How solidarity plans to force out BEE by 2030: Connie Mulder | The NdB Sunday Show

In this edition of the NdB Sunday Show with Chris Steyn, Connie Mulder, the head of Solidarity's Research Institute (SRI) shares its comprehensive roadmap to gradually transition South Africa from race-based legislation to real empowerment, based on need, economic growth and job creation by 2030. It includes practical suggestions on BEE, employee share ownership programmes, foreign investment and a more realistic approach to employment equity. “... our history has shown the only way the ANC does the right thing is if we force them in that direction. So it's not just a plan on paper. We've got levers, court action, public pressure, international pressure that we apply on each of these points.” He is confident that the implementation of the roadmap would also close the corruption opportunities created by empowerment and procurement regulations. “I suspect you would find that the breathing room for your tenderpreneurs who have successfully transformed tax money into Maseratis in South Africa is going to dramatically decrease.” Meanwhile, Solidarity has lodged a formal complaint with the International Labour Organisation (ILO) of the United Nations against the South African government over its breach of an agreement reached with Solidarity that racial laws should be temporary in nature, that no one may be dismissed based on race, that race may not be the sole criterion for appointment to a position, and that skills must be considered. Solidarity is also pursuing legal action in South Africa over the contempt of court order..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 every morning on 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.Chris Steyn (00:00.962)Welcome to the NDB Sunday Show with me, Chris Steyn and Connie Mulder, the head of Solidarity's Research Institute. Welcome, Connie.Connie Mulder (00:13.017)Chris, to be here.Chris Steyn (00:14.904)Thank you. Solidarity has drawn up a comprehensive roadmap to a race-free South Africa by 2030. What sent you, what realities in South Africa, sent you to the drawing board?Connie Mulder (00:32.149)I think it's the reality of driving to work and seeing people standing in an intersection and begging and then realising we do not have to be this country. We can actually be a winning country, but we've got the ANC specifically who absolutely insists on focusing on the team photo rather than looking at the scoreboard. So the first step was just doing some research as to what is the damage that these race-based legislation that they do. And we were shocked to find that we were the only ones who've done this sort of research. So for most public policy, everyone assumes that there's a cost. Let's say we've got a police force. So there's a cost, you have to pay salaries, et cetera. But there's a benefit as well. So as the public, we go, all right, the cost is worth the benefit. But the moment you start talking about costs associated with BEE, you suddenly get denial. You have the president once again now stating, no, there's no cost. Now, that's crazy, that, meaning… Obviously, there's a cost: you're raising the regulatory hurdle that companies have to go through. You're increasing the cost of compliance. Obviously, there will be a cost. So we started a report that says what is the actual cost of the, what does it cost companies to comply? And the results were quite shocking. From our perspective, we found, and this is using the BEE commissions reports, using the JSE payroll data, using Stats of Africa's data. So it's not our own data. We just had different data sets talking to one another. And the costs, conservatively estimated, is between 1 and 3% of GDP growth per year that companies are rather spending on complying with this extremely burdensome system. Now that means we went back and said, let's say this system wasn't in place. if South Africa had grown at the same rate as our peers, which is a weird thing. Every peer country that had outgrown us. And the question should be why, but if we had growth at the same rate as appears by reducing this penalty that we seem to be paying for a race regulated system, unemployment would have been roughly about 17% today. So not ideal. Obviously there's still other macro economic conditions that are a challenge for South Africa, but that would have been 4 million more people having jobs. So then the question is what does this policy actually do? And what we've seen… Connie Mulder (02:54.723)…and Prof. Gumede has shown it, etc. is it does not work on any of the metrics that it says it should. It has not reduced unemployment. In fact, it has increased it, specifically black unemployment. It has not reduced poverty. In fact, it has increased it. Every single South African citizen is poorer and more unemployed due to these policies, except a small elite who have gotten very rich off the back of this policy. And then that means Solidarity when we look at this….It's one of those lessons that you learn quite early in your life, is if you're in a hole, the first step is to stop digging. And that is why we've got a great push with this report, et cetera, and the general debate on this, to say, we need an end date. We need an end date for these policies. We need a date on which South Africa no longer discriminates based on race, a date in which South Africa then can be truly non-racial. And that is the goal of the whole campaign that we're launching. We've gone to Switzerland, and we've got