Some Uber Truths from Moeletsi Mbeki on SA/US trade; Business and the GNU; roots of destructive BEE
Political analyst Moeletsi Mbeki strips off SA’s hypocrisy band aide to explain how the nation needs to understand its one-way relationship with the USA (in SA’s favour) would always need to rebalance – so instead of moaning about Trump, the onus is on Pretoria to design something that works for both countries. Mbeki also shares insights on what was actually a respectful approach by Big Business to keeping the GNU together; and explains how BEE attacks SA’s most important need – fostering entrepreneurship among the demographic majority.
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Edited transcript of the interview
Alec Hogg (00:07.096):
It's barely a month ago that we had the BizNews Conference in Hermanus. One of our keynote speakers, Moeletsi Mbeki, had a lot of interesting things to say. Subsequent to that, he followed up on a conversation with Sizwe Mpofu-Walsh, which has really caught the imagination of the public, particularly BEE at the centre of it. Now, we've got Donald Trump to contend with as well, with the Trump tariffs. We'll find out from Moeletsi an update on his thinking.
Alec Hogg (00:40.046):
Well, let's see. Lovely talking with you. I suppose there's only really one place to start, and that is the Donald Trump tariffs. Clearly, from the conversations I've had with people in the United States—people close to the government as well—there is a back channel happening. They say that they are very unhappy with a lot of the way things are being structured in South Africa, and black economic empowerment (BEE) or the way it’s implemented at the moment is one of the red flags. Now, there's a heck of a lot going on with Trump, tariffs, and everything else, but you've waved that flag—or have been waving that flag—for quite some time, despite receiving criticism. Maybe before we go into further discussion, can you just, in a nutshell, give us your concerns with the way BEE is structured at the moment?
Moeletsi Mbeki (01:37.664):
Well, you know, I’ve been opposed to black economic empowerment since the beginning of the whole process. You remember, BEE started somewhere around 1991 or 1992, and it was triggered by the transfer of what were called high voting shares from a subsidiary of Sanlam called Metropolitan Life. There was a black company called New Africa Investments Limited, led by the late Dr. Mutlana, and our current president, the president, was one of its shareholders. Now, these guys—about six of them—were loaned money by the Industrial Development Corporation (IDC) to buy 10% of the shareholding in Metropolitan Life. They didn't have to provide any security to IDC because Metropolitan Life underwrote the debt that they incurred. So, it was literally a gift for them to buy these shares. Now, my objection was that after over a hundred years of job reservation, the challenge that Black South Africa faced was to promote entrepreneurship. To me, that was the most important challenge we faced—not to enrich politicians from the liberation struggle. Black economic empowerment does not promote entrepreneurship. If anything, it disincentivizes entrepreneurship because it gives people shareholding in existing companies—26% or whatever it is—and since they don't have the capital, the company has to finance them.
Moeletsi Mbeki (04:00.006):
So, it really is a system of buying favours from black politicians, and that is the second problem with black economic empowerment. In the process of buying favours from black politicians, you then create an environment for corruption because anything goes in that situation. So, first, black economic empowerment disincentivizes entrepreneurship—which we desperately need in South Africa. I mean, if we are realistic, most entrepreneurs in South Africa are either white or Indian. So, we need to get Africans and coloured people into entrepreneurship. That is a very important part of developing the economy of the country and tackling problems of unemployment and poverty. True entrepreneurship—not enriching a coterie of politicians. So, that has really been my objection. I was interested that Donald Trump is concerned with our black economic empowerment policies. As it happens, I’ve been opposing them since 1991 or 1992.
Alec Hogg (05:25.142):
It’s extraordinary that you've now laid out the absolute truth. You've always been talking about these, but whatever resistance or objections there have been to this, this capturing of black people by the business establishment, it has been shot down, subverted, not discussed, not allowed to be spoken about in open conversation. And now we sit with a situation where, exactly as you say, entrepreneurship amongst the majority of people is restricted to the informal sector. It just doesn’t seem right. But let’s face it—how many powerful interests are benefiting from the system? The IRR says 150 billion rand a year, at least, legally going to the beneficiaries. To reverse it, to fix the mistakes made in the early nineties, 25 to 30 years ago, will take something. Do you think what Trump is doing right now will help or hinder that process?
Moeletsi Mbeki (06:37.536):
Well, I don’t know what Trump’s strategy is regarding his opposition to black economic empowerment in South Africa, so I can’t say what his actions are going to be. But for us as South Africans, black economic empowerment is a liability—it’s not an asset to the people of South Africa. We have to find a way of getting rid of it. Of course, you're right that there are powerful interests that benefit from this undermining of economic development in South Africa. But then the French... there was a lady who, when the French people said they couldn't find bread, told them to eat cake. So, the beneficiaries of black economic empowerment will likely end up the same way.
Alec Hogg (07:49.218):
Marie Antoinette—deranged when you're so far away from the normal, or the ordinary people. But let's go a little deeper. We now have the business community telling the DA to stay in the government of national unity, and also trying to tell the president the same thing. But Cyril Ramaphosa has told them to take a hike. This does appear to be an overreach, perhaps, from the business community, given that it was the business community that left us with BEE, which, if you like, is where it all went wrong. What’s your view on this?
