Last Saturday, the DA’s policy chief, Gwen Ngwenya, confirmed to News24 that the party was in the process of officially ditching BEE as a tool for redress.
Saying the current model “has not worked”, she added that the party was looking at a model that would focus on “getting people into jobs, making sure they have the skills to earn a higher income when they are in the jobs, and are therefore be able to put more of their income towards investment”.
This would have been sensible and uncontroversial stuff were it not for her and her faction’s evangelical fixation on BEE’s ills.
The DA’s proposed empowerment model, she said, would be “the way to accumulate the kind of wealth that turns into intergenerational prosperity, and BEE has not done that and will not do that”.
Not long after Ngwenya had confirmed the contents of the Vula: The Open Economy document whose authorship she led, the SA Institute of Race Relations (IRR) issued a statement applauding the “brave” and “good” decision.
“The DA’s decision should not be taken lightly. This is a bold move for a party that has been historically fraught on all issues concerning race. There is a chance for the DA to leave a defining and powerful mark on liberal politics,” said the IRR’s Marius Roodt.
Which was kinda interesting. You see, until earlier this year, Ngwenya was chief operating officer of the IRR, which is the unofficial think-tank of the liberal purist wing of the DA. The IRR serves as the DA’s liberal conscience. Each time the DA tries to crawl out of its cave of narrow liberalism, the IRR drags it right back in. It is the institute’s proud role to prevent the DA from stepping boldly into the real South Africa.
So it was no surprise that it was the ultraliberal Ngwenya, a former DA student leader before she joined the IRR and now Parliament, who led the process of authoring this regressive document. The IRR has been at one with the liberal wing of the DA that advances the naive view that you can address the past without referring to race. It’s a
bit like hiring an atheist to exorcise demons from your home.
There is nothing wrong with criticising BEE and pointing out its myriad shortcomings. In its current form, it has had limited impact and has long passed its sell-by date. But to label BEE a “dismal failure” that “has doomed millions to the despair of unemployment and has serially enriched a politically connected elite” is just plain wrong.
When BEE was conceived as a transformative tool during the transition to democracy, there was nothing else to work with. The “commanding heights of the economy”, as the Bolsheviks called the key sectors of industrial activity, were exclusively in white hands. Something had to be done to change that picture.
Through a series of deals, legislative interventions and regulation, the landscape began to alter. Although the exact amount of black ownership of the mainstream is in dispute as a result of different methods of calculation, there is no question that BEE has had an impact.
Giants were born during the early BEE transactions, including Exarro, MTN and Tsogo Sun. Today, these entities have international footprints and can no longer be considered to be empowerment companies. They take competitors head-on and conquer new territories. The point is that they needed an enabling environment to be born and that was the BEE framework.
Lower down in the value chain, the impact has not been as great, but significant strides have been made. There are many unseen and uncelebrated BEE success stories in various sectors. Corporate captains who play a big role in our business and public life emerged from the cauldron of BEE.
It was absolutely necessary to create a class of black billionaires and multimillionaires. It was pivotal that black companies that would be champions be established and emulated.
But, like anything, it had its faults and should never have been seen as a permanent solution. The most damning indictment of BEE should be that its narrow focus on deals and acquisitions went on for too long. The transfer of ownership became the be-all and end-all. Entrepreneurship and innovation – the primary drivers of wealth creation – suffered as clever and energetic individuals chased deals instead of building and growing businesses.
To its credit, the DA does come up with some interesting ideas about unlocking economic growth, creating shared value and making the economy inclusive. Although still raw and in need of a lot of refinement and the putting on of more flesh, the DA’s ideas can contribute to a constructive conversation on how to make the economy more inclusive and deracialised.
But the DA’s own starting point is what will render its contribution dead in the water. The party’s hostility to BEE and its employment equity twin beggars belief. When some of the party’s leaders vent about these “evils”, they become as excitable as Ray McCauley just before collection time in church.
If the DA really wants to make a proper contribution to the development of the next phase of empowerment and if it wants its voice to be heard on this subject, it will have to drop its ideology-driven approach that sees BEE as an enemy. This has to be a South African conversation about a very real South African challenge. It cannot be posturing and positioning ahead of elections.