some...local levers that we're also pushing, but just saying this policy is damaging to the economy. When does it end? What does it look like? How do we get this to end?Chris Steyn (04:05.485)So you calculated the compliance, the cost of compliance. Now imagine if we add to that the corruption it engendered, the empowerment regulations. We've heard through so much testimony at so many commissions how procurement regulations opened the door to corruption to enrich the elite at the cost of the poor. So I don't know if anybody has done that maths addingConnie Mulder (04:19.608)Yeah.Connie Mulder (04:30.19)Etc. No, no, exactly.Chris Steyn (04:35.359)…adding the cost of the corruption to the compliance cost.Connie Mulder (04:40.302)No, that's so we purposefully use the most conservative estimate that we could to say, all right, let's be reasonable. Let's use the most consideration. Certain compliance costs associated with points, for example, spending on upskilling and etc. Qualifications we didn't add; we said, all right, that that does add value to the economy. So this is the most conservative estimate. It's between one to three percent of GDP growth. This also does not count….the corruption, which we've seen Judge Zondo refers to it, says that these policies have been a gateway into capturing State procurement, but also the missed opportunity costs. We've got Starlink, who's quite loud about their BEE compliance, but for every Starlink, there's a hundred companies that just simply pass us by, that go to Morocco or go to Egypt, go to Mauritius and say, look, your regulatory burden is way too complex. We're not going to invest. And it's not just us saying it, this is the World Bank has stated the regulatory burden has become, well the regulatory environment has become too burdensome for companies, it's retarding growth. So it's one of those things that it just, it's common sense, but then you have a government who says, no, no, it's the ANC that constantly replies, it's just a fallacy.But you would notice that whenever they reply with its lie, there's one thing that they don't do, they have no numbers attached to the reply ever. They never say, no, no, no, your costs are wrong. This is what the actual cost is, or this is where it has increased. There's no numbers. It's always just know you're lying. And it's basically because we don't like what you say, which is true. So that's the first step. And that means from our perspective, both the other big piece of racial legislation is the Employment Equity regulations, which we've also calculated…if you have to grow into these targets. Remember, the minister published targets last year. And if a company does not comply with their sectoral targets in five years, they face fines and severe fines. So we calculated how can you comply? And on the one hand, said, look, let's say everything is wonderful, it's hunky dory, you grow into these targets. And then we'd require almost 38% GDP growth for the employment to be created to grow into the targets, which given South Africa's history is completely unrealistic, which then says the other end is, but okay, who do you need to replace to...Connie Mulder (07:01.954)….meet these targets because these targets have the power of law behind them. And then the calculation showed you would have replaced almost 70,000 white males. They refer to us as the non-designated group because it falls better on the ear, I suspect, but non-designated group just means white male. It's nothing else. But also 112,000 African women, black African women in healthcare and education. Because the moment you start social engineering based solely on demographic representation, you just deny all agency that people have. The fact that women choose to be in health care more than men doesn't matter. They should be in mining and etc. that is, if you look at the bean counting that's happening, the racial bean counting, that's just craziness to say that, okay, this is the way we're going to run a country. And we've ultimately seen it spill over into grassroots level. South Africa is the only country that I know of where we, last year, we kicked a professional cricket team out of a final, provincial professional cricket team out of a final, because they used the wrong type of black bowler. They had six black people on the field, but only two African black people. They picked the wrong type of black bowler.… But Africa doesn't work that way. We also had a professional netball team being kicked out of a final in 2020. It's a provincial netball team, it's not school sports, et cetera because they had for one quarter too many black players on the field. Too many black players. Now when we look at this, we need to stand back and look at it. We've now, we're in a situation where at school sports you have a race ref next to the game who's constantly counting, okay, what colour is what player. That's not what winning looks like. That's not what social cohesion looks like. And that's not the South Africa that we can be. We can be so much better than we are at the moment. And that is why four out of five people in South Africa do not want this racial pause.And we've now said, all right, let's first, we need an end date, let's stop the system. It's becoming an increasingly absurd system. But then it is very important. If you look at South Africa, you would have to be heartless to not see the dire socioeconomic circumstances…That means the roadmap says, all right, let's get an end date. But then what can we change to ensure that