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Editorial See other Editorial Articles Title: Managed dance of BEE [affirmative action] puppets 2009/09/02 BLACK Economic Empowerment (BEE) has not proved to be the fatal blow to South Africa’s oligarchs that Nelson Mandela and black nationalists of his era once envisioned. In fact, it strikes a fatal blow against the emergence of black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians, some retired and others not, who have become strong allies of the economic oligarchy that is, ironically, the caretaker of South Africa’s “deindustrialisation”. BEE in South Africa is, in reality, another attempt to siphon savings from private-sector operators in an environment where there are no peasants and where most of the private sector is locally owned. The fact that BEE is an uphill battle for South Africa’s political elite is the result of the ability of the private sector to resist dispossession. But these are early days. Time will tell who will emerge best from what could be a titanic struggle by the political elite – recently joined by organised labour – to confiscate the wealth of South Africa’s current private-sector owners. An even bigger question, however, is what impact these struggles will have on the growth potential of the South African economy … Most people in South Africa, in Africa and the rest of the world naively believe that BEE was an invention of South Africa’s black nationalists, especially the African National Congress , which won the first democratic election in April 1994, leading to Nelson Mandela becoming the country’s first black President. This could not be further from the truth. BEE was, in fact, invented by South Africa’s economic oligarchs, that handful of white businessmen and their families who control the commanding heights of the country’s economy; that is, mining and its associated chemical and engineering industries and finance. The flagship BEE company New Africa Investments Limited (Nail) started operating in 1992, two years before the ANC came to power. It was created by the second-largest South African insurance company, Sanlam, with the support of the National Party government-controlled Industrial Development Corporation (IDC), a State-owned industrial investment bank created in 1940. The formation of Nail was soon followed by the creation of Real African Investment Limited (Rail), sponsored by mining giant Anglo American Corporation through its financial services subsidiary Southern Life. The object of BEE was to co-opt leaders of the black resistance movement by literally buying them off with what looked like a transfer to them of massive assets at no cost. To the oligarchs, of course, these assets were small change. Sanlam created Nail by transferring control of one of its small subsidiaries, Metropolitan Life, 85 percent of whose policy-holders were black, to several ANC and Pan Africanist Congress-affiliated leaders. The device used was to split shares of MetLife into a small package, dubbed high-voting shares, which gave the politicians (funded by a loan from the IDC) control of the company. Overnight, the politicians were transformed into multi-millionaires without having had to lift a finger because all the financial wizardry was performed by Sanlam’s senior executives. All the politicians had to do was show up at the party to launch Nail and thank their benefactor. Even the debt the politicians incurred was largely fictitious as it was MetLife that had to pay it back to the IDC. This financial razzmatazz was designed to achieve a number of objectives. It was intended to: All these machinations were eventually incorporated into South Africa’s democratic Constitution by the creation of a category of citizens, apparently 91 percent of the population, to be known as Previously Disadvantaged Individuals (PDIs). The ingenious legal notion of previously disadvantaged individuals created the impression that all black South Africans could or would benefit from BEE. This legitimised the co-option payment to the black political elite by dangling before the black masses the possibility that one day they, too, would receive reparations for the wrongs done to them during the apartheid era. BEE and its subsidiaries – affirmative action and affirmative procurement – which started off as defensive instruments created by the economic oligarchs to protect their assets, have metamorphosed. They have become both the core ideology of the black political elite and, simultaneously, the driving material and enrichment agenda which is to be achieved by maximising the proceeds of reparations that accrue to the political elite. As we shall see below, this has proved to be disastrous for the country. Reparations The black elite, which describes itself as made up of PDIs, sees its primary mission as extracting reparations from those who put it in a disadvantaged position. To achieve this requires the transfer of resources from the wrongdoer – perceived to be white-owned businesses and the South African State – to the victim, the PDIs. By this logic, the South African State owes the PDIs high-paying jobs. This transfer of wealth from the strong to the weak is what has come to be known as BEE. Enormous consequences follow from this apparently simple formulation: 1. In order for the wrongdoer to be able to pay reparations, the wrongdoer has to maintain a privileged position. This is the principle of fattening the goose that lays the golden egg. What this means is that the corporations that were allegedly responsible for victimising the PDIs must not be transformed beyond putting a few black individuals in their upper echelons. The protection of these corporations has gone so far as to allow them to move their head offices and primary listings from Johannesburg to London in order to shield them from possible economic and political upheaval in South Africa .... 2. For the victim to continue to draw reparations it is critical that he or she remains perceived as a victim and as weak. This means that the former freedom fighter must be transformed from a hero who liberated South Africa into an underling. The payment of reparations to the black elite thus achieves the opposite of what it is claimed it was designed to do. 3. One of the most destructive consequences of the reparations ideology is the black elite’s relationship with, and attitude to, the South African State. As the State is said to have been party to the disadvantaging of the PDIs, it is therefore also perceived to owe them something. By way of reparations, the State must therefore provide PDIs with high-paying jobs. By extension, the assets of the State are seen as fair game … Not surprisingly, corruption under the ANC government has grown by leaps and bounds, leading Transparency International – the worldwide watchdog on corruption – to downgrade South Africa in the world’s corruption tables …. 4. The ideology of reparations traps members of the black elite into seeing themselves as the beneficiaries of the production of other social groups and therefore primarily as consumers. To facilitate their role as consumers the black elite sees the State essentially as distributive rather than developmental. Most importantly, the black elite don’t see themselves as producers and therefore do not envisage themselves as entrepreneurs who can initiate and manage new enterprises. Moeletsi Mbeki’s [brother of the former prime minister] book Architects of Poverty – Why African Capitalism Needs Changing, published by Picador Africa, is available from bookstores nationwide for R152. Mbeki has written an article especially for Daily Dispatch readers – A tale of two nationalisms – which will appear in the Dispatch tomorrow.
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