Defend Truth


Has BEE Failed? Smoking out Malikane’s and Diko’s agendas

Siya Khumalo writes about religion, politics and sex. He is currently working on a book. Follow on @SKhumalo1987. Hailing from Zimbabwe, Dionne has been, in previous lives, a 19-year-old a sales manager and in another, an Economics Degree graduate almost done with her Masters Degree in Agricultural Economics. In this life, shes a BEE specialist at BEE Novation (@BEEnovation), a transformation and business consultancy where she gets to boss the boss around. Dionnes twitter handle is @dionne_makuwaza

Every South African has been — or should have been — following the discussion on “Radical Economic Empowerment” with bated breath. Where that goes is where the entirety of the country’s fiscal policy follows; and with that is no choice but to adapt to the repercussions.

Not long ago, Professor Chris Malikane infamously stated that “scrapping both Black Economic Empowerment and the National Development Plan (NDP) and raising corporate taxes” would bring about transformation in the country. The professor also said that “BEE did not work because today we are crying about a lack of black enterprises,” and blamed Broad-Based Economic Empowerment for inequality among black people.

It’s telling that the professor would say the policy hasn’t worked. It’s being rounded in for judgement; its day is done; it’s getting its final review.

So simply does he evoke this sense of finality, an unstated assumption is that it’s already in the past, done and dusted. Are we perhaps being prepared for the ANC’s June Policy Conference? It doesn’t matter: if we can’t get Broad-Based Black Economic Empowerment to economically empower a broad base of black people except a few politically-connected elites, what on earth makes us think “radical economic transformation” will radically economically transform anything except a few politically-connected elites’ to extreme wealth, and everyone else’s lives to misery?

It doesn’t matter what a policy is labelled if it’s only being used and abused for a hidden agenda by the very voices complaining about such use and abuse; switching to another policy is more show than substance — a way to convince ourselves that something is changing when only the face, but not the soul, is morphing. And we, in the business I work for, have seen BEE do what it’s supposed to do because we implement not just its letter but also its spirit. We strongly encourage our clients to fight on the side of the angels as a matter of patriotic duty — not to mention the moral sense of what is right — because their ability to conduct business in this country a decade from today depends on their behaving sustainably now.

In the face of criticism and his boss, Finance Minister Malusi Gigaba, responding weakly that the nationalisation Malikana suggested is “not necessarily” government policy, the professor reportedly persists, even saying “radical economic transformation” should be physically fought for, if need be.

It’s as though he wants to inflame the situation away from tweaking existing BEE codes (that new entrant threshold must fall) to justifying radically leftist policies. One wonders why.

Naturally, ANC-aligned thought-leader, Yonela Diko, defended Malikane in a piece titled Anger at Malikane reflects fear at failed neo-liberal indoctrination. One need not have been paying much attention to catch that the debate on economic policy is a proxy war for control of the economy. So here’s a defence of BEE, and we must amend and defend BEE because the only alternative South Africa will accept is “radical economic empowerment”:

Although flawed, it aims at a compromise between free trade and historic duty; as such, we need it for political stability. Sure, it hasn’t been implemented as it could have been. But raising corporate taxes dissociates the private sector from being part of the transformation process. By keeping the broader process top-of-mind, B-BBEE does more to transform companies than taxing them would. It facilitates the challenging of hegemonies, the changing of mind-sets and the alteration of company cultures.

Malikane points out that during apartheid, established businesses paid higher taxes because “they were also happy” to fund the system. That argument is better used for B-BBEE than against it.

The private sector is what drives the economy; at its best, government creates an environment for businesses and their employees to thrive. If we leave transformation for the government to solve, we cut key economic players out. While neither party should be burden-bearer nor token, what we claim to believe in calls for the involvement of every stakeholder. That’s BEE.

We can’t have government unilaterally passing legislation in one corner and private sector doing another thing, especially not with the former being policymaker, tax collector and transformation implementer and the latter a profit-driven, tax-paying entity that powers the public services required for private sector to be operational. That’s unstable and unsustainable. Government and business are Siamese twins whether we like it or not.

A large chunk of the BEE value is embedded in white establishments. You take me and give me shares and give me a loan to buy shares from you,” the professor complained.

It’s easy to assume B-BBEE is all about black ownership. Ownership is a critical aspect of the scorecard but it isn’t everything. The policy addresses not only equity redistribution in businesses (ownership) but also equity creation through development and support of black-owned business, especially those owned by women. There are five elements on the scorecard; ownership is but one. One can’t judge transformation by ownership alone; the replenishment of smaller businesses is crucial.

We must all take more time to understand this economic policy and objectively engage on how we can make it work more sustainably, more inclusively, for everyone.

South Africa’s future depends on it. DM


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