we help the right people instead of the right colour people? How do we help…Connie Mulder (09:24.942)…poor people, how do we help unemployed people, how do we help young people? And then we have some suggestions that are regulations or settlements that the government has already signed, which don't take a lot to change, to transform the way the empowerment from black economic development focuses on skin colour to much rather focus on a needs-based approach, saying, all right, if you need help, let's help poor people rather than poor black people.Chris Steyn (09:49.806)So after your extensive research, you proposed a phased, phasing out instead of an immediate ending. So how would that work with BEE and EE now?Connie Mulder (10:03.062)Yes.Connie Mulder (10:07.126)Yes, so we're realistic. I think Otto von Bismarck said politics is the art of the possible. And that means we're also aware of the fact you can't just do a hard stop overnight. Although from our perspective, we should have long since done away with the Apartheid-style racial classification that we're still living with every day. Some of the suggestions that we have, the first one is very simple. At the moment, if a multinational wants to come into South Africa, they have an immense regulatory burden that they have to...Now you've got an instrument in the EECA, the Economic Equity Equivalence Programme, that multinationals need to apply to be granted access to. From our perspective, it's a silly thing to do, is why would multinationals have to give away equity, etc. We're just saying, just flip that around. Instead of making it government decides that a multinational is in the Equity Equivalence Programme, start it off as a default. You're a multinational coming to South Africa, you're going to be in the Equity Equivalence Programme. And then government has to argue why not? Then they can say, right, but you're a different kind of animal. We need to get you out of that. And then also change the Equity Equivalence Programme to focus on uplifting poor communities and upskilling people rather than skin colour projects, which it has in currently. Now this should make it much less of all three to reduce the friction for a foreign investor who wants to actually build a factory or something in South Africa. You say, all right, now I can come in. I would have to have some localisation criteria. So I have to spend money on uplifting the community from where my employees are from, or I need to upskill my employees, or I need to upskill the poor community. Now everyone wins in that scenario. As a company that's not a bad investment. Ultimately, they're going to get more profit out of that. And as a country, we're actually helping the right people. We're not buying the third or fourth Maserati for an entrepreneur with a deal. So that's the first thing for multinationals. Then if we go to local companies, one of the ways in which you can get your BEE Ownership Score up is an Employee Share Ownership Programme or an ESOP. But typical ANC, at the moment only the black people count in an ESOP. No, just take a moment to realise these two guys standing on the factory floor next to one another. They've got the same job, but the ANC says, no, no, no, okay, only the one would count….Connie Mulder (12:29.262)towards the company, the other one not. So companies tend to sort of disregard their employees who aren't black or, but it just doesn't make any sense. These guys are in the same socioeconomic situation. So we're saying one, make ESOP the primary vehicle, but two, to remove the race component, just say, all right, if you give meaningful empowerment to your employees, you should get points on your ownership scorecard. We've seen international examples in the US as well as in the UK that showed when companies do this, productivity increases, better saving, better wealth creation, better saving for retirement, et cetera. And you start actually uplifting working class and lower middle class people by giving them asset creation in a company that they in any case work for and they tend to work harder and want to be more sort of aligned with where the company is going. So make ESOPs the primary vehicle and make it easy for companies to get a meaningful ESOP going to empower their employees. If we move to employment equity, it's actually, it's shockingly simple.We have laid several complaints at the international labour organisation against the South African government, saying that what they're doing here does not constitute restitution anymore, it's now moving way past the temporary programme. And ultimately the ILO ordered government to go into negotiations with Solidarity to get an immediate settlement to resolve this dispute. In 2023 we had some...let's say robust negotiations, but ultimately we ended up with what government itself called an amicable settlement. They signed it…., we had pictures, and the settlement had some provisions. It said, all right, it's important to have people who are previously disadvantaged enter the labour market, but you have to use common sense. So if you're a company and you're looking to employ people, then certain justifiable grounds will exist, it says, but I couldn't find a candidate. First is if the person with the skills doesn't apply. Because at the moment, what are you going to do if you're an engineering firm, you can realistically represent the demographics of professionally trained engineers in South Africa, not necessarily of the whole population. The government insists you have