Who really holds the ‘commanding heights’ of the economy?

The week just ended, designated ‘Anti-Racism Week’, was intended to be a special time for ‘national dialogue’ about racism. Whether or not that objective was achieved, what follows are some facts that should inform any conversation about race in South Africa today.

Under pressure, Treasury has supplied documents with a review of its ‘Central Supplier Database’ (CSD) by indicators including racial ownership and BEE Level, where Level 1 indicates the highest BEE score. This data begins in 2017 and covers R1.22 trillion in government spending.

Some R140 billion went to ‘not black owned’ companies; R128 billion to ‘partially black owned’ companies; and R588 billion to ‘black owned’ companies. Some R289 billion was spent on SOEs, since state departments must pay for things like irregular electricity from government monopolies too.

In percentage terms the spending breakdown was 11.46% ‘not black’, 10.5% ‘partially black’, 48.08% ‘black’, and 23.66% SOE. No one has explained why BEE premiums should be paid at a point when less than 12% is spent on ‘not black’ companies.

Tenth

The CSD only covers about a tenth of total public procurement each year. However, an earlier report on CSD data described it as ‘a large and statistically representative sample of government spend although it is not stratified across all public service institutions such as local government and state owned entities. The OCPO [Office of Chief Procurement Officer] believes this to be a be a fair, accurate and representative aggregate view of public service procurement expenditure.’

If so, then ‘black owned’ companies have received roughly more than R3 trillion from the government since 2017. No one has celebrated these numbers.

BEE points are a separate measure that Treasury provided, which have been summed, apportioned, and tabulated below.

Source: Calculations from data shared by Treasury with National Council of Provinces Select Finance Committee

This means that BEE Levels 1 – 4 received 62.8% of government spending. If this is ‘representative’ of the total, then it comes to more than R4 trillion in taxpayer spending since 2017. Recall that the poorest are taxpayers too, disproportionately burdened by VAT.

Treasury also provided data from an analysis of 141 out of roughly 400 companies listed on the JSE in 2022, covering R2.66 trillion in annual turnover. Black ‘management control’ came out at 60%. 69% of turnover went to BEE Level 1 – 4 businesses, about R1.83 trillion. This is far from covering all JSE business, so turnover of high-BEE-scoring businesses could be much higher.

Individual incomes

It is also important to look past companies towards individual income. At the height of apartheid, the white minority took home roughly 80% of national income. By 2006 Stats SA found that this had come down to half of national income. By 2015 that had come down to about a third of national income.

In the meantime, the black top 10% had risen the fastest of any race-class intersectional trackable in the data, earning a quarter of national income.

But the black bottom 40% did not move at all. In real terms, the black bottom 40% may be worse off than it was in 2008, since the odds of finding work are down. Black unemployment has roughly doubled in that period, and the dignity of work brooks no substitute.

The worst-off are probably children, 1.7 million of whom under the age of 5 are expected to be stunted due to malnutrition.

The final fact to note is that no one knows how much is spent on BEE premiums in public procurement. The City of Cape Town example of a 7% BEE premium in traffic light equipment is startling, since if that was the national average, BEE premiums in public procurement would exceed the value of all child grants combined.

What is racism in context?

Member of Parliament Terror Lekota explained, by example, that to discuss racism one must know what it is, which requires a factual context. To be clear, Lekota did this in making an argument to abolish BEE.

‘If my child goes to Grey College’, said Lekota, ‘or Bishops, or Paarl Boys High, with white children – same teachers, same facilities, same everything – but then you say that because mine is darker in complexion he must get a job ahead of this other child even though this other white child has achieved better results than my child, how can that not be racism? If that is not racism, what is it?’

Likewise, in this context it is worth asking: Isn’t it racist to assume that businesses making trillions would suddenly collapse if BEE premiums were removed?

Isn’t it racist to assume that starving black children facing the prospect of growing up into a zero-growth economy where they might never get a job are ‘represented’ in a way that genuinely eases their suffering by billionaires that happen to share some phenotypes?

These are difficult questions. It is easier for everyone to ignore the questions, and the best way of doing so is ignoring the facts that show South Africa is not what it once was.

However, race debates tend to be so fact-free that Treasury has paid BEE premiums for a decade and a half without ever saying how much it spent (which is the basic function of a treasury), and (almost) no one complained.

Likewise, Stats SA stopped publishing intra-racial inequality data after 2015 and (almost) no one complained about that either.

So, without common knowledge about major changes, the Rainbow Republic plunges from one racial spectacle to the next in gathering fear and loathing, without insight, and without a second thought.

There is another way. Sharing facts such as these relaxes some tensions, while tightening focus on the need for meritocratic collaboration. It shows that no race group dominates the ‘commanding heights’ of the economy. This is probably part of the reason why polls by the Institute of Race Relations always find a supermajority – 80% to 90% – say that people of all races need to work together for the situation to improve, and why there is a similar support for merit-based job appointments.

Is that worth saying during Anti-Racism Week? You decide.

The views of the writer are not necessarily the views of the Daily Friend or the IRR

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