Moeletsi Mbeki (08:33.312):
Well, my own view when I listened to President Ramaphosa’s response to the business letter is that I think he totally overreacted. There was no suggestion of dictation in the letter. In fact, the letter uses the word "pleads" with the leaders of the ANC and the president of South Africa not to break up the government of national unity. The second mission was to set up an armed wing and find training facilities and countries to arm and train the ANC’s military wing. That was the situation.
In the case of the United States, South Africa’s anti-apartheid struggle had a very powerful family—the Kennedys—who were very strong supporters of the anti-apartheid movement. In fact, I think President Kennedy, John F. Kennedy, was the first to impose sanctions on South Africa after the Sharpeville massacres. I think he imposed an arms embargo, if I’m not mistaken. So the United States also opened up for South African students who were in exile, and later even those who were not in exile, with a scholarship program in the 1980s promoted by a Democratic congressman named Stephen Solarz. This was a scholarship program to bring students from inside the country.
Moeletsi Mbeki (14:40.848):
So they pressured the regime to give students passports to study in the United States. If I'm not mistaken, over 3,000 students went to study in the U.S. under the Solarz program during the 1980s and early 1990s. So, that was one side. The other side, of course, was the sanctions movement. The Kennedys and the Democrats pushed for sanctions, but President Reagan opposed sanctions. Reagan and his right-hand man on Africa, Chester Crocker, opposed sanctions and vetoed a resolution on sanctions tabled by the Democrats. The sanctions movement had to persuade the Republicans to join them to override Reagan's veto. The Republicans did join, and the Comprehensive Anti-Apartheid Act was passed despite Reagan's veto.
Alec Hogg (15:38.318):
It was passed over President Reagan’s veto. Now, I don’t think the ANC, after it was sanctioned by the United States, made any effort to build relations with the Republican Party, and I think that’s one of the problems.
Moeletsi Mbeki (15:38.876):
Exactly. The ANC never made an effort to build up its relations with the Republican Party. I think that’s one of the problems. They never explained the armed struggle, never explained their relationship with the Soviet Union, which was arming them, and never explained their relationship with Cuba. They just took an antagonistic view when these issues were raised, and obviously, this has been building up for many years. Now, it’s burst—it’s like a boil that’s been there, building up, and now the boil has burst. This is what we’re sitting with now. I don’t think if the ANC had made the effort to maintain relations with the Republicans, we would have come to this stage.
Alec Hogg (16:52.59):
It’s a beautiful dilemma we face in South Africa. But we do have humility sometimes, and surely there’s a great deal of humility required on both sides of the ocean right now. We're very small in the eyes of America. What would you advise the South African government to do right now, given that even getting an audience with Donald Trump and his closest advisers would be very difficult?
Moeletsi Mbeki (17:20.98):
Well, you know, the experts on American politics tell us that Donald Trump is a transactional person—he wants something for what he's giving. So, the Americans have been giving us a lot, but that’s one-way traffic. They’ve been giving us. As I pointed out, in the 1980s and early 90s, they gave us scholarships for our students, and they imposed sanctions on the apartheid regime. Now that we are a normal democratic country, we have to have reciprocal relationships, where we also give. The question is, what is it that we have that Donald Trump and his administration value about South Africa? That’s what we should be discussing with them.
Alec Hogg (18:32.07):
So it’s really that simple—one looks at what we can give them so that they will give us back and remove these awful tariffs? I had a message this morning from the Citrus Growers Association of South Africa, and they are really worried because the citrus is on its way to the United States and will be priced out of the market. If those tariffs are implemented tomorrow, all that citrus will come back, and that’s going to have a big impact on 20,000 jobs and the town of Citrusdal, which has focused its attention on the United States. Who knows what’s going to happen there? There are some immediate practical implications. Would part of your recommendation be for the government—or, if it’s a government of national unity—to get together quickly, act cleverly, as Helen Zille told us yesterday, and get something on the table before the country starts losing jobs?
Moeletsi Mbeki (19:41.546):
Yeah, absolutely. The two main parties, at the end of the day, are the ones who matter in the government of national unity. They have to sit down and look at what the Americans are interested in about South Africa, what they would like to get from South Africa. Then they should sound out, through various channels, whether they’re heading in the right direction. The good thing about the United States is that it has think tanks like the Center for International and Strategic Studies, which has a lot of access to the U.S. government. They should go see these think tanks and ask them: What does this guy want? What can we give him that he would consider valuable?
Moeletsi Mbeki (22:07.58):
We have think tanks in South Africa as well. I’m chairman of the South African Institute of International Affairs, one of the oldest think tanks in the country. We have the Institute for Global Dialogue. I haven’t seen the government of national unity talking to these experts. We have powerful research teams in these institutes who can advise them.
Alec Hogg (22:27.214):
Going to these think tanks... We have powerful teams of researchers who can advise them. I think one of our big problems is that we have a very narrow government, and I don’t know what the solution is to that, but that is one of the big problems. That's why people end up doing things like implementing tariff barriers against things they don’t understand—through people who don’t even know what’s going on in the country.
Alec Hogg 24:22:56
Moeletsi Mbeki, South African political economist and I'm Alec Hogg from BizNews.com
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