Cyril Ramaphosa blames apartheid for poor economic growth
President Cyril Ramaphosa said the racist policies of the past have held back South Africa’s economy, and that black economic empowerment (BEE) is solving this problem.
He made these comments during a question-and-answer session in Parliament about South Africa’s poor economic growth.
“I am surprised and taken aback when I hear that policies of black economic empowerment militate against the growth of our economy,” he said.
“I am working from a starting point that our economy was held back over many years by the racist policies of the past.”
He said those racist policies prevented most South Africans from playing a meaningful role in the economy of their own country.
“Black people were brought in as labourers. They were not even seen as consumers. They were not seen as active players in the economic landscape of our country.”
He claimed that there were no advertisements that used black people during apartheid because they were not seen as consumers.
Ramaphosa said that with democracy, what has been happening and what they seek to happen is opening the economy and broadening participation.
He added that those who only want black people to play the consumer role in South Africa’s economy are truly mistaken. “Black people must play a productive role as well,” he said.
Ramaphosa said he is baffled by people who still hanker for policies of the past and claim that black economic empowerment (BEE) is holding the economy back.
He claimed that it goes against what organisations like the World Bank and the International Monetary Fund (IMF) said.
He said these organisations highlighted that South Africa’s economy is too concentrated, meaning it is in the hands of too few people. “Ownership has not spread,” he said.
“In South Africa, it is the small group of privileged white people who continue to own the means of production,” Ramaphosa said.
Ramaphosa said BEE will fix the economy
Ramaphosa said he finds it immensely worrying that people continue to have the notion that BEE is holding back the South African economy.
“It is the partial or exclusive ownership of the means of production in South Africa that is holding back this economy from growing,” he said.
“What we set out to do, as set out in the equality clause in the constitution, is to redress the imbalances of the past.”
“If we accept that the ownership in our economy is imbalanced, the constitution’s equality clause seeks to undo that. Ownership in the economy should be broadened.”
He said that every time a black person sees a production facility owned by a black person, it warms their heart and makes them feel good.
This, he said, was because in the past, that was not allowed. “People were arrested if they tried to set up an economic facility in town,” he said.
“We are saying all that must be put behind us. We must allow more people to play an important role in the economy of our country.”
“What baffles me about those who oppose black economic empowerment is what they want to see happen.”
“Do you want to see black people continue to play the role of labourers and consumers only? Why can’t black people own productive aspects of the economy and be rich?”
Ramaphosa said that as a nation, we must acknowledge that one group has been disempowered and needs to be empowered. “Our objective is to spread economic participation broadly,” he said.
“I will hold on to the argument that the more we have previously disadvantaged people playing a role in the economy of their own country, the better it is.”
“This will enable us to ‘make a much bigger cake’ so that everyone participates in having the cake.”
Repeated comments from before
This is not the first time Ramaphosa has blamed apartheid for the poor economy and high unemployment rate in the country.
Ramaphosa previously made these comments during his keynote address at a national Workers’ Day rally at the Athlone stadium in Cape Town in 2024.
“We needed to deal with the damage that was done by apartheid. We still need to complete the work that we have set out ourselves to do,” he said.
He added that they still needed to return the land to those who worked the land.
“We still need to ensure that the harm done to our people when they were forcibly removed from their land and houses should be addressed,” he said.
“We still need to undo the effects of Bantu education, transform our schools completely, end illiteracy, and help people find decent work,” he said.
“We know that we still need to tackle high unemployment in our country. We still need to remove the barriers that kept black South Africans from full participation in the economy.”
Placing the blame on apartheid for the economic and social ills in South Africa has become a common theme ahead of the 2024 general elections.
During his election campaign, Ramaphosa said the economy is where it is today because the Apartheid government crippled it.
He repeated these claims during the Department of Trade, Industry and Competition’s Worker Share Ownership Conference at the Sandton Convention Centre last year.
He told delegates that pre-1994, Black South Africans were deliberately excluded from meaningfully participating in the economy.
“We enabled this economy to operate not on all cylinders. If a car has six cylinders, it is only operating on two,” he said.
Had South Africa’s economy operated on all cylinders, it would have been far bigger, it would have grown faster, and it would have created more jobs, he said.
“Through that, we would have fostered competition, and competition is good. It creates companies which can innovate and create more jobs,” he said.
“Our economy was deliberately crippled and kept stagnant by the exclusion of the majority of our people,” he said.
“That is why our economy is where it is today. Many people don’t reflect on how our economy was crippled by not enabling it to operate on all cylinders.”
Many economists warn against BEE
Many economists and political analysts warned that black economic empowerment (BEE) is harming South Africa’s economy.
The World Bank stated that BEE has imposed an excessive burden on institutions and has opened the door to corruption.
“South African policymakers have attempted, often with good intentions, to correct market or historical failures by intervening through hard regulations, such as BEE,” it said.
Other interventions include local content requirements, collective labour bargaining, and direct support programs to specific groups, such as grants, tax rebates, and labour training.
“Today, these interventions have become so cumbersome that they smother the implementation capacity of the public administration, especially local officials,” it said.
The World Bank noted that these interventions have created opportunities for corruption, as evidenced by the state capture hearings.
Political analyst Frans Cronje stated that taxing foreign capital upon arrival through BEE and related policies makes South Africa less attractive to international investors.
“Many companies quietly pass South Africa because their policies do not make for a good investment case,” he said.
Sakeliga said BEE has done far-reaching and lasting harm to the South African economy, adding layer upon layer of structural cost.
“Countless businesses lose bids that would otherwise provide better goods and services for public enjoyment at lower prices,” it said.
“For over two decades now, state entities in South Africa have been paying anything between 10% and 1000% extra for goods and services.”
Sakeliga said citizens should confront this fact to understand state failure in South Africa, from the collapse of municipalities, metros, and provinces to the distress of Eskom.
It said BEE’s harms might be less pronounced in the private sector, where the discipline of profit-seeking contains the fallout.
“Still, there, too, it is a burdensome drag on performance that reverberates through value chains,” it said.
“The replacement of value-directed with politically directed business inevitably comes at a heavy price.”
South Africa’s unemployment rate (lower is better)
South Africa’s real Gross Domestic Product (GDP) (higher is better)
South Africa’s real GDP per capita (higher is better)
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