BEE policies under fire in South Africa

JOHANNESBURG – An admission by South African Finance Minister Trevor Manuel that Black Economic Empowerment needs an overhaul has handed fuel to critics who say the flagship policy has only benefited an elite.

BEE was drawn up by the African National Congress government soon after it took power in 1994 in a bid to redress the economic imbalance of the apartheid era in which blacks were effectively excluded from the boardroom. But while the emergence of leading black businessmen was initially widely hailed, complaints have grown steadily amid accusations that those who have benefited most have done so thanks to their ANC links.”Little has changed.There is still extremely low levels of black participation in the mainstream economy,” said Ibrahim Fakir, a researcher with the Johannesburg-based Centre for Policy Studies.”Insufficient measures have been taken to significantly increase and expand black participation.And where proper measures have been in place, they have served to benefit a tiny elite rather than the general populous.”In an interview this week with the Financial Times, Manuel said that “there will have to be a review” of BEE as he cited various abuses of the system.In particular, Manuel said too many companies had followed only the letter, and not the spirit of the programme by recruiting black managers and board members only as token gestures.Fakir said too much emphasis had been placed on wealth creation at the expense of expanding the boardroom base.”The overall aim of the BEE has been to deracialise business ownership and control instead of aiming to make it easier for black people to gain access to capital for business development.”It should not be about contracting wealth but creating opportunities through proper regulations.”Among the most trenchant of critics has been the anti-apartheid campaigner and Nobel peace prize winner Desmond Tutu who has said BEE “seemed to be benefiting a small recycled elite.”Even President Thabo Mbeki, seen as the godfather of BEE, admitted in his state of the nation address this year the number of black managers in companies listed on the Johannesburg Stock Exchange was “woefully low.”According to Dirk Hermann, of the Solidarity trade union, Manuel’s criticism was long overdue.”We only see the enrichment of an elite few, and those who have connections with the ANC,” Hermann told AFP.The main opposition Democratic Alliance, which has been heavily critical of BEE, said it would support a review of the policy.”A review of BEE would be an excellent opportunity to …see whether it has succeeded in effecting the broad-based empowerment of the disenfranchised, or whether it has merely offered a few politically connected individuals the opportunity to enrich themselves,” said DA lawmaker Pierre Rabie.A recent study of JSE-listed companies showed that of a total of 697 directors, 66 per cent are white and only 28 per cent were black.Some experts however say it is important to look beyond the headline figures before concluding BEE had been a flop.Nampa-AFPBut while the emergence of leading black businessmen was initially widely hailed, complaints have grown steadily amid accusations that those who have benefited most have done so thanks to their ANC links.”Little has changed.There is still extremely low levels of black participation in the mainstream economy,” said Ibrahim Fakir, a researcher with the Johannesburg-based Centre for Policy Studies.”Insufficient measures have been taken to significantly increase and expand black participation.And where proper measures have been in place, they have served to benefit a tiny elite rather than the general populous.”In an interview this week with the Financial Times, Manuel said that “there will have to be a review” of BEE as he cited various abuses of the system.In particular, Manuel said too many companies had followed only the letter, and not the spirit of the programme by recruiting black managers and board members only as token gestures.Fakir said too much emphasis had been placed on wealth creation at the expense of expanding the boardroom base.”The overall aim of the BEE has been to deracialise business ownership and control instead of aiming to make it easier for black people to gain access to capital for business development.”It should not be about contracting wealth but creating opportunities through proper regulations.”Among the most trenchant of critics has been the anti-apartheid campaigner and Nobel peace prize winner Desmond Tutu who has said BEE “seemed to be benefiting a small recycled elite.”Even President Thabo Mbeki, seen as the godfather of BEE, admitted in his state of the nation address this year the number of black managers in companies listed on the Johannesburg Stock Exchange was “woefully low.”According to Dirk Hermann, of the Solidarity trade union, Manuel’s criticism was long overdue.”We only see the enrichment of an elite few, and those who have connections with the ANC,” Hermann told AFP.The main opposition Democratic Alliance, which has been heavily critical of BEE, said it would support a review of the policy.”A review of BEE would be an excellent opportunity to …see whether it has succeeded in effecting the broad-based empowerment of the disenfranchised, or whether it has merely offered a few politically connected individuals the opportunity to enrich themselves,” said DA lawmaker Pierre Rabie.A recent study of JSE-listed companies showed that of a total of 697 directors, 66 per cent are white and only 28 per cent were black.Some experts however say it is important to look beyond the headline figures before concluding BEE had been a flop.Nampa-AFP