Both the right and the left (as represented by trade unions and some social justice organisations) agree that BEE is essential. There is also unanimity among them that addressing apartheid injustices requires economic growth, which must also be sufficiently inclusive to allow everyone to succeed, regardless of race or gender. Tackling unemployment thus becomes a primary goal. Further general agreement can be presented as a process where investment⭢growth⭢jobs.
The consensus that BEE is essential has been disrupted by the government’s recent proposed changes to BEE codes of practice. Objections have come from within the market-oriented rationality, or, more precisely, from the dominant section of that rationality, and also from other perspectives. While each different understanding is rational in its own terms, none of them is immune from critiques by other rationalities. This is perfectly acceptable. The only proviso is that such critiques highlight misplaced claims, omissions or exaggerations in a fair manner rather than caricaturing them. Differing values – often reflecting alternative time spans and priorities – are additional to these critiques of the internal rationalities of contending understandings.
These various themes, including the one promoting and defending BEE, will be developed in what follows.
More generally, proponents of a particular understanding accuse their opponents of being irrational or hypocritical rather than accepting rationality as the quality of being guided by reason, logic and evidence to form beliefs or make decisions that achieve different – often antagonist – goals. An example of such opposing goals is: Defending humanity from climate change vs defending the economy seen as best meeting national needs. Each goal is equally rational in its own frame of reference. Rationality is not a form of relativism; it allows for critiques based on objective criteria, other than values.
1 Transformation Fund – a hornet’s nest
In March 2025, the Department of Trade, Industry and Competition proposed amendments to the 2013 BEE Act’s Codes of Good Practice. The Transformation Fund is central to these amendments. The Envisaged Fund is a R100-billion collaborative initiative between the government and the private sector designed to fund and support majority black-owned enterprises. It aims to accelerate Broad-Based Black Economic Empowerment (BBBEE) through an estimated R20-billion per annum over five years.
For purposes of this article, I shall use only the oft-overlapping critiques of the Transformation Fund by Ann Bernstein and Anthea Jeffery. Bernstein is the long-time executive director of the Centre for Enterprise and Development. Jeffery is head of policy research at the South African Institute of Race Relations.
Their fear was that the Transformation Fund would fail to attract sufficient voluntary contributions from business and the government might then make the contributions compulsory. Bernstein warned this would be the equivalent to imposing a new tax on corporate profits, leading to lower levels of investment and hence fewer jobs. These outcomes would be the opposite of what is required to attract foreign investment in a highly competitive, capital-seeking market. Bernstein’s call is for enhanced “de-risked” – business-friendly – policies. Jeffery concludes that the Transformation Fund fails the tests set by the Constitutional Court to make race-based remedial measures valid: they must target the disadvantaged, help advance them and promote equality. Jeffery says it fails by curtailing investment, growth and jobs, and thereby greatly harms the majority. Instead of promoting equality, it widens the
“gulf between the few who benefit and the millions who are harmed.”
Bernstein’s conclusion is unequivocal. The Transformation Fund is “reckless”.
2 A business-friendly approach to unemployment
Bernstein’s opposition to business-unfriendly BEE long precedes the still proceeding Transformation Fund of March 2025. Her approach, in a March 2020 article in Business Day (“Ann Bernstein Calls for a New Approach to the Jobs Crisis”), is standard, rather than new. Her focus is on barriers to job creation. Foremost among these barriers are South Africa’s post-1994 labour laws, beginning with collective bargaining. This pro-trade union measure results in labour being too expensive. Dismissing workers is onerous and similarly too expensive. Government policy promotes capital intensity rather than labour intensity. As her final barrier, she identifies
“a highly concentrated, uncompetitive economy characterised by useless state-owned enterprise monopolies that created barriers to entry for business”.
Her only endorsement is the government’s Public Work Programmes. She wants more of them.
What must be emphasised is that all the above are rational within their own frame of reference. An alternative rationality to BEE and Transformation will be offered in section 4. For now, a narrower focus is used.
3 Why a different rationality opposes Bernstein’s ‘new approach’ to unemployment
Bernstein’s new approach is predicated on cheap labour. This is perfectly rational for her given South Africa’s richness in the poverty of the unemployed. It is only the undue influence of trade unions, collective bargaining and, more recently, a national minimum wage (NMW) that prevents willing workers from working at any wage or under any conditions. Moreover, a cheap labour workforce would attract investment, both local and foreign.
