repaired and to repair it you need to go to the depth of it … you've got to name everything for what it is because unless you do so, you will never be able to rid our country of the legacy of the past.'
