Opinionista Johann Redelinghuys 13 May 2013

Black Economic (Dis)empowerment: It’s time to rethink our strategy

If Nigerian billionaire Aliko Dangote says that our black economic empowerment policies are driving away investment, shouldn’t we be listening? As foreign direct investment is one of the biggest factors in creating jobs, and as we are desperately trying to change our chronic unemployment situation, should we not be paying attention?

Dangote is not saying don’t transform. What he is saying is that we are going about it in a self-defeating manner. Based on experience in Nigeria where there were similar rules in place to give advantage to locals and where investment fled away, he advocates that we change our policies to be based on merit and increased access to international capital markets. He also says that we should open up the country and welcome investment from other parts of Africa because we “are all brothers and sisters, ..and if you make it difficult for me to invest in one country then I will move my capital somewhere else where it is easier to invest.”

As may have been expected, Trade and Industry minister Rob Davies, who is about to launch a significant amendment to the Black Economic Empowerment Bill, immediately jumped to defensive mode. He insists BEE should ensure that the benefits of the economy must be spread to the broad population, and not be left in the “hands of a small minority”.

The question people like Dangote might ask is “If you are trying to spread the wealth of the country in a way that scares international investors, should you not be thinking about a different model”? In no economy anywhere in the world do all the people benefit equally. It is always a small group of talented, bright people who drive business, build the entrepreneurial ventures and create the wealth that gets taxed for the benefit of the broader population.

It is not only the investment and financial wealth that leaves when conditions are unfavourable; it is the intellectual and skills wealth that also departs.

The Dangote comments come at a time when the benefits of race-based affirmative action are being questioned in other countries as well. As a major series of articles in the media recently reported, key figures in the United States are now leading a new debate focusing on the legality of the country’s affirmative action policies and challenging their ultimate benefit.

America, like other countries, burdened by the legacy of discrimination and injustice toward minorities, has tried to find methods of redressing matters by instituting a raft of affirmative action policies. Their keen desire is to make society fair and to give everyone an equal chance. This is why certain designated racial groups are held to different, mainly lower standards and are admitted, for example, to universities and institutions of learning ahead of others who may have higher marks and better academic credentials.

These mainly African-American minority groups are also given preference when public-works contracts are awarded and private companies have to account for the racial balance of their employees. They have to give preference to minorities in order to keep their numbers up.

An important new dimension in the argument comes from a piece of research conducted by law Professor Richard Sander and journalist Stuart Taylor who, as authors of the book Mismatch, say that with all the best intentions, affirmative action hurts the students it’s intended to help. They contend that “racial preferences put many students in educational settings where they have no hope of succeeding. Because they are under-prepared, fewer than half of black affirmative action beneficiaries in American law schools pass their bar examinations.” More troubling, according to their view, is that “major universities, fearing a backlash, refuse to confront the clear evidence of affirmative action’s failure.”

If vigorous and committed affirmative action in the United States is not achieving the goals set for it, what chance do we have in South Africa, where we are not only trying to uplift a minority in a country like America with many other benefits, we are trying to do it for a majority in a country with many other obstacles along the way?

People like Moeletsi Mbeki and Mamphele Ramphela have expressed their doubts about the affirmative action of Black Economic Empowerment. Mbeki said all it does is create opportunities for “legalised corruption”. But what about our affirmative action in the educational system, especially in the admissions to university places? Are we heading into the same dilemma described in Mismatch?

Forget for a moment what the final academic outcome is and whether the degrees earned actually prepare our graduates for the careers they aspire to, and think about the values being ingested by students who benefit from black empowerment in universities. They are learning that race trumps ability and that when life becomes challenging and we have to make sacrifices to achieve goals, all we have to do is lower the standards.

What about the bright, competent black people who would have been successful and made it to the top without being pushed by affirmative action? How do they feel about standards patronisingly lowered for their benefit? Confidence and self-esteem are much influenced by achievement and one’s success. Does affirmative action not debase the achievement of the real stars, the very people who should be the next generation of role models?

For many now in civil society and in business, transformation is not happening fast enough. The emphasis is on speed and getting the transformation job done.  Should the emphasis not be on the quality of transformation? Would we not want institutions, boards of directors and businesses to be transformed to sustainable, long-term viability rather than to see so many short-term transformation quick-fixes?

If America is having second thoughts and if ‘scrapping affirmative action’ is now a fit subject for discussion, is it an idea whose time has come?

And if a wealthy African industrialist can challenge the thinking of black economic empowerment of a leading economy in Africa, must we not start thinking again? DM

* The opinions expressed by Johann Redelinghuys are his personal opinions.

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