Mr President, stop playing games – IRR

Institute says Ramaphosa must stop the blatant elite enrichment that is BEE

IRR to President Ramaphosa: Stop playing games, stop the Blatant Elite Enrichment that is BEE

20 January 2021

South Africans must conclude from President Ramaphosa’s remarks this week on BEE that the ANC government has learnt nothing from the catastrophic failure of race-based empowerment policy, while stubbornly ignoring better policies such as Economic Empowerment for the Disadvantaged (EED).

While BEE has in reality come to stand for ‘blatant elite enrichment’, President Ramaphosa has expressed his desire to make 2021 a ‘game changer’ for this policy misadventure. To ignore the failures of BEE and to be deaf to better alternatives – such as the IRR’s EED policy – is to condemn more people to poverty and our economy to stagnation.

The president reportedly said at an event on Tuesday hosted by the African National Congress’s Progressive Business Forum: “Sometimes we talk in broad terms about the economy. We now need to go deeper into exactly what makes the economy work and function, and the participation of black people in all areas of economic activity. We will then see how best we can get black people to participate. This is the year that we should be able to do that and move the needle of economic empowerment for women, young people and black people broadly. We need to be able to say in a few years’ time that the empowerment of our people is now becoming a reality.”

However, what must actually become a reality is real economic empowerment. The data is indisputably clear: BEE does not benefit those in need, but only members of the politically connected elite, like the president himself.

In stark contrast to the inherent weaknesses of race-based empowerment policy stands the sound alternative of EED, formulated by the IRR’s Head of Policy Research, Dr Anthea Jeffery.

Where convoluted BEE measures rely on race as a proxy for disadvantage – by which, absurdly, President Ramaphosa is a disadvantaged billionaire – EED would deal directly and honestly with disadvantage itself. This would finally scrap Apartheid-era racial classification, and end the cronyism that has had the effect of robbing from the poor to give to the powerful.

Furthermore, EED focuses not on outputs in the form of numerical quotas, but rather on providing the inputs necessary to empower poor South Africans. Far from overlooking the key barriers to upward mobility, it seeks to overcome these by focusing on economic growth, excellent education, employment, and the promotion of vibrant and successful entrepreneurship.

Research by the IRR shows clearly that the real issue of inequality is not race but socio-economic deficits. This is most clearly visible in the inequality among black South Africans. Where inequality among Indian South Africans has declined, inequality among black South Africans has worsened – this over a period that saw an overall reduction in inequality.

Says Hermann Pretorius, IRR Head of Strategic Initiatives: “President Ramaphosa and his ANC colleagues have done very nicely from the empowerment framework they created – not so much the rest of our people. The president’s reference to a ‘game changer’ must be seen in the context of a game that the political elites have rigged in their favour. Rather than a game changer, South Africans need the ANC to stop playing games. Scrap blatant elite enrichment and give real empowerment policy a chance.”

Issued by Hermann Pretorius, IRR Head of Strategic Initiatives, 20 January 2021