The logic is impeccable. It’s the values organic to the logic that are questionable. Business rationality sees South African-sized inequality as either natural or an unfortunate though unavoidable transitional period to reduced inequality.
There is no easy right or wrong, in this context. Actual situations, however, might assist in evaluating the subjective values involved.
A court case from 2013 covers one such situation. It was a legal battle between the Southern African Clothing and Textile Workers Union and noncompliant clothing manufacturers over collectively bargained minimum wage agreements.
Noncompliant companies, employing 17,000 workers, paid about 30% below the agreed wage. Bernstein was approached for her views on the case. In her rationality it was the “high wages” of clothing workers that “impoverished millions of low-skilled work seekers”. Yet, Western Cape farmworkers went on strike from August 2012 to January 2013 for a wage of R69 a day. R69 is about 30% higher than what the clothing workers were being paid. [All from my Business Day article, “Heartless Attitudes”, 1 February 2013].
The clothing union lost its case. The victorious noncompliant clothing manufacturers were delighted. Unemployment, however, was not touched by the new, court-determined “realistic” wages.
Poverty wages, however, are the reason Bernstein advocates more Enhanced Public Works Programmes (EPWP). The EPWP wage is about 45% lower than the NMW. And the government itself readily acknowledges that the NMW makes no pretence being a living wage.
Apart from such a value rationality, Bernstein’s “new approach” relies on heavily selective facts. She chooses to recognise only state-owned enterprises in her critique of monopolies. Her preference is blindness to South Africa’s private sector dominated by monopolies (or oligopolies) that create “barriers to entry for business”.
With a now all but self-proclaimed fascist in the White House, it is apposite to recall what the much-revered President Franklin D Roosevelt had to say about US monopolies. Beginning in 1938, in his “Message to Congress on Curbing Monopolies”, he counselled for the imperative of monopolies being eliminated, saying that concentrated economic power was incompatible with democracy. He advocated for the invigoration of democratic institutions, like education. He called for a guaranteed minimal standard of living for everyone, which, for him, meant guaranteed universal healthcare. Keeping the US free from fascism additionally meant guaranteed employment and the right to belong to trade unions.
He went even further in 1944, saying all these guarantees should be in the US constitution, in what he described as the “Second Bill of Rights”.
From today’s perspective, these warnings came during monopoly’s nappy days. Yet, despite more than 80 years growing up globally, Bernstein remains blind to South Africa’s mature monopolies.
4 Transformation – an alternative view prioritising ‘our people’
Bernstein, and the many others who agree with her, have either one or two main objections to BEE: that it is racist and/or empowers only a small minority of people who are politicians or privileged via political connections. Both characterisations have overlapping major limitations.
4.1 The continued use of apartheid race classifications contravenes post-apartheid laws
Apartheid-manufactured racial classifications have never gone away, despite the apartheid government itself having repealed the Population Registration Act in 1991. This Act, introduced in 1950, provided the legal framework for the division of all people living in South Africa into the four “races” of White, Coloured, Indian and African, a classification that determined each individual’s life from birth to death.
Yet, 32 years after the birth of constitutionally nonracial South Africa these once-hated classifications are still used in all official statistics. What is more, even though they are now without definition, they – other than “White” – are expressly precluded from the only statutory definitions provided – the Employment Equity Act (EEA) of 1998. By deliberate design, all three of the “non-White races” are banished from this Act. The generic term Black is used in the EEA’s definition. I was the ANC’s parliamentary labour researcher during the Act’s Parliament process. As such, I was part of the ANC’s labour caucus and attended all meetings of the parliamentary committee deliberating the proposed Act. The ANC took the principled decision to exclude both apartheid’s divisiveness and hierarchy of oppression from the EEA. This was despite considerable counter-pressure from within its own labour caucus as well as from other opposition parties represented on the labour committee.
The EEA’s definition of Black remains unaltered despite several amendments to the Act during the intervening years. BEE and related legislation all use the EEA’s definition. Why has neither Parliament nor any of the other bodies established to implement the EEA endorsed the very categories excluded by the EEA? Why have the supporters of BEE/Transformation from both right and left said nothing? Indeed, has Bernstein ever read the EEA?
I will offer my answer once we have addressed the related issue of racial inequality.
