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This is according to Dr Anthea Jeffery, Head of Policy Research at the Institute of Race Relations (IRR), who has called for an end to the ‘extortion’ of the BEE system.
Last week (20 July), Western Cape Premier Helen Zille spoke out against new Draft Preferential Procurement Regulations, which would see government pay a large premium on all procurement less than R10 million, in favour of BEE companies.
In a column on Politcsweb, Jeffery said that BEE benefits approximately 15% of the black population, with “a small group of beneficiaries having their way at the cost of the many”.
“BEE is a key reason why economic growth in South Africa lags so far behind other emerging countries.”
The remaining 85% have very little prospect of ever gaining BEE ownership deals, management posts, preferential tenders, or new small businesses to run, she said.
“Worse still, BEE does not simply bypass the 85% majority. Instead, it actively harms that 85% by reducing investment, growth, and jobs and making it very much harder for the poor to climb the economic ladder to success.”
The black African population is in the majority (44.23 million) and constitutes approximately 80% of the total South African population, according to StatsSA.
According to Jeffery, the indirect expropriation of existing firms through the 51% BEE deals – which is now increasingly required under empowerment rules – will ultimately do nothing to help unemployment, if no alternative is found.
“The immediate consequence of indirect expropriation under the rubric of BEE will be to deter direct investment, reduce our already meagre growth rate, and make it harder still for some 8.7 million unemployed South Africans (up from 3.7 million in 1994) to find jobs.” Jeffery said.
“The more this indirect expropriation is sanctioned and applauded, the more state powers of this kind will expand.”
“The real challenge is to open up real opportunities for all disadvantaged black South Africans. This cannot be done while BEE puts ever heavier leg irons on the economy.”
BEE: is it working?
BEE was launched in 2003, to redress the inequalities of Apartheid by giving certain previously disadvantaged groups of South African citizens economic privileges previously not available to them.
In October 2014, ANC deputy president Cyril Ramaphosa said that BEE benefits everyone and is necessary to build a prosperous, sustainable and equitable society.
However, data from research groups has shown that, while there has been an increase in wealthy black Africans since 2007 (113% increase to 4,900 individuals with a net worth over $1 million) – the black African population has shown the smallest growth in wealth out of all previously disadvantaged groups.
In March 2015, research found that black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange as at the end of 2013.
The shares held by black investors include 10% held directly (largely through BEE schemes) and 13% through mandated investment – mostly through individuals contributing to pension funds, unit trusts and life policies.
An Intellidex study has shown that empowerment deals and schemes done by the JSE’s 100 largest companies have collectively generated R317-billion of value for beneficiaries – R108-billion of which has been generated by BEE deals, alone.
This is one of the first articles I will be writing on race relations in South Africa, with the view to contribute towards how we can build a United South Africa flourishing in the richness of our diversity. Contribution and comments are welcome.
The mere mention of South Africa in a discussion provokes deep images of institutional racism, discrimination and horrific violence.
A British woman who rushed to her husband’s aid while he scuffled with a home invader said on Thursday that she would not be intimidated by robbers.
The couple took on a burglar after a confrontation in the kitchen of their Waterfall holiday home – a fight which played out through most of the house.
Seventy-six percent of people in SA used to feel the country was going in the right direction from the early years after 1994, but now just 42% think so.
The chair of the tax commission said greater levels of corruption mean greater chances of a tax revolt.
Yesterday, chair of the tax commission Judge Dennis Davis said there was a risk of a tax revolt because so much money was wasted on corruption.
Those who have been through crisis points in their lives know that the first step to recovery is admitting there is problem, that the situation is unmanageable. The paradox is that only after such utter surrender can the solutions begin. There are reminders everywhere.1 I had a couple this week that the Zuma Administration is some way from grasping reality. One was a passionate soccer administrator who tried to explain away the $10m bribe SA paid FIFA officials to host the 2010 World Cup. Another is recently appointed Eskom chief Brian Molefe’s emotive defence of the indefensible Russian nuclear power project that threatens to bankrupt SA (but enrich the already enriched). RW Johnson’s explains in some detail in his classic How Long Can SA Survive that the end of Apartheid was engineered abroad. Hopefully international pressure will play a similar, desperately required job of sobering those who desperately need it. Here’s a precis of what the British are reading about South Africa in the influential Times of London this morning. – Alec Hogg
While digging around on the web yesterday, I came across some fascinating data compiled by global network news channel CNN. The Atlanta-based team scoured through Government accounts to compare salaries paid to heads of State.
THE TRUTH ABOUT SOUTH AFRICA – Hosted by BRENDI RICHARDS
THIS WEEK’S GUEST: TREVOR LOUDON, Author / Researcher / Activist
Farm attacks showed how criminality in South Africa was engulfing its citizens, the SA Human Rights Commission said on Thursday.
Since the start of the year, there have been 148 farm attacks, with 33 murders taking place.