R1 Trillion moved among BEE elites – academic

William Gumede of the Wits School of Governance has said black economic empowerment (BEE) has led to increased poverty, unemployment and inequality in South Africa.

He says BEE across Africa failed terribly because it focused on benefiting a small group of connected individuals rather than a large group of people.

Gumede states that the government had asked him to conduct an assessment of BEE in South Africa.

He says it was very clear that BEE only benefits a tiny group of politically connected people linked to the African National Congress and trade unions.

In countries where empowerment is effective and has reached its goal, it has been implemented to reach the widest possible group of people.

However, in South Africa, BEE only benefits a very small group of connected people.

Gumede says he had calculated the amount of money which has been moved through empowerment in South Africa.

“Conservatively, R1 trillion has been moved between under 100 people since 1994. The same people have been empowered and re-empowered over and over,” he says.

“South Africa’s BEE model has created a model of corruption because people set up companies just to get a contract.”

He adds that genuine South African entrepreneurs who are not politically connected do not benefit from BEE funding.

Gumede says that R1 trillion could have been spent more effectively on things other than enriching a small group of connected individuals.

He says companies could have spent the money on housing for black South Africans or sponsoring schools in Soweto. “This would have delivered a much wider impact,” he says. He uses the examples of automotive manufacturers Tata Motors and Mitsubishi in India and Japan, respectively, claiming that their educational empowerment projects were highly successful. He also suggests that Starlink’s entry to South Africa could enable the sponsorship of science and mathematics programmes in underprivileged schools, ensuring that children are empowered and better equipped for further education or entering the workforce.

“We want to create millions of black South Africans who have R500 000 each, not a small group of billionaires,” he says.

ACCOUNTABILITY FOR FAILURES

The Institute of Race Relations (IRR) says parliament must answer for its failure to oversee BEE policies that obstruct investment and job creation.

IRR head of strategic communications Hermann Pretorius says that, despite South Africa’s severe unemployment crisis, the government persists with BEE.

Like Gumede, Pretorius describes BEE as an elitist policy that benefits the connected few while keeping millions in poverty.

The IRR has sent formal letters to 64 members of parliament on key economic committees, urging them to demand answers on how many jobs, investments and businesses had been lost due to BEE.

“A recent example is Starlink, which was blocked from entering the market, sacrificing economic opportunities to protect BEE elites,” Pretorius claims.

He argues that many businesses have been discouraged from investing in South Africa due to racial quotas and empowerment requirements.

“Parliament cannot ignore policies that deepen poverty and economic exclusion,” Pretorius says in a press statement.

The IRR has also written to ministries involved in BEE enforcement, including those overseeing employment and labour, small business development, trade and industry, and international relations.

“Support economic inclusion and job creation, or enable a system that serves only the cadre elite while millions suffer. History will judge their actions or inaction,” he says. – Daily Investor

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