Jonathan Yudelowitz.

In defending South Africa against the rating agencies downgrades Minister of Finance Pravin Gordhan cites positive achievements; including financial prudence, welfare provision and the increased affluence of the previously disadvantaged


But he does not acknowledge that the government’s social engineering Black Economic Empowerment (BEE) programme over two decades has benefited a connected few without any economic or social value being added. Policymakers have not learnt from experience, typical of social engineering, which patronises the past, simplifies the present and underestimates individuals’ capacity to imagine a future, think and decide for themselves.

BEE ignores the fact that generating economic value depends on integrating self-interest with the greater good; in fact, its public relations emphasises the latter and reality promotes the former, usually to a point of outright greed.

A company with an enabling, inclusive culture, which mentors and trains its people, provides opportunity to the truly previously disadvantaged, will probably fare far worse on a current BEE scorecard than those who manipulate the system, throw large amounts of money at convenient people and programmes, regardless of whether or not value is added.

South Africa’s BEE commoditises and compromises real economic and social progress; devaluing the creativity, calculated risk taking, culture of investment, learning and delayed gratification and severely compromises leadership.

Nevertheless, parts of Employment Equity legislation, especially recruitment for entry-level jobs and graduates, are successful and have been a major force for positive change. There are numerous top black professionals and executives who began as graduate trainees, developed their skill, matured, attained status and material benefit over time.

The process of natural selection that ensued has contributed to the vital blend of confidence and humility that can only be gained through experience. Today their seniority, privilege and wealth is well-earned and more than justified. One effective store manager creates more economic value than a BEE billionaire whose wealth derives from connections or being in the right place at the right time.

These real business leaders and professionals have the pride and self-esteem that the “big deal” BEE beneficiaries need but lack attitudes that are essential to effective decision making, critical to helping transition angry entitlement.

Although it does not cancel South Africa’s poverty and social iniquities, such progress is meaningful, resulting in the increasingly rich and cosmopolitan nature of our urban culture. None of this was envisaged in the Freedom Charter or by the Departments of Labour and Trade and Industry, which driven by ideology, continue to value transformation in linear, crude, and quantitative terms.

BEE stems from protest ideology that ascribed the economic success of the previous elite only to unfair advantage and privilege, ignoring the business acumen, self-discipline and investment that went into building sustainable businesses from scratch. If policy makers had the moral courage to confront this truth, and the assumptions and ideologies that prevent BEE proponents from dealing with reality, much needed integrity may be restored to our economic policy.

Additionally, rating agencies should acknowledge South Africa’s resilience and resourcefulness in pulling back from “the brink” countless times.

Despite the violence and desperation the centre continues to hold, indicative of the determination that makes poor parents scrimp and save to send their children to suburban schools; that fills the Johannesburg Public Library with disciplined correspondence students; that has built stokvels and an efficient, albeit unruly, taxi industry, and contain real potential for economic progress.

The government should realise that progress is made through realistic, ethical deal-making, that neither the drafters of the Freedom Charter, BEE policy nor the designers of our labour relations framework could predict the circumstances of present day South Africa.

They must stop moulding our social and economic realities into their ideological views and respond to reality of how ordinary people are adapting and changing.

Jonathan Yudelowitz is the joint managing director at YSA and the author of Smart Leadership.