Studying the relationship between business and government is a pastime that occupies analysts the world over. The intersection between these two forms of power, one economic and the other political, holds enormously important implications for the societies in which these dynamics play themselves out.
Where relations between business and the state are poor, so mainstream thinking goes, counterproductive policy and mutual recriminations grow, and societies suffer. Where government and business become too cosy with each other, collusion follows, and societies also suffer. Where they can learn to cooperate and negotiate robustly with each other, however, society can benefit. In South Africa, the search for this ideal state accounts (in part), for the nominal ‘social partnerships’ beloved of government rhetoric and formalised in structures such as the National Economic Development and Labour Council.
The reality, though, is a complicated one.
Probably nothing demonstrates this quite like the question of Black Economic Empowerment. Speaking at a recent webinar, intellectual Moeletsi Mbeki put forward the argument that BEE was not a creation of the ANC, but rather an initiative from business to curry favour with the party. Given the ANC’s ideological positioning and its commitment to nationalisation, this was an understandable way to protect its interests post-transition.
Whatever its origins, the ANC developed its own attachment to BEE. The policy married easily with racial nationalist sentiments and it was a handy toolkit to measure (and to demand) change in the business world. As a policy, it has become entrenched in official thinking.
Whether it did anything to endear business to the ANC is an open question. Over the past decade, ‘White Monopoly Capital’ has re-emerged as a supposedly dark and insidious threat to the nation and its future. President Ramaphosa, to his credit, spoke against this view in 2018, but the sentiment remains very much alive.
Indeed, the failure of the policy to achieve the sort of results that government and the ANC demand – and ultimately this would come down to some sort of demographic formula – can conveniently be invoked as confirmation that business lacks appropriate commitment to BEE. Business, from this perspective, was hoist with its own petard.
Burden on business
And so is the country. BEE is a significant cost and burden on business; it has put off investors and offers as good as nothing to the country’s poorest people. Nor does it necessarily even always benefit black people. As the Bosasa scandal showed (and this has been shown in such programmes elsewhere), white businesspeople can position themselves to take advantage.
During the Covid-19 crisis, many were surprised that government declared that support for threatened tourism enterprises was to be apportioned taking into account BEE compliance. But this was entirely in keeping with policy as well as worldview. When quizzed on this in Parliament, and asked if it was not opportune to discard BEE, President Cyril Ramaphosa proclaimed: ‘The Broad-Based Black Economic Empowerment policy thrust of this government, if anything, needs to be enhanced.’
Yet having endorsed the policy without having secured the trust of government, business now finds itself in the unenviable position of needing relief from it but lacking the confidence to push for this. Business for South Africa, for example, now proposes a ‘review of the efficacy of existing regulation and policies in achieving sustainable economic transformation and B-BBEE.’
This is a weak and ambivalent response, reducing a major policy question essentially to something flagged for future attention – an invitation to government to reconsider things, not a bold call for change.
Bystander and casualty
And perhaps this is inevitable. Business is all too often shorthand for big business, a community able to navigate South Africa’s politics and the costs that come with it. This has relegated entrepreneurs and small business to the role of bystander and casualty. As economist Azar Jammine commented to the Institute: ‘Far too much of the South African economy is controlled by the so-called “golden triangle”, of government (and SOEs), labour unions and big businesses.’
GetBiz CEO, Andile Ntingi, recently wrote that BEE in its current form stands to compromise the country’s future, since it makes re-engineering the economy for growth and real empowerment impossible. ‘A progressive solution must be explored to either scrap or suspend the policy and replace it with a strategy that prioritises growing small businesses and creating jobs,’ he commented.
Mbeki remarked that the key to the country’s future was entrepreneurship. Here again, current policy works against this, even as successive governments have pledged to create an entrepreneurial climate.
Where does business stand on this? How far is it prepared to go to bring about change? It has both a moral duty and a pragmatic interest. Having helped to bring the current policy environment about, business now needs to find the courage to address the failings of BEE, and to propose real alternatives.