Anthea Jeffery: EED must replace BEE. Vouchers will transform SA via new deal for truly needy

The IRR's Head of Policy, Anthea Jeffery, puts the final nail into the BEE coffin, sharing research into how more than 80% of Black South Africans are sick of the ANC's elite enrichment programme and would support a voucher-based alternative like the one successfully applied in India and elsewhere. She explains that even the SACP admits BEE is the primary cause for SA's disastrous economic performance for the past decade and a half. In this powerful interview, Dr Jeffery explains how a fairer, globally-tested alternative is preferred by the majority and spark a transition that would inject energy into SA's moribund economy. She spoke to BizNews editor Alec Hogg..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.Edited transcript of the interview ___STEADY_PAYWALL___.Alec Hogg (00:04.558):Well, the pressure is building on black economic empowerment. It is being exposed as a mirage, which was supposed to have supported and helped those who were affected, particularly economically by the apartheid regime. In fact, it's done the opposite. It's made lives worse for the majority of South Africa's population and only enriched a few. We are going to continue along this theme today, with Dr. Anthea Jeffrey, who's got some interesting insights. It's called the Economic Empowerment for Disadvantage, the EED, as an alternative to BEE. A story that's been on BizNews that she wrote, which has been extremely well-read. We're gonna pick up on it in a moment..Alec Hogg (00:57.826):Anthea, thank you for joining us. The whole BEE story is now suddenly coming into the spotlight. I guess helped along a little by, although love him or hate him, the chaotic Donald Trump has certainly shone a spotlight onto what the ANC has been up to in the last 30 years. Something that it seemed to have been given a free pass on from most people around the world, including the United States..Anthea Jeffery (01:26.649):I think that's right, and I think that for very many years the narrative was always that there might be the odd problem with BEE but really the solution was just to ratchet up the rules and then to implement it more strongly and then it would be even more successful. And I think there has been a reluctance until now to acknowledge the extent to which it's widened inequality. As you were saying, that it helps perhaps 10-15% of the black population, the people who are the best skilled, the most credentialed, often the best politically connected, and it's harmed the remaining 85 percent. And I think that realisation is really beginning to hit home. There have always been some acknowledgements of that, interestingly some of them coming from very senior figures within the ANC..With Pravin Gordhan back in 2010, for example, saying that BEE hadn't worked, made South Africa a fairer society, had helped the few rather than the many, and the SACP in 2017 saying that it was the main reason for our rising Gini coefficient because it had so contributed to intra-black inequality. Again, same picture. It's the small group at the top that benefit, the great majority who don't, and then the gap between the two of them widens. So we now do, fortunately, I think, have a widening recognition that BEE is not working. Perhaps it's also triggered by the fact that we have yet another year of meagre economic growth at 0.6% of GDP against population growth of 1.3% of GDP. So obviously, the entire population is getting poorer year by year on a per capita basis. We need to break the mould, and since BEE is something that deters investment, hampers growth, worsens unemployment, it really deserves critical scrutiny, and we believe the development of an alternative..Alec Hogg (03:27.021):Unfortunately, it also is benefiting the few who are incredibly powerful within the decisions or shaping political decisions. How might their minds be changed? Are they going to have to be bought off by some other policy to actually give up these wonderful gains? And you just think of various sectors of the population who have benefited hugely. From BEE, many of them are talking to Gabriel Krauss recently. He unpacked, your colleague at the IRR, he unpacked the cost of BEE being around 150 billion a year, rands a year. That's just an extraordinary layer on top of everything else. And we all know about this, but those who are getting the 150 billion are certainly not gonna give it up without a fight..Anthea Jeffery (04:24.121):Yes, that's right. And the 150 billion he talks about is only in the public procurement context. And BEE obviously has many costs beyond that. But certainly, there are entrenched interests and people will fight to retain the current system because it does work for the few. And it has made a relatively small number of people extremely wealthy. And also, I've probably given them a sense of power over business. So nobody wants to give up that. But if we can just make the voice of the ordinary people emerge more strongly, perhaps that can be a powerful countervailing factor because the Institute has been polling black South Africans on BEE and on some aspects of our EED proposal for a number of years. And with the EED idea, we particularly want to do something that will reach down to the grassroots, that will help the most disadvantaged get ahead by equipping them with better education, better healthcare, better housing..And international experience shows that you can do that through tax-funded vouchers. So we've been asking people what do they think about vouchers. And in our last polling in 2024, 92% of black respondents who really liked the idea of schooling vouchers, 83% supported healthcare