Black Economic Empowerment cannot only be viewed as a social contract but a business case.
When I started studying basic statistics I found the course/module interesting as it explained the mean, median and mode, the standard deviation and outliers. However the chapter on the normal distribution curve was extremely fascinating and the lecturer went on to explain that this measured all human variables. How “on point” this was!
Seen through a statistical microscope Black Economic Empowerment cannot escape statistical explanations and extrapolations.
If you consider a breakdown of numbers according to the 2011 census you will soon realise that the African majority which bore the brunt of the colonial past, apartheid regime and even after the inauguration of the tricameral parliament in South Africa between 1984 to 1994 form just over 79% of the population. BEE candidates according to the Codes of Good Practice will form over 90.2% of the population of South Africa if you factor in the Chinese Community that qualifies as BEE candidates after they won a court battle in 2008. Surely the exclusion of such a significant number of participants in the economic strata of the country was suicidal, not only from a political point of view but also from an economic viewpoint.
The advent of democracy in 1994 meant a paradigm shift for the country and that choices to bolster the economy and take it out of the doldrums must be engineered and not least the advent of Black Economic Empowerment was, inter alia, the result. How else could a Nation that had wasted between 79% and just over 90% of its brain power rescue itself out of an economic dilemma that it had locked itself in for years other than creating means for its other players and participants to be involved. Talking about brain power it suddenly dawns to me that South Africa was using just about 10% of its brain power. Can you imagine a human being using that percent of their brain when the rest has fallen into disuse – it could be a disaster! No wonder the country was functioning and producing at less than optimum levels not only as a political entity only but an economic whole too.
It is reported that South Africa’s real economic growth rate averaged 0.8% with a per capita growth of negative (-)1.3% between 1985 and 1994. In the year 1995 and 2004 this had turned the tide with an average GDP of 3.2% and per capita rates of 1.1%. This perhaps not a significant improvement and not anything to write home about but nonetheless an economic upswing. This trajectory was at the back of what one calls a consumption economy, fuelled by improved disposable incomes as a result of the deliberate creation of the so called Black Middle Class in South Africa by simply including the majority of its people in the mainstream economy and making them play a meaningful role through the pillars of BEE, especially Management Control and Employment Equity and to a lesser extent Preferential Procurement. It is reported that the increased spending by households (from 1,5% p.a. in 1985 – 1994 to 3,7% in 1995 – 2004) was supported by steady growth in real disposable income (4.4% p.a. in 1995 – 2004). (Economic growth in South Africa since 1994 Stan du Plessis and Ben Smit1) Stellenbosch Economic Working Papers : 1 / 2006. Detractors and advocates of Black Economic Empowerment agree that the exclusion of a certain sector of the citizenry of the country was detrimental to both the political stability of the country and its economic state of being. They however differ on how the correction or redress should be done. In the absence of a proposed solution by detractors of BEE I couldn’t possible conceive that they are suggesting that such redress should be left to the market forces. The latter has proved many times to have imperfections in even regulating economic cycles and that some human intervention must trigger movements towards the desired and intended direction. How much more with a mechanical system that was designed and orchestrated by human ingenuity to relegate part of its population to the fringes and periphery of economic activity. This could not be left to the invisible hand to regulate.
I have listened to debates in the run-up to the 2014 elections and no party has been vocal about how they would include previously disadvantaged South Africans except the EFF and I am no supporter of the EFF. The voter could have thought “We know what the ruling party’s stance is on this matter; but what about other parties?” On par with creating an excellent service delivery machinery in South Africa, economic redistributing and/ or an equitable distribution of her resources remains an item on the agenda and a hot potato. This should probably explain why parties calling for a sunset clause on BEE or those that were silent or not vocal or just not convincing on the matter made a poor showing during the elections.
I guess the point I am making is BEE cannot be wished away if it is true that the country suffered inequality under the apartheid system throwing out of the mainstream economy 90% of its resource component. Am I suggesting that it is the best model of empowerment? The answer is NO; it is fraught with flaws, imperfections and inconsistencies and these will be discussed in the next article.
I therefore make a proposition that population distributions in South Africa are a reflection of economic/income distributions and if plotted on a normal distribution curve will show skewed realities of the curve to the left and that every effort should be made to skew the graph to the right. It is hoped that the new Ministry of Small Business Development will take a fresh look at this matter and tackle it with renewed vigour if the country must succeed in growing its economy and meet its employment targets.
The author of this article can be contacted for strategic alignment of BEE by small, medium-sized or large companies.
