The BEE question we need to answer

Hardly anyone I listen to or read has any hope that finance minister Enoch Godongwana will lift the South African economy from its languor when he delivers the 2025 budget on Wednesday.

He may dwell on the slight uptick in consumer confidence in the wake of the formation of a government of national unity last year, but markets and investors will be more interested in him not making any of our fiscal or economic problems, including our debt, worse than they already are. 

With US President Donald Trump on the warpath against South Africa, it’s inevitable there’ll be some economic cost and that, in turn, will feed directly into the ANC’s trifecta of political crises — poverty, inequality and unemployment. In a way the ANC would like that — it thrives on victimhood.

The scariest thing for a party like the ANC is success. What if all our problems were suddenly solved? The essence of our current politics came through strongly during the state of the nation address last week and the subsequent debate about it,     

There was a lot of insult with attacks on BEE and ANC         positions on land, health and schools. The ANC in turn insisted that opposition attacks on it were thinly disguised attempts to overthrow the state. All very mature. 

“The ultra-right lunatic fringe in this country,” said electricity minister Kgosientsho Ramokgopa, “... seeks to undermine the transformation project ... now they have found an ally [in Trump]. They are detonating the nuclear options to ensure they undermine the economy of this country to create a groundswell of social discontent that will unseat this government.” 

But if you tot up the gains of “transformation” by all ANC governments since 1994 you would be hard-pressed to come up with more than a handful of positive, macroeconomic outcomes. 

For the most part transformation, or its BEE component, has delivered significant personal wealth but total disaster where it touches the state — SAA, the Post Office, the railways, local governments, the hospitals, the schools. 

Given what black South Africans were put through before 1994, redress is critical and BEE, to the extent that it creates a black middle class, has helped keep the peace. But the lines of the poor have lengthened in spite of it. 

Or maybe because of it. Redress and reform are not the same thing and President Cyril Ramaphosa’s promise to create a new R100bn fund to finance BEE will simply involve taxing the salaries and profits earned in a largely productive private sector to feed supplicant businesses dependent on the state. Maybe that is the point, but ministers shouldn’t delude themselves that transformation automatically means growth and success. It doesn’t. 

The most recent World Bank report on South Africa makes the same point about the minimum wage — it’s hard to measure the benefits, if any. But the bank likes the faint outlines of reform it sees. 

“South Africa’s long-term economic growth prospects are weak given the current policy mix and foreseeable external circumstances,” it says. “Future labour demand is unlikely to be high enough to create the number and quality of jobs needed to reduce inequalities, unless structural reforms are implemented to stimulate growth.” 

The trade-off between redress and reform isn’t easy. BEE funds the ANC, for a start, and real reform is painfully slow. BEE, not affirmative action and not state assistance to black companies, has become a path for lazy and ultimately unproductive capital. 

Its beneficiaries should be required by law to turn their good fortune into new, productive and measurable investments. 

 Transnet, supposedly the next big state elephant up for ‘reform’, has done hardly anything yet to warrant the hopes being placed in it. Despite its posturing, it is extremely reluctant to concede anything substantial to the private sector. 

Why can we not frame a discussion about redress in any way other than as a direct transfer of wealth? The World Bank says that at the rate we’re going it’ll take another 60 years to become a developed nation. 

 Ramaphosa replied on Thursday to the Sona debate with an appeal for unity, saying we should use a promised national dialogue this year to find “concrete processes” to pull us all together. 

Indeed, though president has not helped organisers of the dialogue by appearing to hijack it. But if it were allowed to venture   beyond mere rhetoric and to ask to what question is more and more BEE the answer? — it might not be a complete waste of time. 

• AfriForum has complained that my column last week incorrectly reported it has been calling farm murders a “white genocide”. They say they have not and I am happy to retract the remark and apologise for making it.