IRR’s Hermann Pretorius: ‘BEE is legalised theft - South Africa must wake up.’”

In a fearless conversation with Alec Hogg, IRR strategist Hermann Pretorius tears into the myths behind South Africa’s empowerment policies, calling BEE a system of legalised theft that enriches elites while bankrupting the state. He reveals the IRR’s Value for Money Bill - a blueprint to end race-based procurement, restore accountability, and save billions lost to inflated tenders and cadre contracts. From Eskom to education, Pretorius argues that only honesty, merit and competence can rebuild South Africa’s future..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.The Institute of Race Relations (IRR) believes South Africa’s empowerment policies have become a shield for corruption rather than a tool for upliftment. In a frank conversation with Alec Hogg, the IRR’s head of strategic communications Hermann Pretorius said the country’s most sacred policy, Black Economic Empowerment (BEE), has been “captured by the elite at the expense of the poor.”“It’s not transformation,” Pretorius said. “It’s using the suffering of black South Africans to justify procurement favoritism. BEE is fake empowerment — it’s a system that keeps poor people poor and rewards those close to power.”The IRR has just released what it calls the Value for Money Bill, a new policy proposal aimed at scrapping race-based procurement and restoring cost effectiveness in state spending. The organisation believes this reform could save billions, cut waste, and even reduce VAT to 11.5 percent — all without cutting a cent from frontline services.The bill that could change everythingPretorius said the bill’s purpose is simple: to make government accountable for every rand it spends. “It really does what it says on the tin,” he said. “It’s about making sure South Africans get value for money.”He explained that public spending in South Africa now has what economists call a negative fiscal multiplier. “For every rand government spends, the economy actually shrinks,” he said. “That’s how broken the system is.”Pretorius pointed to the inflated costs of state contracts — from R27 straws to million-rand laptops — as proof of how tenderpreneurship has infected the public sector. “These markups are not accidents. They are the design of the system,” he said. “If we simply removed the BEE premium that allows these inflated deals, we could save enough to lower VAT and redirect that money into real service delivery.”He credited his colleague Gabriel Crouse, who led the research behind the bill, for uncovering just how costly South Africa’s procurement system has become. “Gabriel’s work shows that if you clean up those markups, you get an economy that breathes again,” Pretorius said.From fake transformation to real empowermentPretorius didn’t hold back in describing what he calls South Africa’s “culture of fake transformation.”“Fake transformation is when the suffering of black South Africans is used as a cover for self-enrichment,” he said. “We’ve had 30 years of anti-growth policy dressed up as empowerment. If you look at the real barriers to economic freedom — malnutrition, bad education, poor housing, unemployment — BEE doesn’t fix any of that. It actually makes it worse by bleeding the very funds that should be used to address those issues.”For him, real empowerment means redirecting resources to where they are most needed. “True transformation is when money flows from the taxpayer’s compassion to the vulnerable’s need,” he said. “That’s empowerment. Not some politically connected tender deal in Sandton while the poor in Soshanguve are told to be grateful.”A battle of ideasThe IRR’s new focus on publishing bills is part of what Pretorius calls the “battle of ideas.” Instead of waiting for politicians to act, the think tank is drafting fully-fledged laws that could be adopted by any party serious about reform.“The IRR writes recipes,” Pretorius said with a grin. “The DA or any political party can take those recipes and decide whether to serve them. That’s our job — to develop practical ideas that make sense for the country.”Over the past year, the IRR has published several proposals alongside the Value for Money Bill. These include the No More Race Laws Bill to repeal race-based legislation, the Right to Own Bill to protect property rights, and the Better Health Bill, a private-sector alternative to the government’s National Health Insurance.“We don’t just criticise,” Pretorius said. “We show what can be done differently.”Political reactions and unlikely alliesAsked which parties were engaging with their proposals, Pretorius said the response had been surprisingly broad. “We’ve had productive talks with people inside the ANC, national treasury, the DA, Freedom Front Plus, even backbenchers from the EFF and MK,” he said.He said many politicians privately admit that BEE has failed. “We’ve heard it from names like Pravin Gordhan, Gwede Mantashe and even Kgalema Motlanthe. They’ll tell you it’s not working, but they don’t know how to replace it. That’s where we come in.”Pretorius said some engagement has come from unexpected corners. “EFF members often talk about wanting policies that truly help the poor,” he said. “If we hold them to their own words and show them that fake empowerment is hurting the people they claim to represent, we might find some common ground.”Still, he recognises that the road ahead is long. “We’re not naive. We know how entrenched the system is,” he said. “But we’re playing the long game. The IRR has been around for nearly a century. We build relationships, we make the arguments, and we win in the court of public opinion before we ever win in parliament.”Reclaiming the taxpayer’s randPretorius said the ultimate goal is to make every rand count again. “The Constitution already says procurement must be fair, transparent, and cost-effective,” he said. “If we enforce that, if we just follow the Constitution, we could change the country overnight.”He believes South Africans are ready for that kind of change. “People are tired of seeing politicians live large while hospitals and schools crumble,” he said. “They don’t want race-based excuses anymore. They want results. They want value for money.”Pretorius ended the interview on a note of cautious optimism. “We are in a moment of flux,” he said. “The ANC’s dominance is fading, and voters are ready to listen. Now is the time for ideas — not ideology. If we can show people that good governance isn’t complicated, that it’s just about honesty and efficiency, then maybe we can start rebuilding this country one bill at a time.”

IRR’s Hermann Pretorius: ‘BEE is legalised theft - South Africa must wake up.’”

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