BEE enriches black tycoons

Phumlani Majozi says the advocates of this policy tend to justify it by pointing to intentions, not outcomes

For much of the last six years, I have reflected a great deal about South Africa’s black economic empowerment (BEE) policies. What I have tried to understand is what the impact of these policies has been in our young democracy.

Since its establishment in the 1990s, BEE has been seen by many in the country as a policy fundamental to the uplifting of black people who were disadvantaged before 1994. The intentions of BEE during its founding were exactly that – the improvement of black people’s lives. It was a noble idea.

I must be clear – helping the poor – especially in a challenged country like ours is an imperative. In my opinion. We should help them either via government or in our private capacities.

However, it is very important that in our anti-poverty programs, efficiency and effectiveness are paramount. And BEE fails to meet that criterion.  

Dr. Anthea Jeffery of the South African Institute of Race Relations (IRR) has written great content on BEE and its failures. Her findings, detailed in her book titled “BEE – Helping or Hurting?”, are that the policy has largely benefitted the already well-off black people, not the poor blacks as was originally intended. This finding is damning to the advocates of BEE policies.

Advocating for the scrapping of BEE policies is controversial. Whoever argues against them endures nasty attacks. Regardless of how strong their argument is on the failures of the policies. If you think the nasty attacks are unique to South Africa, you are mistaken.

In the United States of America (USA), the same attacks are experienced by those who oppose affirmative action. They are demonized and hounded. These people tend to be conservative in political thinking. Even the mainstream media brand these people as not caring for the poor. The mistreatment of people who raise justified concerns about the failing racial affirmative action policies is a disgrace.

The advocates of BEE policies tend to justify the policy by pointing to its intentions, instead of its outcomes. That I see as a grave mistake on their part. As Nobel economist Milton Friedman, who died in 2006, once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

It does not do this country any justice to carry on with policies that do not work, simply because their intentions are noble.  What the proponents of this BEE policy tend to do is argue that the reason these policies fail is because they have been badly implemented – or that there is no political will from our leaders. No, the policies are a complete disaster.

We need programs that will help the poor not enrich black tycoons as BEE has done.

I like the idea proposed by the IRR. The program they propose is called Economic Empowerment for the Disadvantaged (EED). The program would help people who are poor – regardless of their color.

Now some say that if it’s non-racial, it does not account for racial redress. Wrong! The program would target the poor – and most of whom will be black anyway. The policy would help eliminate the instances where the already well-off black people get special preferences. If our political leaders and policy makers could understand and accept such a program, South Africa would speedily head in the prosperous direction.

One other aspect of my opposition to BEE – is something that many people do not talk about – and that is, the policy patronizes black people. Black people are undermined, because of the policy.

For example, when a black person succeeds in the corporate sector, the automatic assumption is that it is because of BEE, not because of their talent and hard work. Black peoples’ success is always questionable.  I see this as very damaging to our society; and it damages the morale of many black people. We all want to be respected, recognized, and trusted that we are good at what we do. BEE makes that difficult.

The positive impact of BEE has been very minimal in changing the lives of the poor for the better.

Bringing a change to this policy would require that bold decisions are made – decisions that may be unpopular to some interest groups. I doubt that the boldness will come from the ANC. The DA that has correctly rejected race-based policies received a lot of flak over their decision. I have commended the DA multiple times for their brave act.

South Africa’s BEE has not done what it was originally intended to. A change is needed. IRR’s idea would work better in addressing the problems of poverty and the needs of the disadvantaged black people. Our leaders must adopt the IRR’s redress policy.

Phumlani M. Majozi is a senior fellow at African Liberty. His website is phumlanimajozi.com. Follow him on Twitter: @PhumlaniMMajozi.

This article was first published on Billionaire Tomorrow Magazine.