to represent the demographics of the whole country. These two things don't make sense. In the same sense, if you're a Springbok coach, the Springboks can't represent the demographics of the country, they can represent the demographics of...Connie Mulder (14:54.146)….professional rugby players because that's an inherent skill that's necessary. So the first is if the skills aren't necessary, if I can't find a person with skills, if I can't afford them, if my company isn't growing into this, if, quite simply put, if I intend to, want to actually retrench people, et cetera. We also had a provision in there that said no one may be retrenched based on racial criteria, which just is, if you're talking about restitution, we don't want to create new injustices to correct old ones.There's no reason why we're going to say, right, show up at the shop floor and go, all right, all the white people to the right, you're on a fire because our targets are wrong. That's not a situation that we want to be in. The ANC itself has created this state. That's not what they envisioned.We signed this agreement. The ILO was very happy. They said it's a wonderful agreement. And then a year and a half later, the ANC just reneged on the whole deal. They went, no, we're not going to do it. We're going to only use race as a criteria. Now, we made this agreement in order of court…in the courts at the moment to say, look, said, it's not just, you didn't sign something, it's a court order that you're defying, but it says something about the way they see this. Because the one thing that they took out is they took out that clause that said you can't be terminated, which is a weird thing to do, given the way that they've proposed it. So from our point of view, the simplest thing to do is literally just abide by the settlement that you've already negotiated and already signed. Just implement that. There's no reason why you can't do that. They've thus far refused with all sorts of weird reasons, but it does go to show the absolute hypocrite that President Ramaphosa has become, because he would say, no, we need South African solutions. This is a South African solution. We negotiated it. You signed it. And then you decided you don't like South African solutions. You would rather have an ANC solution. And that is exactly what we have. And then the last suggestion that we have is saying, This is the one that might take a legislative change. It's a bit longer of a timeline. All of these other things can happen within three to six months if the government actually moves on it. It's simply stating, we need to go change the definition in the Employment Equity Act. At the moment, the Employment Equity Act is set up to favour black people, but it's now been 30 years and black is not a good proxy for disadvantage anymore. So we've got a problem… is we need to help empower poor people. We need to help empower unemployed people.Connie Mulder (17:19.554)We need to help empower young people. So, to change the definition, government has already moved in this direction in other areas. Meaning, if you reply for an NSFAS bursary, they don't count your race. They say, all right, what is your household income? And government has a database of people who have lower certain threshold. So, use that database. Say, right, if you're on this database, you're part of a designated group. We're to help. The advantage of this is if you get a job, you can move out of the database and we won't have to constantly re-empower a millionaire into a millionaire, which is what's happening at the moment. We can empower someone, get them into a job and help them better themselves, which is what we want. Second part is we've got the social relief for the stress grant. It's a 350 COVID grant. It's actually quite stringent to qualify for this grant, but we have a department that has a data person who has qualified for this grant. So say, all right, if you're on that list, you're part of the designated group. If you're an unemployed person, this is we should be empowering. So we want to incentivise companies to appoint people who are poor or struggling or who are unemployed. This is obviously what we want. We don't want to have legislation that ensures a black senior manager goes from earning two million to earning four million grand a year. That just doesn't make any sense. And the last one is saying, but let's say we are going to not have, but make the decision to group anyone born after 1994. The ANC would constantly tell you that the system is necessary to correct the injustices of the past. But...more than half of the country now, I think the median age is 28, which means more than half of the country was born after 1994. They've never known anything but an ANC government. So we now need to not be in the opposite world where somebody born in 2015 can somehow be held responsible for a system that stopped existing long before they were on the planet. And that means 1994 is a good start to say, let's say anyone born after that, because otherwise this will become a system that goes on in perpetuity. It does not make sense to have racial discrimination against a child born in 2005 or 2010 for a system that they could not ever have any part in. So let's get that going. This also incentivises companies to appoint more youth, which is exactly what we want to put a youth unemployment crisis going. So let's say, let's incentivise companies to appoint poor people, unemployed people, young people. The vast majority of who will still be black.Connie