The number of unemployed black South Africans has doubled after BEE was implemented

Gabriel Crouse said that Black Economic Empowerment (BEE) has made poor black South Africans poorer and caused an increase in unemployment.

Crouse, an executive director of IRR Legal and a fellow at the Institute of Race Relations (IRR), shared his views during a debate on BEE on the Frank Dialogue show.

He said that while BEE was needed in the 1990s and 2000s to address the country’s past, it was meant to be a temporary measure.

“BEE is a set of laws that chooses winners and losers based on their race. Our position is that this is what must be phased out,” he said.

Crouse argued that Black Economic Empowerment negatively impacts every part of South Africa’s society, including rich and poor black citizens.

• Rich black people need BEE to go away so that they can get richer. The issue of the black tax is really a failure of government.

• Middle-class black people don’t have much savings. If you get rid of BEE, it will help them to save up money and pass on intergenerational wealth.

• Poor black South Africans are unemployed. The raw number of unemployed black South Africans has almost doubled since 2007.

He said that unemployment has radically increased during the main BEE era since 2008. “So, BEE is obviously not helping the poorest of the poor,” Crouse said.

“BEE is a very clear obstacle to employment. The biggest reason to end BEE is to help poor black South Africans get jobs.”

He explained that BEE causes significant government spending waste, especially in public procurement.

“We don’t have much money, and even what we have isn’t being well spent. Treasury said 40% of the money is being wasted,” he said.

This wastage results in infrastructure collapse. This, in turn, puts a damper on business activity in South Africa.

“When there’s less business happening in South Africa, there are fewer jobs,” Crouse said.

Stop BEE to create a more vibrant economy in South Africa

Crouse argued that there are many reasons to scrap BEE, including that it has run its course and has become counterproductive. He said:

• The majority of wealth and income is now in black hands. That’s a good thing, but it means we don’t need BEE as much.

• The majority of people in the top 5%, the top 2%, and the top 10% of income earners are black. That’s good, so we don’t need BEE anymore.

• BEE is creating confusion that’s driving corruption and chasing away money. When the money runs away, the jobs run away as well.

“We need the money so we can build jobs so that poor black people can join the economy,” he said.

He added that service delivery in South Africa needs to be carried out on a maximum value-for-money basis.

“Schools, housing, education, and municipal services must be delivered properly to the best of our ability,” Crouse said.

However, black economic empowerment is an impediment to this happening, which is why it should be scrapped.

Apart from hampering effective government services, BEE is also hindering investment in South Africa.

He said the institutional confusion of BEE breeds corruption, which actively scares domestic and international capital away from the economy.

Without that investment, the country cannot build the businesses required to generate employment for the poor.

“Rather than chasing money away because it comes from a white person, we must pull the money towards us. We must become very attractive to money,” he said.

“We must actively pursue many measures to attract investment into South Africa so we can build businesses that create jobs.”

Crouse said that instead of white and black people fighting over a small pie, the best option is to increase the size of the pie.