Sunday, 15 April 2007

The elusive honey of BEE

Black Economic Empowerment has been slammed by commentators from many quarters - by key people in government and critical voices at other levels in society. Externally the likes of Moeletsi Mbeki, Sipho Seepe, Duma Gqubule, Jeremy Cronin and others have let rip. Now Finance Minister Trevor Manual has expressed his concern and called for a fundamental review.

BEE is meant to straighten out a skewed economy, one is that is deeply shaped by apartheid and the principles of apartheid. It is only logical that when doing away with that brutal, perverse and morally bankrupt system, we would want to go one step further and erase its traces in various parts of society. All the more in a sphere as important as the economy, which - given its immense capacity - is able to disseminate and multiply the effects of apartheid perpetually into the future. Furthermore, BEE is about distributing access, opportunities and resources for a decent life to wider layers of South Africans, and about strengthening the credibility, sustainability and susbtantiveness of political change.

Whether narrow-based or broad-based, whether delivering pots of honey or just a whiff here and there, BEE has always been problematic. It hobbles along - initially poorly steered and supported by government and lacking a framework. In later stages and while enjoying more political backing, it continues to suffer from conceptual and methodological problems, the latter being the problem of relying on tools and mechanisms that don't deliver what's intended. The conceptual muddle is apparent when even a government commission refused to distinguish between broad-based delivery of social services and real development of black influence, power and expertise in the business world. They refused to put their bums on the block - and shied away from a more focused definition of black economic empowerment.

There has been constant concern about BEE benefitting a tiny few. A handful of people - the usual suspects, as they are called - keep surfacing as central players and key beneficiaries in major deals. So much so that the ANC's Kgalema Motlanthe has proposed putting a limit on the number of BEE deals any individual may be involved in. (Of course, he did not say how such a ground rule would be enforced).

What I have argued also (see newsletter/news9.htm")is that - although nobody says this out loud - BEE is shaped largely by white business interests. Here words like cynicism and self-interest come into play. It is clear that mainline white business interests cannot be custodians of the BEE agenda. These interests will make adjustments and will launch interesting BEE initiatives - but this is usually with an eye to sustaining income via government tenders, to restoring vibrancy to languishing businesses or to cashing in as banks and other agencies advance the megabucks that change hands in the deal.

In recent years, it has become clearer that such protagonists formulating major BEE deals are targeting ANC National Executive Committee (NEC) members or former NEC members. There are also signs that Cabinet Ministers are being singled out for beneficiary status. This is logical from a business point of view, in the sense that political connectivity acts as the value that the BEE partner brings to the table; but one can also see how the circle of the chosen few is being drawn even more tightly. In the case of the Cabinet Minister, one can see the ethical problems and good governance questions that arise.

There does not seem to be a way of stopping this focus on ANC NEC members as ideal suitors in BEE deals. Not only are there no mechanisms or levers (at least not ones that would stand up in law), there is also currently no will to curb this trend. As deplorable as this phenomenon (targeting ANC top leaders for BEE share ownership deals) might be, in a free society governed by the free enterprise system and in a capitalist world, many former political activists and current political leaders are naturally taking opportunities to accumulate personal wealth. In most cases, they have spent their entire lives in the struggle, shunning other career possibilities in favour of fighting full-time for freedom. For many years in the past they had depended on the ANC for a meagre income. Now they say - as did Smuts Ngonyama - "I did not join the struggle to be poor". This statement may be taken to mean "I joined the struggle precisely as a path to gaining life's comforts" or "When I joined the struggle, I made no commitment to repudiate opportunities for greatly increasing my personal wealth". All in all, it is not realistic to hope that ANC top dogs give up a chance to be rich through a BEE deal - not without considering the broader stimulants and influences in society as well as dominant social attitudes that place emphasis on "net worth" - and on having possessions that reflect wealth and affluence.

BEE is a space and opportunity. While people will - and must - continue to look at ways of curbing the distortions, many others from the (formerly and/or currently) disadvantaged community will focus on the here and now as they see it and will emphasize the importance of invading the spaces opening up. They might argue that the moves they make to grab opportunities, even if such opportunities are confined to a few, help to effect incremental change (which is necessary in the absence of more far reaching changes). Thus many agendas are at play in the field of BEE, and narrower interests dominate.

Those seriously concerned about the trends in BEE, however, now need to go beyond talking and passive criticism. Concerned interest groups should consider certain key actions and selected interventions - and the possibilities for using networking, advocacy and organisation in order to move thinsg in the right direction. They need to probe the centres of thinking and the nodes of key decision-making with regard to BEE. Possible targets here are organised white business and leading spokespersons for their interests. Another relevant target is the coterie of leading black businessmen who are well connected to the ANC and who command influence through the multiplied millions they possess in assets and cash. The latter group can be engaged in dialogue that may result in shifts in their the moral or philosophical positions. The former can be engaged through negotiations and discussions that would include reference to the links between black economic empowerment on the one hand and reconciliation and restorative justice on the other.

The following key thrusts should be considered in demanding a reshaping and improvement of BEE:
a) The ways in which BEE could contribute to the Accelerated Growth and Development strategy and support rather than undermine strategies aimed at narrowing the divide between the First and Second economy.
b) The challenge within the context of BEE of bringing black graduates into the workplace; such persons are trained to play leadership and management roles in society, yet they are frequently excluded from a meaningful place in economic affairs through racial and old power networks.
c) The gender dimensions of poverty and injustice and whether BEE can be shaped to undo rather than reinforce gender inequality and marginalisation of women.
d) Issues related to ethnicity; whether by accident or design, BEE should not be implemented in ways that increase perceptions of marginalisation of particular ethnic groups. Failure to undertake BEE in ways that align with nationbuilding (and with building an inclusive society) will create medium and long-term risks for the economy.
e) The fact that BEE, if it is about expanded access to a meaningful role in the economy, must assist the emergence of small and medium enterprises. The current attention to affirmative procurement and the implementation of this policy do assist, especially in the public sector. However, most government departments - and parastatals such as SETAs - through their daily practice are ensure that the emerging entrepeneur is either killed off or remains stuck in survival mode. This they do through extremely late payments, through inordinate delays in and summary terminations of tender process and through generally unprofessional treatment of small companies.

The moral and philosophical foundations of BEE are right, but it is being distorted by society's dominant values, by certain white business interests and by many instances of perverse and cynical implementation. Those interested in fairer and more socially responsible BEE must seek practical intervention points for bringing about positive changes in the process.

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