Mulder (19:43.806)We will still be empowering black people in large, but the difference would be we would be empowering the right people and not just the right colour people. And that is the suggestions that we have to say, let's try to transform from a race-based approach to a needs-based approach.Chris Steyn (20:00.844)Okay, have you shared your roadmap with any of the political parties in the Government of National Unity?Connie Mulder (20:07.885)Yes, no, it's where we're hoping it goes. It gets widely publicised wide. Because I know people would say, all right, this is a nice plan. But how do you actually do it? Are you going to be dependent on government suddenly starting to realise common sense? And I don't think we've been around the block a couple of times with ANC….We're not under any impression that they're going to just do the right thing themselves. In fact, our history has shown the only way ANC does the right thing is if we force them in that direction. So it's not just a plan on paper. We've got levers, court action, public pressure, international pressure that we apply on each of these points. From our perspective, the first and most important action is just getting the debate going on when does this end? What is an end date? How does the end look? You have Business Leadership South Africa two weeks ago basically saying you are going to destroy manufacturing because you've shifted the goalposts once again. And that is the point is…the ANC has designed a system where they can constantly shift goalposts. This needs to stop and say, all right, let's get an end date. What is the definitive point? Can we now say we've now reached it? Because all of these measures are defined by the ANC themselves, but also by international standards as temporary measures. Saying, you had an injustice. Now you have to temporarily discriminate to rectify. And a temporary measure needs to end. So first is public pressure getting getting the debate going on. What is the end date? When does this end? How does the end look? What does success look like? Where are we going? Then we've got some court actions, et cetera. We've got public pressure, hopefully local pressure that will translate into political pressure, but also international pressure, not just from the US, which has been applying pressure on this, but from the UN, from the International Labor Organisation, from the World Bank, et cetera, which have been consistently applying pressure.And if we can elevate, say, look...Here's a pressure point where you can apply all of the pressure saying, just change this regulation. Why not? What is holding you back? Why can't you do that? Because saying you need to stop race based regulation is so vague, the ANC can ignore it. If say, look, we're saying change this regulation specifically to this. And then they have to argue why, why not? So it's part of the plan to go that direction. And lastly, we're not in the business of waiting. So we have started building just this Race Free platform South Africa is going to see by 2030: we have a platform…Connie Mulder (22:31.959)…for job seekers and for companies that advertise jobs, where one of the requirements is simply put, you cannot put an advert there for a race requirement on your job title. If it's there, then we remove it immediately. And that is, from our perspective, look, we get along very well at grassroots levels. South Africa does not have animosity. South Africans like one another. The politicians just need to start learning a couple of lessons from us, at grassroots levels, figuring out that we need to have respect for one another and allow one another to be exactly what you are. But at the same time, stop this idea of trying to oppress one another for some reason. Let's move towards a truly non-racial South Africa, because then we can be a winning country again. At the moment, we're a country that is absolutely obsessed, or an ANC government at least, absolutely obsessed with what does the team photo look like, and that's completely ignored the scoreboard. And from our perspective, we need to switch that around. Let's focus on the scoreboard and ignore the team photo so that we can be your winning country.Chris Steyn (23:34.188)You've likened the race classification laws of the African National Congress to Apartheid. I think you've referred to it as Apartheid style. Isn't it ironic that you now have to use the law?Connie Mulder (23:51.983)Yeah, I think we need to be careful. It's not the same as Apartheid. We're not saying that. What we are saying is that these pieces of legislation use Apartheid-style racial classification, which they still do. They use this for race categories that the National Party had. And that is what they're trying to use as a proxy for disadvantage. But that's not necessary anymore. In fact, we've seen that something like inequality, for example, has not come down at all. BEE has not reduced inequality, but what it has reduced is intergroup inequality, inequality between whites and blacks have reduced. But the inequality in the black group has grown dramatically. So inequality now is primarily within the black population, meaning the richest people in South Africa are black, but the poorest people as well. Now that means using black as a proxy here is not a good fit for actually empowering disadvantaged people. We need to move to a needs-based approach rather than using the crude National Party Apartheid style racial classification, which these laws are still using. Now they expressly state