vouchers, they wanted to have them. 80% were in favour of housing vouchers. And when we asked people if they thought the vouchers would be more effective than BEE in helping them to get ahead, 81% of black respondents said yes. And this is a consistent picture that goes back to 2016 when we first began asking this question. So if the political parties could tap into what South Africans think and want and then provide a very clear message that this is what they would introduce if given the power to rule, then perhaps this would help to break the logjam where people know that the ANC government is not working for them but they haven't switched ready considerably to alternatives yet, not enough. We saw a big shift, of course, in the 2024 election but we need a bigger shift still..Alec Hogg (06:41.197):Have they been used elsewhere to good effect?.Anthea Jeffery (06:46.169):Yes, they have been. India has a very big voucher program at the primary school level, which is… run in all private schools. But there are vouchers also in many other countries. And the idea was really a simple one. Initially, I think the whole assumption was that government must not only fund education, which of course makes sense, but must also deliver it. And when you have state delivery, it turns to become top-down, centralised, bureaucratic. Nobody really gets good service from it. Bureaucrats who run it are not affected if the schooling system is not good. If anything, there are likely to be more bureaucrats and more money to solve the problem next year. So somebody called James Tooley, who I think is quite well-known, he's now the Vice Chancellor of the University of Buckingham, has been studying this problem and the fact that in developing countries all around the world, in India, in Africa particularly, parents have been voting with their children's feet by taking them out of free but dysfunctional state schools and sending them to private schools, very low-cost schools..Here in South Africa, we have such a high level of unemployment that it really is difficult to imagine that many people would be able to afford even low-cost private schools. But if they are equipped with tax-funded vouchers, then this becomes viable. And the great merit of the voucher system, as Professor Tooley pointed out, is that it gives everybody an incentive to compete. The idea is that you work out how much of the education budget is going to low-income households at the moment and being badly spent by bureaucrats, and instead, you divide that amount among the low-income households and you transfer that amount to households for use only for education as vouchers, and then parents can choose what school they would like their children to go to..Anthea Jeffery (08:48.891):And the school uses the voucher money to pay all their operating expenses, including teacher salaries. And that means that they have a powerful incentive to make sure that they are attracting more pupils, which means that they must increase their performance. And we have so many public schools at the moment which are really dysfunctional, which are not doing well. And our failing public schools would now receive a reason, an incentive to up their performance. Whereas the fact that there are many people with vouchers, there is effective demand, as it were, in the economy..It would mean that many other businesses would also be keen to start meeting this demand. And so you would have an increasing pool of schools that are competing for the vouchers of parents who have a real choice and who know that the schools that they are sending their children to have incentives to compete with one another, have incentives to innovate, to push quality up, and hold prices down. And it's worked well in a number of countries where the children at private schools, some of them voucher-funded, some of them with parents paying, generally do better than the public schools. And that's why parents move away from the free but dysfunctional public schools to ones that work better. And we can aid that process and really help the truly disadvantaged by taking the money away from the bureaucrats and giving it to the families..Alec Hogg (10:20.557):It's an irresistible idea. It makes a lot of sense. It's very logical. But so too is the argument against BEE. And yet you get some very smart people like Professor Pierre de Vos. And you quoted in your article another professor as well, Christi van der Westhuizen, who both said that the whole situation or the whole argument against BEE is a white-right agenda. We're hearing a lot of that lately. It seems whenever one puts a logical suggestion forward, you do get this accusation that it's about defending the status quo, keeping the few in control of the wealth and holding back transformation..Anthea Jeffery (11:08.368):Yes, I think that's a very big problem. And there is a narrative in South Africa that says that to challenge BEE is to challenge transformation itself. And I think that the reality is very different. Transformation is necessary, but we must ask what kind of transformation do we want? Is it the kind of transformation that's going to benefit the few and deepen inequality? Or is it going to be a more inclusive, more sustainable form of transformation that really helps the poorest of the poor to make progress? And we believe that a voucher system would be exactly that kind of transformation, and it would reach the truly disadvantaged, the people who don't have the political clout to benefit from BEE. And to argue for vouchers, to argue for an alternative system that could really improve the lives of the majority of South Africans, is a very different kind of argument from just defending the status quo..Alec