The dark side of transformation: How revenge politics is harming SA’s economy – Mpiyakhe Dhlamini

Journalist, Mpiyakhe Dhlamini, explores the negative impact of transformation policies, such as employment equity and Broad Based Black Economic Empowerment (BBBEE), on South Africa’s economy and society. The article argues that these policies, which aim to address historical inequalities, have instead facilitated corruption and perpetuated poverty by pushing out productive people based on arbitrary factors such as race and gender. Despite these negative outcomes, Dhlamini notes that many middle-class supporters of the ruling African National Congress (ANC) remain attached to these policies as a means of revenge against past harms, highlighting the allure of victimhood in South African politics. Find the article below.


Transformation at all costs is not worth it

By Mpiyakhe Dhlamini*

It is not a party capable of governing well but it can remind its supporters that they have been harmed and it can take revenge on their behalf regardless of whether this improves anything in their lives. This is reflected most strongly in the attachment to transformation among South Africa’s middle-classes.

This is the holy cow of our politics. No matter how much things may go wrong, among especially the middle classes, few seem to be willing to consider that maybe the attempt to transform our best institutions at all costs is the underlying reason behind the general collapse of all things under the ANC government.

The transformation agenda is judged on two things, its intentions rather than its outcomes, and how much it harms/is hated by the racial groups that are the object of its revenge politics. It is a set of policies which are meant to pull down rather than build up, and in that it succeeds brilliantly.

It also pulls down those who are the victims in the narrative it weaves. By bringing down institutions, it ensures the perpetual poverty of those it claims to serve. That is why after three decades of ANC rule, the net result is gradually coming to nothing. After a promising early start when transformation was rolled out slowly, all the ANC’s gains are now being unwound. The access to basic electricity, water and sanitation is being undermined by the transformation agenda’s facilitation of corruption.

Read more: ANC’s ideological indulgences distract from tackling poverty, unemployment in SA

Increasing unemployment

Poverty reduction is being undermined by increasing unemployment, even if it has decreased temporarily for one quarter due to the Western Cape, the one province not being run under transformation mania. And in any case, poverty reduction under the ANC was mostly due to social grants.

But this is being undermined by the loss of productive people through emigration and the failure of job creation to keep up with population growth. Social grants are increasingly unsustainable, since the tax base is shrinking in spite of the ability of Mr Kieswetter to squeeze blood from a stone.

Yet, black middle-class supporters of the ANC are unwilling to contemplate ending the signature transformation policies of employment equity and Broad Based Black Economic Empowerment (BBBEE). The first forces each company to adopt employment equity targets for transforming the demographics of its staff to be more in line with national averages.

This ignores the rather obvious fact that skills, interests, talents, and inclinations are not distributed according to national averages. The fact that employment equity targets get more and more teeth over time means that we lose more and more productive people who are pushed out for arbitrary things like their race and gender.

This cannot result in efficient, tax-paying businesses, but try telling that to the people who believe that employment equity saved them from racist corporate South Africa. The obvious points raised in any rational mind are firstly: Why would you want to work for a company run by racists?

And secondly, if corporate South Africa is generally racist, then this is a competitive edge in the market for black-run companies. We only need to deregulate the market and promote savings and capital formation among black people and they will produce better, more productive companies because they will be hiring only on the basis of merit and not race.

Read more: Religious rhetoric: The winning strategy for secular parties, ANC?

Facilitator of corruption

The policy of BBBEE on the other hand has been the biggest facilitator of corruption. It commits companies to a scorecard that while not only based on ownership, includes ownership as well as elements such as preferential procurement. Companies can increase their BBBEE score by awarding contracts to black-owned companies for example. BBBEE has teeth because it is a condition of government contracts.  The state usually collects 25% of GDP as taxes in the economy, and it issues the currency, which means it spends much more than 25% of GDP through inflation. So doing business with the government is hard to avoid.

This is not counting state-owned companies like Eskom and Transnet who often have monopolies for critical parts of the economy. And it’s a self-re-enforcing law because businesses who do business with the state can increase their score by doing business with other private entities with a high BBBEE score.

It also has teeth through being made a condition of state concessions such as mining licenses.

BBBEE facilitates corruption because the politically connected have a first-mover advantage when it comes to BBBEE. They are always ready when new changes to BBBEE legislation are made, due to their connections with insiders. These insiders also have preferential access to the particular BBBEE and other tender requirements for state contracts. These are some of the reasons why this policy has tended to empower those aligned to the ANC and has driven inequality among black people to be greater than inequality between whites and blacks, for example.

All of this has made life worse for South Africans of all races, and yet the commentariat as well as many members of the black middle class, some of whom don’t support anything else about the ANC except these policies, still believe in it. The allure of victimhood is too strong for these people even if it drags all of us to hell, as long as those damnable whites burn along with us.

Read more: ANC could retain a stranglehold on SA’s future even if it loses the majority in 2024 elections – Ivo Vegter

*Mpiyakhe Dhlamini is a programming tutor and writer. He is also a policy fellow at the IRR. He believes passionately that individual liberty is the only proven means to rescue countries from poverty.

The views of the writer are not necessarily the views of the Daily Friend, the IRR or BizNews.

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