4.2 Racial inequality – the misunderstanding and abuse of a term
Racialised poverty is seemingly an in-your-face daily reality. Poverty is certainly real in the world’s most unequal society. But is it racial? This might seem a silly question. After all, official statistics all confirm its racialisation. Regardless of the metric used, Africans are the large majority of the poor and unemployed and distinct minority when it comes to the really rich or senior management positions in the private sector.
The point is that the law doesn’t recognise “African” as a separate category. Racialised thinking, however, is deeply – and unbrokenly – embedded in our culture since colonial times. This leaves “race” as the natural, only, explanation for poverty and inequality. Being so easy prevents further questioning. Being so easy also beckons blindness to other characteristics – including class – of longstanding poverty and inequality that is almost universal.
President Cyril Ramaphosa unknowingly reminds us of these global realities. Speaking at the recent international “In Defence of Democracy” initiative in Barcelona, he noted:
“It is essential that we intensify the struggle for equality and social justice.”
Emphasising that inequality remains one of the most pressing global challenges, he continued:
“Inequality is neither inevitable nor interminable. By the policies we adopt and the actions we take, we can end inequality.”
What he didn’t say – couldn’t say – was that the 28-year-old defiance of the EEA was essential for the ANC’s BEE policies. Then president Thabo Mbeki was the most explicit about the purposes of BEE – the creation of what he called the “black bourgeoisie”. It is common knowledge that by “Black” he meant African. Depending on context, the use of Black, within the ANC and its alliance partners, the South African Communist Party (SACP) and Cosatu, “Africans in particular” is immediately added to references to “Black”.
In my understanding, inequality is inherent in all class-divided societies everywhere since the first emergence of class in antiquity. Entrenched in the miracle of South Africa’s peaceful transition to democracy is the protection of property rights. “African” being a standard category in official statistics allows the African bourgeoisie and aspiring bourgeoisie to claim, with statistical support, that they still suffer discrimination and that still better BEE legislation is required.
The “sunset clauses” proposed by the ANC and SACP in 1992 were negotiated compromises aimed at reassuring White South Africans that their established economic privileges would remain protected. Societies naturally reproduce themselves in normal circumstances. This means that the privileged class position of White South Africans remains intact as part of South Africa’s societal reproduction since 1994. These privileges, along with BEE’s still catching up drives, and the natural reproduction of poverty, make the abuse of the EEA essential for BEE.
BEE is thus the African bourgeoisie’s use of their political power to advance their own class interests by abusing EEA statistics in two ways. These statistics “prove” that both they and the mass of the African population, via racialised poverty, are the victims of implicitly racial discrimination.
4.3 Transformation for ‘our people’
“Our people” is often invoked by African politicians and businesspeople. But they are not to be found in the major policies and actions referred to by Ramaphosa in Barcelona. This doesn’t necessarily make him a hypocrite, but it does underscore a different class rationality from his chosen lodestar.
This article allows for no more than an outline of Transformation shaped by a rationality different from the standard one.
The main contours of this outline already exist but only as incantations, if at all. These contours are the Freedom Charter, the Redevelopment and Development Plan (RDP), especially the Cosatu version before being changed into the ANC’s RDP, and the now all-but-forgotten, ANC-commissioned 1993 “Making Democracy Work: A Framework for Macroeconomic Policy in South Africa”, prepared by the Macroeconomic Research Group, largely based at London University’s School of African and Asian Studies.
The relevance, for present purposes, of these three documents is that they are all compatible with social democracy. This is to say, none of them are premised on a revolution against capitalism. They all advocate reforming capitalism by giving some priority to meeting the needs of the majority of South Africans, rather than the primary priority possessed by the privileged.
Achieving this necessitates South Africa shedding the neoliberal saddle worn by its capitalism for about 35 years. This means abandoning such immediate things as:
- Full cost recovery;
- The user pays principle;
- Export-led growth;
- Speedy and substantial removal of outsourcing; and
- Limiting the freedoms currently privileging “the market”.
This capping of capitalism’s neoliberal rationality is not as radical as might appear. World-renowned, non-Marxian economists from around the world have been advocating it for decades. Foremost among those still alive are Joseph Stiglitz, Ha-Joon Chang and Thomas Piketty.
A question even those who agree with me might have is: How do we move from neoliberalism, particularly when the GNU is wedded to it? The essence of my answer (which I’ve developed in another Daily Maverick article) is the formation of a credible, broad-based United Front committed to such a capping of capitalism, with the United Front becoming a political party before the next national election. DM