Article for the Cape Times
by Tracy Bailey
April 2005

Meaningful economic transformation in South Africa is no small task. Decades of international exclusion, race and gender inequality, and the dominance of the white minority in business and industry, produced a uniquely pock-marked economic landscape.

Black economic empowerment is a key mechanism for bringing about economic transformation. But it is difficult for the average person to get a sense of whether it is succeeding or not.

We have certainly become accustomed to reading about black corporate giants like Patrice Matsepe and Tokyo Sexwale, and empowerment deals that involve small fortunes. There are increasing numbers of black senior management in our major parastatals, and millions of Rands are being spent on the procurement of goods and services from black empowerment companies, large and small.

Despite these developments, there is still a perception that BEE is only enriching a few, and that it is making little, if any, impact on the poor black majority. An eyebrow-raising example is that, of the R42.2 billion in empowerment deals completed in 2003, sixty percent (worth R25.3 billion) accrued to the companies of only two men (United Nations Development Report 2003). At the same time, some statistics suggest that poverty and unemployment is on the increase, especially within African households, and that the gap between rich and poor is continuing to grow.

'Broad-based' BEE is intended to counter these concerns by emphasising economic empowerment beyond the simple transfer of ownership and equity. Depending on who you speak to, the 'broad' in broad-based implies procurement, corporate social responsibility and investment; access to skills, capital and economic opportunities on a much larger scale; and the provision of affordable and reliable electricity supply, housing, transport and telecommunications.

We are yet to see how successful this new emphasis in BEE will be, especially in its most comprehensive form. Needless to say, the debate about the whys and hows of black economic empowerment is far from over.

For example, do we insist, as suggested by ANC Secretary General Kgalema Motlanthe, that an individual no longer be regarded as 'historically disadvantaged' after benefiting from an empowerment deal, and therefore not benefit again? Or do we take into account that global markets look favourably upon those in business who are already well-established and influential, and that the likes of Tokyo Sexwale and Cyril Ramaphosa improve our overall credibility and help to attract much-needed foreign investment. And besides, can we really put a ceiling on black success?

At the very least we must interrogate whether the beneficiaries of BEE deals include their staff, and the communities within which they live, in their successes - but surely no more than we do any other successful business person.

More fundamentally, however, we need to question the assumption of a trickle down effect, from new black business to the poor and unemployed majority. Is it possible for capitalism - be it 'black' or 'white' - by its nature, to ever achieve anything but inequality and the concentration of wealth in the hands of a few? Can capitalism ever lead to real redistribution?

A final issue is whether we have thought enough about how to ensure that the poorest and most marginalised can benefit from black economic empowerment. Do women, the youth and the disabled know enough about BEE, whether they qualify and how to take advantage of opportunities? How do we deal with the fact that many people do not have access to the capital or skills required to enter an empowerment deal or complete a tender process?

We are going to need some very innovative thinking and action to make sure that we are not simply putting the disadvantaged at a disadvantage, and that black economic empowerment brings about real economic transformation and growth - through new markets and new investments - and not just the redistribution of wealth to a select few.

The role of black economic empowerment in advancing socio-economic transformation will be the subject of the next Harold Wolpe Memorial Trust forum meeting. The speakers are Zamikhaya Maseti, political economy analyst, and Professor Roger Southall of the Human Sciences Research Council. The meeting will be held on Thursday 14 April 2005 at the TH Barry Lecture Room, Iziko Museum, Queen Victoria Street. Drinks and snacks will be served at 6pm and the talk will start at 6.30pm. RSVP 021 424 7543.

Tracy Bailey is National Co-ordinator of the Wolpe Trust