Poor paying price for failed BEE policy – study
Theuns du Buisson, economist at the Solidarity Research Institute, says a new report found that South Africa’s flagship transformation policy, broad-based black economic empowerment (B-BBEE), has stifled opportunity, crippled growth, and deepened poverty.
The study claims that the policy has only enriched the politically connected elite.
The joint SRI and Free Market Foundation (FMF) report, released in Johannesburg on Thursday, accuses B-BBEE of causing widespread economic damage over the past two decades.
It claims the policy has directly led to the loss of about four million jobs, stifled 3% of potential annual GDP growth, and imposed compliance costs exceeding R200 billion annually.
"There are 3.8 million South Africans who could have had jobs — but don’t — because of this policy. That includes at least 3.2 million black South Africans. It cannot be said this policy empowers black people,” Du Buisson said.
Introduced post-1994 to redress apartheid-era inequality, the B-BBEE was meant to broaden economic participation. However, Connie Mulder, head of the SRI, said it has failed on almost every front, and President Cyril Ramaphosa’s continued defence of the policy ignores reality.
"Policies are not judged by their intentions but by their outcomes, Ramaphosa talks about growth through transformation, but the data shows transformation is killing growth. What we need is growth that drives transformation.”
According to the report, South Africa’s economy has stagnated since 2009, with per capita income stuck at levels seen 15 years ago.
The country has consistently underperformed its global and regional peers in economic growth over the past decade.
"No policy that hinders economic growth can be labelled as ‘empowerment’, if the economy doesn’t grow, there is no room for opportunity. What we have now is redistribution for the few — at the expense of the many, you couldn’t criticise it — until now,” Du Buisson added.
Dirk Hermann, CEO of Solidarity, said B-BBEE evaded scrutiny for years because it was cloaked in moral legitimacy.
"You couldn’t attack it, because it was framed as morally untouchable, but this report is brave enough to expose the reality: the biggest victims of this policy are the working poor."
Hermann called for race-based laws to end, not out of disregard for inequality, but because the current model has failed.
"Race laws must stop, and it’s not because we are insensitive to unemployment and poverty, it’s because we care deeply. We’re not saying do nothing, we’re saying do better."
Mulder and his co-authors pushed back against the idea that critics of B-BBEE want a return to the past.
"We’re not apartheid apologists, no one wants to go back to the 1980s. But doing nothing isn't an option either. We’re saying: do something different, because what’s being done now clearly isn’t working."
The report proposes scrapping B-BBEE and moving toward free market policies, which it argues are proven to reduce poverty and foster a thriving middle class.
Martin van Staden, FMF’s head of policy, supported this approach: "No country with a free-market economy is poor."
Dr. Morné Malan, co-author of the report, likened the findings to a post-mortem on an economy in decline.
"South Africa is poorer, less progressive, and more stagnant with every passing decade. This is the price of BEE, and it’s staggering.
"BEE was supposed to cure unemployment, poverty, and inequality, but instead, it’s made the disease worse."
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THE COSTS OF B-BBEE by mmangalisokhumalo278
