Nullification of BEE requirement in state procurement takes empowerment efforts three decades backwards
By Siyabonga Hadebe
The decision of the Supreme Court of Appeal (SCA) to set aside the Preferential Procurement Regulations of 2017, thus declaring them invalid, created a huge storm throughout the country.
There are now serious concerns about the longevity of Broad-Based Black Economic Empowerment (B-BBEE) policies that have been generally utilised as a conduit for economic participation for the previously marginalised black majority.
Although the court decision does not repeal B-BBEE as such, it continues to attract responses from many sections of society. In simple language, the SCA judgment removes one basic requirement for companies who wish to engage in public procurement in South Africa, i.e. the B-BBEE pre-qualification criteria.
The reason this court decision is contestable is that as things stand, as argued by the leader of the EFF, Julius Malema, not less than 80% of public spending goes to white companies. It therefore looks like white companies have become tired of fronting and approached the courts, which ruled in their favour.
This article argues that the SCA judgment does not come as a big surprise. For a long time, members of corporate South Africa have consistently expressed their misgivings about economic empowerment and the inclusion of the black majority in the economy.
Basically, corporate South Africa is saying that it no longer has time for creating space in the economy for black people. “Net Blankes, Whites Only” servitude.
The judgment blunts BEE policies and leaves a huge vacuum for companies that are owned by European South Africans to recreate “Net Blankes, Whites Only” servitude in the economy.
In any manner, BEE was not conceptualised by the ANC in the first place.
Some ex-members of the National African Federated Chamber of Commerce and Industry (Nafcoc) and the Black Management Forum (BMF) maintain that BEE was a product of Nafcoc, and want to claim credit for it. This goes to show how much certain individuals overstate their importance.
It is inconceivable that black individuals could “redistribute” what they did not have, meaning it was impossible for anyone who had no assets to have empowered anyone.
The nullification of the BEE requirement in state procurement is a regressive step that takes the empowerment initiatives three decades backwards.
BEE was a “gift” that was given by large white businesses. One former senior member of Nafcoc openly declared in a meeting with international investors that BEE was never the policy of the ANC.
The policy is a creation of white monopoly capital.
One may be tempted to link it to the Urban Foundation, a project initiated by Harry Oppenheimer in the 1970s to grow a black capitalist class in South Africa. Political economist Moeletsi Mbeki confirms that neither Nafcoc nor the ANC created BEE. In a talk given on August 28, he explained that BEE was transposed from the private sector to the public sector through the 1998 Black Economic Empowerment Commission led by Cyril Ramaphosa, which was engineered by both Nafcoc and BMF.
It is from this occurrence that these organisations see themselves as the initiators of BEE; but they grossly omit the part about Sanlam’s creation Nail, led by the late Dr Ntatho Motlana.
The commission, also called the Ramaphosa Commission, was nonetheless created “to study ways to empower black South Africans to participate more fully in the economy”.
It was through this commission that the native elite maximised their thirst for economic rent and patronage. Mbeki disputes that BEE was ever aimed to empower any blacks, but rather its goal was to maintain the status quo.
He blames companies and the government for creating overly paid black people at the expense of a productive economy.
Unfortunately, Mbeki and many members of the native elite class are happy to be assimilated in the unequal economy and to behave worse than the white tycoons.
The consequence of the selfish and narcissistic attitudes of the native elite is that the country has relied on economic rent and patronage as a pseudo-economic policy to facilitate the half-hearted participation of the African majority in the economy.
If there is a need to replace BEE, with all its flaws, the government would need to put something in its place that can achieve four things: increased involvement of blacks in the economy; economic growth; increased employment; and create a productive economy.
Unfortunately, interventions such as the draft Public Procurement Bill do not promise much.
Siyabonga Hadebe is an independent commentator on socio-economics, politics and global matters.