South Africa’s big BEE lie

Minister Gwede Mantashe said the belief that Black Economic Empowerment (BEE) policies have failed because they have only benefitted the politically connected and elite is a “farce”.

He explained that politics cannot create entrepreneurs, and South Africans should not expect the gift of wealth from the government.

Mantashe’s comments, made in a recent interview with SABC News, come as BEE has been under intense scrutiny in recent months.

Many business leaders and South Africa’s second-largest political party, the DA, have called for BEE policies to be replaced with more means-based redistribution policies.

The DA has gone as far as to propose its Economic Inclusion Bill, aimed at replacing BEE, which the party claims has “left millions of South Africans unemployed, impoverished, and hopeless”.

Even some within the ANC, including Trade Minister Parks Tau, have said that BEE has become tainted by cronyism and corruption, calling for these policies to be reviewed.

This sentiment is also seemingly shared by South African citizens, with a recent survey from the Institute for Justice and Reconciliation finding that 54% of the country’s inhabitants agree that the Broad-Based BEE rules should be phased out.

In addition, the institute found that two-thirds of South Africans think that the use of racial categories does more harm than good.

Much of the recent criticism surrounding BEE relates to the argument that it has not achieved its aim of empowering historically disadvantaged South Africans.

Instead, critics have argued that BEE policies have only served to benefit the well-connected political elite.

Professor William Gumede of the Wits School of Governance has estimated that R1 trillion has been transferred among fewer than 100 people since 1994.

In addition, BEE opponents have criticised BEE’s cost to the economy. Various studies from Solidarity and the Free Market Foundation, among others, point to the cost of BEE being between 2% and 4% of annual GDP.

This translates into an absolute cost of around R226 billion a year, using the latest GDP data from the Reserve Bank.

A ‘farce’

Mantashe denied these claims made against BEE in South Africa, saying critics of these policies are mainly white parties who are responsible for depriving black people of participating in the economy.

“That debate reflects the emboldenment of white supremacy in South Africa after 30 years,” the Minister of Mineral and Petroleum Resources said. 

“The right to participate in the economy itself is quite an important right. And if you say BEE must be done away with, you are basically saying exclude 80% of the population from participating in the economic activity of the country.”

“And I’m saying that is a misnomer that we must resist with everything we have.”

On the argument that BEE has only benefitted the well-connected political elite in South Africa, Mantashe said it is a “farce”. 

“Politics don’t create entrepreneurs. I want to start from that. Entrepreneurs are entrepreneurs on their own,” he said. 

As an example, the minister pointed to South African billionaire Patrice Motsepe, who has often been cited as one of the politically connected individuals to have benefited from BEE, given his position as the President’s brother-in-law.

“What they don’t explain is that the president got married to a sister of Patrice, who was already a business person,” Mantashe said. 

“So, it’s not connected to politics. It is politics that are connected to that entrepreneur. Entrepreneurship is not created by politics – it is in you. It burns you. It makes you feel like you want to create wealth for yourself and, in the process, you create a company.” 

“You don’t create jobs and then make money. You make money and then create jobs. That’s what the system looks like.”

The minister explained that entrepreneurs are “inborn” and they develop their own skills and develop big empires, “and we must do that as black South Africans and not expect to be given gifts called wealth”.