PETER BRUCE | DA’s fig leaf covers as little as the ANC’s

Proposals by the DA to replace broad-based BEE with new laws that ignore race as a criterion for financial inclusion have inflamed the argument over black empowerment.

President Cyril Ramaphosa and the ANC have responded frantically to the proposals, defending BEE as essential to “inclusive growth”, their fig leaf for racial transformation. They have been stung by US attacks on alleged discrimination against whites and by sensational claims by Wits University Prof William Gumede that more than R1-trillion has found its way to around just 100 politically connected members of the black elite since 1994.

This week, B-BBEE Commission head Tshediso Matona issued a near-hysterical attack on the DA proposals, which, he said, pose “a serious threat to the constitutional foundations of our democracy and its commitment to equality through laws and measures such as BEE to redress past discrimination … and promote inclusive economic development”.

Of course, the proposals do no such thing, as they have no chance of being adopted. But the mere questioning of BEE disorientates the ANC. It is the party’s financial lifeline, but we all know that while BEE laws have been in place unemployment is worse, the gap between rich and poor is worse, income per capita is worse, and investment into the real nuts-and-bolts economy is worse.

Yet no ANC leader could ever survive weakening BEE. The only way the DA gets to make a real dent in its dominance in economic policy is to persuade enough black voters to support an alternative, and its new proposals are not going to do that.

Far from a shift in DA economic thinking, the proposals nestle in the unconvincing U-turn the DA made after a poor showing in the 2019 elections. Mmusi Maimane was fired as leader and the party declared it would no longer entertain race in policy after a decade hunting for black leaders. Patricia de Lille, Lindiwe Mazibuko, Mamphela Ramphele and Maimane had all come and gone. After 2019, the DA produced an “economic justice” policy by cutting and pasting the UN’s 17 woolly sustainable development goals (SDGs) into its statutes, which would, it said, now recognise poverty, and not race, as a proxy for disadvantage.

Legislating how many people of what colour a company now has to employ is insane.

The next local elections will test the wisdom of ignoring race in a country with our history. You don’t fix a problem by pretending it doesn’t exist, but by pushing its new policy now, rooted in the SDGs, the DA is telling us nothing has changed in its thinking since 2019. Yet it barely made headway in the 2024 elections. Only a massive ANC split created space for it in government.

Instead of looking for compromise, however, it chooses now to reach for the impossible, which at least saves it from ever having to worry about implementing the policy.

Compromise would recognise that not all race-based strategy deters success. Rassie Erasmus’s Springboks promote affirmative action and include black players wherever possible. Agencies like the Industrial Development Corporation help black entrepreneurs like they used to help Afrikaners. There is nothing wrong with that.

The trick is to avoid compulsion in the complex and delicate matter of economics. Erasmus still picks his teams on merit, and forcing quotas on him would be insane. Legislating how many people of what colour a company now has to employ is insane.

And there’s really only one cure for our economy, whether you measure disadvantage by race or by poverty. It’s fixed investments in roads, buildings, plant and people. It’s the investment, not the inclusion, that creates the jobs, growth and wealth. Nothing would do more for transformation here than economic growth.

Sadly, the ANC makes no money from investments it can’t insert its own middlemen into. So the BEE requirement that 30% of a new investment must go to black shareholders will stay. So will the new race quotas in businesses.

There is, though, literally no investment case at all for BEE. A brave country would scrap it and any other measurements such as the DA is proposing. We need more than double the fixed investment we currently get to create jobs. But from where? What foreign investor in their right mind would part with 30% of an investment from day one? Or invest in a country where there’s even a remote risk of expropriation without compensation?

The right tax incentives in an enterprise economy — where every citizen would be encouraged and incentivised to work for themselves — would do more for black empowerment or job creation than any of the laws now in place. Nothing galvanises a capitalist quite like a tax break does — be it for creating jobs of even sharing wealth with a stranger.

The ANC doesn’t have the courage to go for it, and the DA’s policy document makes me doubt it does either.