John Steenhuisen: Ensure fairness, end the fat-cat feeding frenzy

Key topics:SA’s crisis driven by poor governance, inequality and stalled growthB-BBEE benefits elites; widespread poverty and unemployment persist“Fat Cats Bill” proposes merit-based, job-focused, inclusive procurement.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..By John Steenhuisen*.South Africa is stuck in a crisis of poverty, unemployment, and inequality. It pains me to say it, but this is a crisis that is entirely homegrown. Bad choices have pushed us into a vicious cycle of poor governance, low investment and low growth..This has betrayed the promise of political liberation for South Africans. The figures are startling. Since 2014, for example, South Africa’s per capita economy declined by 7.2%, a number usually associated with countries at war.While we have fallen behind, the rest of the world has been forging ahead. The average wealth per person worldwide increased by 18.9% to $11,876, nearly double South Africa’s current figure. Wealth across East Asia improved by 59.6% driven in large part by Chinese growth of 109%, and the US by 19%. Only across sub-Saharan Africa has GDP growth been negative at -1.8%.This is a failure of governance, a failure to grow opportunities for people and a failure to get business growing. It represents a failure to put people at the centre of policy.We know that good governance makes a difference. Just look at the Western Cape, which is responsible for the bulk of new jobs created countrywide during the last five years.For this reason, the Democratic Alliance has introduced the Public Procurement Amendment Bill, also known as the Economic Inclusion for All Bill.We know it as the Fat Cats Bill.This Bill is not a matter of party politics, or of scoring cheap political points, but a much more fundamental concern about finding the most effective way of graduating from the system of Broad-Based Black Economic Empowerment.B-BBEE has failed to transform the economy for the majority.While we recognise the imperative of economic redress from apartheid, which excluded the majority of South Africans from full and fair participation in the economy, B-BBEE has only worked for a tiny, politically connected elite.Think of it like this: We have conducted a 30-year experiment with B-BBEE, and the results are in: Unemployment is worse than ever, poverty persists, more have been disempowered than empowered, and corruption driven by violent tenderpreneurs has made a few politically connected individuals into super-rich fat cats.This is not empowerment. It is an economic disaster unfolding before our eyes.As a result, 44 million South Africans remain trapped in poverty. No fewer than 12 million are jobless. And our economy’s growth rate remains well below our rate of population increase, explaining why opportunities are shrinking.South Africa has a R1,200 billion (that’s R1.2 million million) government procurement budget. Under BBEEE, much of this money flows to fewer than 1,200 companies, and perhaps around 100 individuals. The vast majority of black South Africans have not benefited at all from what is no more than a system of patronage built on political privilege and creating enormous inefficiency.Instead, it has made their lives substantially more difficult and poorer, by placing a premium on doing business and reducing the financing available for pressing social projects from security to education, roads, water and electricity.It is time for us to start a new experiment. What if we gave government tenders to people who could do the job? What if we spent public money in the most cost-effective way possible? What if the broken state-owned enterprises were professionally run and built the infrastructure we needed to create jobs? What if we focused on real empowerment for those left behind by the fat cats?The Fat Cats Bill proposes a system whereby empowerment is measured by job creation rather than extreme wealth for a few, since continued skewed access to employment and the training it offers has become the 21st-century version of economic apartheid. By using poverty and opportunity as the key determinants for disadvantage, the Bill ensures that the support goes to those who need it most. In so doing, it establishes a more inclusive and equitable framework for full economic participation.Make no mistake, the fat cats are going to fight this one as hard as they can. They are going to go to the old, tired playbook of crying ‘racism!’ and summoning the ghost of apartheid for one more macabre defence of their ill-gotten gains. They don’t want efficiency; they want back-door tenders. They don’t want the people to be empowered; they want all the power for themselves. They don’t want a state run on merit; they want a state run by their cronies and relatives.We have taken this step to ensure that our ambitions are shaped not by what happened yesterday, but by the prevailing conditions today and by creating the opportunities of tomorrow. We cannot expect normal, hard-working South Africans to have to any longer carry on their backs the burden of these fat cats.B-BBEE has become synonymous with fronting practices and elite enrichment. This Bill offers fresh thinking to deliver freedom and fairness, not fat cats. When they vote on this Bill, politicians will be deciding whether they want to be on the right side of history: a South Africa of inclusion, growth and citizen empowerment.If they choose to remain stuck in the past, the choice will be the voters’ to ensure they are represented by those who are looking to the future. And we must start by ending the fat-cat feeding frenzy..*John Steenhuisen is the leader of the Democratic Alliance, and Minister of Agriculture in the Government of National Unity..*This article was originally published by Daily Friend and has been republished with permission.

John Steenhuisen: Ensure fairness, end the fat-cat feeding frenzy

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