Ramaphosa should appoint non-racialists to BEE panel – IRR

Gabriel Crouse says it is obvious the system fails black people in general, and poor black people in particular

Ramaphosa should appoint non-racialists to BEE panel – IRR

31 May 2022

The Institute of Race Relations (IRR) challenges President Cyril Ramaphosa to include an expert capable of analyzing the damage BEE is doing to poor South Africans when he appoints the new B-BBEE advisory council this week.

Said IRR Head of Campaigns Gabriel Crouse: “It is so obvious that BEE fails most black people, and poor black people especially, that nobody pretends the policy works overall. Instead, the President’s panel is likely to include several critics of BEE of the past who spin in furious circles only to propose that the solution is more BEE. The best would be no BEE. Let someone tell it straight from inside the new advisory council.”

The IRR believes the pro-poor, pro-merit case for finally liberating South Africa from race law would be welcomed by anyone seriously recognizing the harm BEE is doing to South Africans generally, making most black people poorer, and that doubling down on BEE will only make matters worse for the worst off.

According to Stats SA, in the first quarter of 2022 most working-age black South Africans could not find a job or had given up looking for work. This is a shocking contrast to the period between 2003 and 2008, before significant aspects of BEE were implemented, when employment figures among all groups, including black people, improved. Unemployment fell by 12% in that time.

Subsequently the official unemployment rate for black South Africans increased, rising from 27% in 2008 to 39% in 2022. This period was BEE’s heyday.

IRR-commissioned surveys over the last decade have shown consistently that unemployment is the top-ranked problem in South Africa and that most black people are eager to give up BEE in place of workable policies.

The choice between prioritizing BEE and workability is addressed by the Zondo Commission’s report into state capture too. That report underlines an “inevitable tension” between maximizing value-for-money and race-based social engineering in the analysis titled, “Problems in the legislative design”, finding that “in the view of the Commission the primary national interest is best served when the government derives the maximum value-for-money in the procurement process and procurement officials should be so advised.”

The President’s advisory council must receive this advice too.

Dismissing the B-BBEE advisory council, Saftu Secretary General Zwelenzima Vavi said BEE “made a very few people rich while the rest of South Africa languish in poverty”.

This is correct, but the IRR argues that BEE must be replaced by a policy that is more likely to succeed, such as the non-racial Economic Empowerment for the Disadvantaged (EED) proposal crafted some years ago by IRR Head of Policy Research, Dr Anthea Jeffery, which would incentivise growth rather than rent-seeking.

The IRR has successfully urged Finance Minister Enoch Godongwana to offer exemption from BEE to some state-owned enterprises “in the national interest”.

Crouse concluded: “If the B-BBEE advisory council wants to seriously tackle the question of whether BEE is harming most poor black people it should include someone from the IRR to lay down the uncomfortable facts and present a workable plan to grow opportunities for those in need. My hand is up, I want to help.”

Issued by Gabriel Crouse, IRR Head of Campaigns, 31 May 2022