BEE gave wealth and didn’t grow it

INLSA

Families arrive at the public hearing of the commission of inquiry to investigate the Marikana tragedy where 44 people were killed. Picture: Dumisani Sibeko

South Africans started designing the first draft of the black empowerment policy in 1990. The unfortunate fact is that black economic empowerment, although a work in progress, did not make any meaningful or substantial contribution towards addressing the twin ills of poverty and unemployment.

It did not address a fundamental issue, namely that for economic transformation to be successful, we had to create black entrepreneurs who were not the beneficiaries of wealth created by others.

It also did not delve deeply enough into critical issues such as the overhaul of our broader educational systems with a view towards ensuring that business principles as well as entrepreneurship were taught and instilled at an early age.

What we did, therefore, was to place decision-making in the public sector in black hands, as well as to create a new layer of wealth without deepening and broadening entrepreneurship, wealth creation and retention.

The simple fact is, whether we are white or black, there is a dire need for broader participation in the wealth of this country in a way different from the current model.

Marikana taught us that our social cohesion is fragile; that our black economic empowerment model is dysfunctional; and that we need to be creative when older models of negotiation are discarded by the disenfranchised.

If the miners at Marikana, and elsewhere, had a meaningful stake in the assets that they create, my view is that we would have had different and more positive outcomes.

Wealth is never given away, nor successfully redistributed through force, but our circumstances dictate that the wealth and ownership gap needs to be addressed as a matter of priority.

If we hesitate in doing so, we will be the architects of our own demise.

To be even more brutal, our current policy drift and general public discourse on these matters do not contribute to a solution.

The time that lapses between the crisis, the policy solution and action does not contribute to social stability or future cohesion.

I believe we should start casting our eyes wider than our own South African back yard.

In one of their latest Africa Attractiveness studies looking at foreign direct investment, audit and advisory firm Ernst & Young found that not only is SA the biggest recipient of foreign direct investment (FDI) on the continent, it is also the biggest African investor in the continent.

That SA is the leading destination for FDI projects is partly due to the fact that it is the continent’s largest and most developed economy, but also because it is virtually without peers among global emerging markets in providing a stable investment platform, with strong democratic institutions, a world-class financial and capital markets system, and an environment conducive to doing business.

In various global benchmarks measuring these kinds of factors, SA consistently ranks among the leading emerging markets, and generally well ahead of its Brics (Brazil, Russia, India, China) peers.

At the same time, and partly because it does offer such a stable investment platform, investment from SA into the rest of the continent is also growing substantially.

We are currently ranked sixth overall in terms of cumulative FDI project numbers in Africa since 2003, signifying that SA companies have invested the sixth most in FDI projects overall on the continent.

These are simple statistics, but critical in the context of creating an atmosphere of Afro-optimism, both about our own future and that of our beloved continent.

Our inward-looking commercial and economic philosophies should be complemented by outward-looking approaches that shape a new way of looking at ourselves and our continent.

They should be informed by creating opportunities, and by executing our vision of our empowerment, and not by waiting for others to develop policies that will create “wealth” in the hands of a few and mountains of debt for others.

It is time that we make the development of a strategy of how SA and its major black companies invest in Africa a priority.

Such a strategy could help guide and assist those entrepreneurs who see profit outside our boundaries, and want to reshape their businesses to tap additional markets on our continent. In seeking new markets, we can develop new partnerships, not only locally, but with international entrepreneurs looking to invest in Africa.

l Phosa is treasurer-general of the ANC. This is part of the first memorial lecture he delivered for Thamsanqa Max Maisela at the Monash Africa Centre this week.