Hogg (11:44.112):Absolutely. But how do we get the political will? We have a government right now that is deeply entrenched in its own ideological perspective and it's been in place for decades. How can the average person, especially someone who might not be that engaged in the political debate, break through this barrier?.Anthea Jeffery (12:08.447):Well, I think it's about creating enough pressure for the political parties to see that this is a winning issue. In the past, people have been too scared to speak out because they felt that BEE was something that had to be accepted. That was the dominant narrative for a long time. But as I said, with this growing realisation that BEE has helped the few and hurt the many, I think that pressure is slowly beginning to shift. More and more South Africans are waking up to the reality that they've been excluded from the benefits of economic transformation..Alec Hogg (12:42.090):And how do we, as the public, as voters, play our part in shifting the narrative, in changing those entrenched interests? Because it's easy to get cynical about it all and think, well, what's the point? They'll just push through whatever they want..Anthea Jeffery (12:59.619):I think there's real power in the voting booth, especially with the rise of alternative parties. You can see that in the 2024 election where many South Africans voted for parties that are challenging the status quo. The challenge for political parties is to offer a clear alternative to BEE. If they put forward practical, workable solutions that will benefit the majority of South Africans, it will be hard for the ANC or other entrenched groups to ignore that..Alec Hogg (13:31.890):Yes, it's crucial to make sure there's an alternative, because without that, it's easy for the current political elite to shut down any meaningful conversation about change. What has been the reception to your idea of EED so far?.Anthea Jeffery (13:47.867):There's been a lot of positive feedback. We've received encouraging responses from people who are tired of the BEE system and see it as an obstacle to real transformation. I think there's a growing recognition that a voucher system for education, healthcare, and housing would allow ordinary South Africans to empower themselves and take charge of their own lives, rather than relying on a government that hasn't delivered on its promises. It's a model that makes sense, but as you rightly say, the challenge is getting political buy-in from parties and leaders who are deeply embedded in the current system..Alec Hogg (14:28.227):And those entrenched interests do not give up power easily. I imagine you're also facing some pretty stiff resistance from those in the business world who benefit from the current model, especially those who are getting government contracts and benefiting from the BEE scorecard..Anthea Jeffery (14:45.690):Yes, absolutely. There are many businesses that benefit from the BEE system, and they're deeply invested in maintaining the status quo. Some of them have profited handsomely from the preferential procurement policies, the ownership stakes, and other BEE-linked opportunities. So, they will resist any change to the system because they stand to lose. But the real question is whether their interests should outweigh the needs of the broader population, especially the poorest South Africans, who continue to bear the brunt of unemployment, lack of access to quality education, and healthcare. We need to challenge that and show that their model isn't working for the country as a whole..Alec Hogg (15:26.267):And one would think it should be in their long-term interest, too. Because the current system is not sustainable. If you've got a small group of people benefiting at the top, that's simply going to create more resentment and undermine social cohesion..Anthea Jeffery (15:41.499):Exactly. And that's the real danger. If we continue on this path, the inequality will only worsen, and the gap between the haves and have-nots will become even more pronounced. We're already seeing signs of social instability, and as I mentioned earlier, South Africa's economic growth is abysmal. A divided society can't thrive, and businesses that benefit from this system might think they're insulated, but they're not. In the long run, it's in everyone's interest to build a more inclusive society where the benefits of economic growth are more widely shared..Alec Hogg (16:16.196):Well said. So, as we wrap up, Anthea, what do you think needs to happen next to move this conversation forward?.Anthea Jeffery (16:24.344):I think we need to keep pushing for a more honest conversation about the effects of BEE and about viable alternatives. It's essential that political parties take the idea of vouchers and economic empowerment for the disadvantaged seriously and start to champion it. We also need to continue polling ordinary South Africans to show that there is broad support for change. Ultimately, I think the public will drive this, and when they realise that their votes can force real change, we'll see momentum build for alternatives to BEE that actually help those who need it most..Alec Hogg (16:58.808):Dr. Anthea Jeffrey, thank you for perhaps lifting some scales on some eyes. Anthea is the head of policy research at the Institute for Race Relations. I'm Alec Hogg from BizNews.com..Read also:.🔒 Worldview: Trump nominates conservative media critic as US ambassador to South AfricaTony Leon: New US Ambassador to SA "a flamethrower from Trump's MAGA world"End race quotas, embrace merit for real growth

Anthea Jeffery: EED must replace BEE. Vouchers will transform SA via new deal for truly needy

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