To BEE or not to BEE. That is one of the many prevailing questions, as the government of national unity (GNU) comes into power and prepares to govern the country.
Black Economic Empowerment (BEE) and the continued enforcement of similar race-based policies will be a test of the substance of the incoming government’s commitment to true constitutionalism, primarily the principle of non-racialism.
Equally, it will challenge the co-operation of the GNU partners. given the conflicting positions on the issue of non-racialism at by least the two dominant parties within the GNU formation, the African National Congress (ANC) and the Democratic Alliance (DA).
BEE has failed, despite its noble intention to correct post-apartheid racial disparities. Not only does it miss the target in identifying groups best suited to benefit from affirmative action. It disproportionately favours the well-off and politically connected at the enormous cost of keeping the underprivileged poor, stagnant, and bereft of opportunity. BEE misdirects government resources that could otherwise be better distributed to fund infrastructure projects that address poverty and economic marginalisation.
Its continuation only leads to continued funding of the mismanagement of government resources in healthcare, public works, education, and many other sectors critical to economic upliftment. To keep BEE means to continue making a smaller group of people very much richer, whilst simultaneously perpetuating the cycle of poverty and inequality in a far bigger economically excluded group.
How BEE fails
There are supporters of BEE who claim that critics of BEE want to protect their own privilege or do not want black South Africans to succeed. These assumptions overlook the fact that the policy of BEE, like any policy, must be judged by its outcomes rather than its intentions. The outcomes reveal that black people largely remain in poverty and that the country’s Gini coefficient, the measure of inequality, has increased since apartheid ended, from 59 in 1994 to 63 in 2022.
Demonstrably, BEE is good at making enriched black South Africans richer, but it is dismal at uplifting wider groups of black people out of poverty and achieving growth that is inclusive of them and others. South Africa is not unique in this. Affirmative action has failed in other parts of the world too because it engenders nepotism – the packing of governments with friends and family of the political elite instead of filling the positions on a basis of skill and ability.
This was a constant theme of state capture which illustrated that in an arm-wrestle between nepotism and meritocracy, nepotism beats merit, as people are biologically wired to favour family and friends over making impersonal appointments on merit. These friends and family appointees may then perform incompetently or act out of self-interest and waste state resources that could be going to the disadvantaged.
Modern governments require technical ability and competency that are not always found in affirmative action appointments. BEE and other race-based policies produce both types of corruption, where people are appointed into positions for which they are not qualified, and resources and opportunity are disproportionately distributed through family and friendship ties to the political class.
BEE’s practice of relying on race as an indicator of need ignores the fact that much of the work has already been done through the arrival of democracy’s closing of racial gaps. Enabling equal access to opportunity and unrestrained self-determination accomplished much of the job BEE was supposed to do. It is the 1994’s wider enfranchisement and non-racialism that have gone some way to addressing apartheid disparities, not BEE. Its continued application implies a failure to recognise this, and the fact that in post-apartheid South Africa poverty persists beyond racial categories.
Even with all this, BEE continues to enjoy unwavering support, including from the very people it robs of opportunity and upward mobility. This can in part be attributed to cognitive rigidities straddling the minds of disadvantaged BEE proponents, hindering them from acting in their own interest and mobilising against race-based policies so that resources can finally trickle to them fairly.
Another possible reason can be that the racialisation of government policy maintains racial divisions and entrenches group-identity politics by race over individual self-interest. It is also likely that enriched BEE sycophants with a vested financial stake in preferential procurement, who cannot in good conscience be labeled ‘economically disadvantaged’ or be eligible for affirmative action, will not relinquish the material financial benefit afforded to them by such policies.
Not to BEE?
The Institute of Race Relations proposes a BEE alternative, namely, Economic Empowerment for the Disadvantaged (EED). EED ensures that people who are economically marginalised are prioritised by the government and obtain the benefits due to their economic status – which is a better determinant of need than race. This way, EED ends economic exclusion and marginalisation without the baggage of BEE racialisation and unequal disbursement of state resources.
By relying on the individual’s economic status rather than race, EED works much like the National Student Financial Aid Scheme (NSFAS) to facilitate wider economic inclusion and stop the immiseration of the poor under BEE. Under EED, black people remain the biggest group of beneficiaries as they are the most economically disadvantaged, whilst all other impoverished groups also stand to gain regardless of race. If EED is implemented, the government will be obligated to make appointments based on skill and ability over family ties, thus restoring all functions of government so that service delivery is effective and productive.
Less BEE, not more, is how we should provide for groups most in need of government assistance and better distribute state resources to them through EED. The attachment to BEE, despite its failing the people it purports to assist, defies rationale.
Upending the status quo of poverty and inequality requires breaking through the BEE sunken cost fallacy and intellectual rigidities. BEE beneficiaries also need to abandon self-interest to allow fairer administration of government support in favour of inclusive growth. New modes of thinking such as EED can get us to a South Africa that is prosperous and economically inclusive of all.
[Image: Gerd Altmann from Pixabay]
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