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.

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Terence Corrigan
Terence Corrigan is the Project Manager at the Institute, where he specialises in work on property rights, as well as land and mining policy. A native of KwaZulu-Natal, he is a graduate of the University of KwaZulu-Natal (Pietermaritzburg). He has held various positions at the IRR, South African Institute of International Affairs, SBP (formerly the Small Business Project) and the Gauteng Legislature – as well as having taught English in Taiwan. He is a regular commentator in the South African media and his interests include African governance, land and agrarian issues, political culture and political thought, corporate governance, enterprise and business policy.

9 COMMENTS

  1. “Where does business stand on this? How far is it prepared to go to bring about change?” With the exception of an extremely small number of businessmen, the vast majority stand on whatever they can profit from and are only willing to go as far as it takes to secure those profits, a recent case in point being how SA business sang Ramaphosa’s praises when he was elected and jumped on that Ramaphoria/Thuma Mina bandwagon- all without any realistic consideration of the country’s socioeconomic situation. SA business have known for more than two decades that AA, EE and B-BBEE don’t do anything good for the country, but they helped government to create a cottage industry out race and gender quotas along with BEE certification and passed the cost onto the consumer. This wrecked a lot of small businesses and coupled with the funding and enabling of corruption in government has gotten this country to the point at which the rather incompetent crew is circling the drain in a leaky boat with a broken paddle. SA business are as culpable as the ANC for the nightmare in which we live today and I for one expect from them nothing but more grovelling and self-serving support for the destruction of SA until they get on a plane to go where they can enjoy the money they’ve sent out of the country.

    • Exact and To the point Mercea, Very well penned, our Major Business will continue to Grovel and Lick arse knowing Full well it’s detrimental to our Economy, but hey who really gives a Toss, Steal and Draw as much as you can and invest as much as possible offshore, so when the proverbial Sh1 T hits the fan you are able to run overseas for cover.

    • Not only that. BEE has opened up a massive opportunity for graft. I call bs on the notion that it wasn’t an ANC invention, but one from business. Given the massive amounts of resources being redirected inefficiently towards pencil tests before hiring someone, there’s no incentive on business side to opt for AA/BEE. I happen to remember when AA and BEE notions first came around, and they did come from government and nowhere else – albeit perhaps not the ANC government, because at the time we were still in a transition period.

      But BEE is about graft. Look at the Zol Tannie and her totally nothing to see here dealings with the contraband cigarette trade in the country. BEE and AA offer exactly the same kind of patronage/tenderpreneurship opportunities, and it has very little to do with skin colour ultimately. It’s gatekeeping.

  2. Public private partnerships is simply criminal where Industry and Government cooperate in fleecing the citizens. It Protectionism with Government collusion. Disguised socialism under another name.
    Of course the bankers love love it. Payment is guaranteed by Government.

  3. Business in South Africa still have to realize. In Africa politics is not based on fair reason. Mild/meak opposition is seen as weakness and not respected. If business want to be heard they must make their viewpoints strong and stand on it, only then will the ruling government consider it.

  4. With the draconian laws of BEE and regulation on Businesses in every field possible, business cannot take initiatives on its HR and Operational needs as necessary to steer the business towards success.
    Government interference on what should be a complete fee economic environment is now severely strained by the compelling dictate of government. Added to this is the inability to grow the infrastructure requirements that encourage economic growth, failing to incentivize all economic players as only select groups of society are provided with stimulating support.
    Regulatory controls are poor in service and fail to meet the new economic environmental impacts created by Government damage to the business sector the drop in GDP and loss of tax funding due to rampant plunder and Corruption taking place which also affect the huge loss in the value of the currency during the last 30 years. Why would Business wish to invest in a economy that is bleeding value opposed to value growth and profit.

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