they need to use it to retrace an historic disadvantage. We think that's a semantic argument. At best, what you need to do is you need to address poverty, need to address unemployment and specifically youth unemployment. And we can do that with different metrics and different measures. We don't need to resort to simple race based criteria.Chris Steyn (25:14.538)I take it you're confident if your roadmap were applied that it would start closing the opportunities for corruption.Connie Mulder (25:23.694)Oh, most definitely. And that's one of the advantages is we're not the only ones who are fed up with the system. There's a broad phalanx of opposition against this. If you believe polls….almost 4 out of 5 South Africans say, no, we don't want this anymore. We want a merit-based society, especially when it comes to government functioning, saying, look, we don't care what colour the person is who switches on my water, as long as there's water in the taps. Just get that going. And paradoxically, the people who suffer the most from corruption-induced service delivery problems are the poor and destitute. If you're at a certain income level, you can buy solar, you can buy a borehole, you can get out of the crisis of municipal services. But if you're poor and destitute, the insistence on using a tenderpreneur who's not actually ever intended to fix the water, but just wants water tankers to drive….That's going to cause actual major water disruptions to the people that you're supposedly empowering and that means if we can move away from saying look you're going to get the tender because you're black and rather say you need to show that you're the cheapest, that you can do the job and we don't care who does the job because service delivery affects everyone. There's no reason for us to have service delivery in the hands of especially race-based criteria based on a service delivery situation because the people who benefit the most are the people who require those services the most.I suspect you would find that the breathing room for your tenderpreneurs who have successfully transformed tax money into Maseratis in South Africa is going to dramatically decrease.Chris Steyn (27:03.254)Why do you think with all the evidence on the table, all the calculations, that the African National Congress has dug in its heels and particularly President Cyril Ramaphosa?Connie Mulder (27:14.862)I think we should not lose out of sight that there have been real beneficiaries of the system. It's not been broad-based. It's been a small elite that have gotten very rich and obviously they're going to fight against this. But that has come at the cost of the employment and of the welfare of every other South African citizen. We've all paid the price for the system. For the simple reason it retards economic growth, it does investment, it means we've got more unemployed people. The second thing is I do not think the ANC is capable of reform. I've read their policy documents for the last 20 years and they've really not strayed from 1997 until 2025, end of last year. They just simply cannot see that it's possible to grow an economy and their economic view, the economies are fixed…And then the only thing that you can argue about is who gets what size of a slice. Whereas in the real world, and we have several international examples, we have China, we have many East Asian countries that have lifted people out of poverty by growing the pie. It's possible you can grow your economy, but the ANC does not ascribe to that view. And that means I think low economic growth does not bother them that much as it should, but they're obsessed with how do we slice the pie correctly rather than moving in a direction that says, look, let's make sure everyone has a bite, which is what you can do: You follow a couple of… it's not rocket surgery, it's not that difficult to get an economy growing. We've seen several countries other than South Africa do it. I've repeatedly said that South Africa is sitting on a rocket ship economic growth-wise. We've got everything going for us. We love this country. We've just got a horrible government that insists on snatching defeat from the jaws of success every single time.Chris Steyn (29:07.02)Lastly, is there anything about your roadmap that we haven't touched on that you would like to add or explain?Connie Mulder (29:15.47)No, it's important that we start this conversation. I would encourage people to please start the conversation as much as you can, apply public pressure and help us. We're going to spend the next four, five years actively pushing in this direction, but it's not something that we can do alone, obviously. I can, I have to sleep at some point, so I can only do so much. But no, we're fighting for a better South Africa. And the reason for that is quite some people, as … just stated repeatedly. We love our country. We've been here for a long time and we really love the country. We do not like the government. And in that sense, we're just in the business of building the future that we want to see. And if you think that the future of a non-racial, much wealthier future is something that you would like to see, please help us build this.Chris Steyn (30:04.364)Thank you. That was Connie Mulder, the Head of Solidarity Research Institute on the NdB Sunday Show with me, Chris Steyn. Thank you, Connie.Connie Mulder (30:15.022)Thank you, Chris.

How solidarity plans to force out BEE by 2030: Connie Mulder | The NdB Sunday Show

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