Genuine black entrepreneurs are unable to secure funding and partnerships if they are not politically connected, writes William Gumede.
The terms radical economic transformation, seeking economic freedom and economic decolonisation are increasingly being captured by unscrupulous individuals for self-enrichment, to deflect individual wrongdoing and to cynically catch votes.
Genuinely disadvantaged black South Africans, whether out of naivety, lack of knowledge or simply being unaware of the selfish motives of individuals using calls for “radical economic transformation”, “economic freedom” and “economic decolonisation” for their own benefits, in many cases fall for such false promoters of black advancement.
The real danger is that these redistribution terms will not only become empty, meaningless and opportunistic, but will become associated with mismanagement, corruption and state capture.
This means that genuine initiatives to pursue economic transformation, economic freedom and economic decolonisation, so crucial to improve the lives of ordinary black South Africans for the better, will lose credibility.
It will eventually not only be opposed by previously advantaged groups, but also by the previously disadvantaged groups for whom it is intended. Policies in countries which must rightly pursue redistribution strategies to undo historically injustice are particularly vulnerable to corruption, capture and mismanagement.
The big danger is that economic transformation, economic freedom and decolonisation only benefit small elites, often the leader of the governing party, allies and their associated families.
In fact, research across developing countries which pursue redistribution strategies shows that corruption is often prevalent where governments with good intentions want to redistribute to vulnerable groups, using subsidies and transfers.
Redistribution strategies therefore cannot succeed unless pursued with absolute honesty, fairness and doses of pragmatism.
President Jacob Zuma in his State of the Nation Address this past week promised to accelerate radical economic transformation. To be honest, his call lacks credibility.
Black economic empowerment (BEE) is increasingly benefiting a handful of political capitalists close to the leadership of the dominant faction of the ANC. The presidential project to create black industrialists appears to be yet another scheme to enrich the few.
Zuma said in his address that accelerating the expansion of the black industrialist programme is “critical” to achieve “radical economic transformation”. The Department of Trade and Industry is planning to support 100 black industrialists over three years.
In this climate, it is absolutely the wrong approach. The money should be given to boost the 54million micro, small and medium-size black businesses over the next three years - providing them with funding, training and linking them to the supply chains of large state and private companies.
The challenge for genuine black entrepreneurs is that they are unable to secure state and private-sector funding and partnerships if they are not politically connected. Preferential procurement in state-owned companies (SOEs) often also goes to connected black political capitalists.
Affirmative action at senior levels in the public sector and SOEs are now increasingly going to the politically connected. The private sector also often at the executive level appoint politically-connected individuals, who can bring closeness to the government and the ANC. And in some cases appoint non-South African blacks where they can, presumably believing locals may along the line insist on more meaningful transformation.
The beneficiaries of radical economic transformation, decolonisation and economic freedom are increasingly small elites. This, unfortunately, is a replication of what happened in the post-independence period in most African countries: leaders have under the guise of pursuing “radical economic transformation”, “decolonisation” and “economic freedom”, enriched themselves fabulously at the expense of unknowing poor masses.
What would be the basis of genuine radical economic transformation, economic freedom and economic decolonisation be? On what “radical economic transformation”, “economic freedom” or “economic decolonisation” basis is it possible to defend the fact that the same small group of well-connected black political capitalists gets one BEE deal after another? Or the fact that the same small group of black political capitalists gets the same preferential procurement deals in the public sector and SOEs? Or, for that matter, that the same small group of political capitalists are appointed to the boards of SOEs and private, mainly white companies?
The failure of the post-independence African project to build industrialists is that it has empowered political capitalists - either from the ruling party or in the public sector, rather than entrepreneurs, who are often not linked to the ruling party or the higher echelons of the public sector.
The first is to scrap the current BEE policies as singularly useless. The basis of radical economic redistribution must be providing quality education at school level to historically disadvantaged black children, on par with the world- class education offered in the best industrial countries or emerging markets.
BEE should be about white companies funding this - not giving the same black political capitalists stakes in their companies. Second, relevant industrial technical education - from electricians, plumbers to welders - should be rolled out to black adults out of the education system.
Relevant vocational, technical colleges and academies with courses relevant to industry should be set up. BEE should be companies either setting them up or paying for them.
For example, instead of giving BEE shareholding to one or two well-connected black political capitalists, mining companies can set up vocational, technical schools and academies out of their money and fund the lecturers. That would be meaningful empowerment of black people.
The whole point of the colonial and apartheid project was to disempower blacks educationally in such a way that it would perpetuate black inferiority - because they lack skills, knowledge and confidence in a world where an individual and his or her off-spring’s sense of worth, life prospects and happiness heavily depend on education - for generations to come.
Therefore, the pillar of the decolonisation project must be to as quickly as possible provide the widest number of blacks with world-class quality education.
BEE should shift from individuals to providing assets and skills to wider communities. Company BEE strategies must involve ordinary employees, not individuals or managers.
Employees should be given BEE shares. Furthermore, companies can set up community co-operatives/trusts in which the local community becomes the BEE shareholder of the company with proceeds used for community,
skills and entrepreneurial development. Companies must provide like the post-war Korean, Japanese and Taiwanese companies did, their employees with housing, their children with skills and bursaries. Banks could for example provide, as part of BEE, a specific percentage of their book loans to housing finance for the black poor.
Finally, government must govern honestly, more efficiently and in the interests of all South Africans.
* Gumede is associate professor at the School of Governance at the University of the Witwatersrand. His more recent book is Restless Nation: Making Sense of Troubled Times
** The views expressed here are not necessarily those of Independent Media.