How BEE became a ladder for the elite, not the poor

Key topics:B-BBEE enriches elites, failing to uplift South Africa’s poorest citizens.Race-based empowerment ignores real barriers: education, health, housing.True reform needs merit-based, grassroots solutions like the IRR’s EED plan..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 Hermann Pretorius*.“Broad-Based” Black Economic Empowerment (B-BBEE) reduces being economically excluded to being black. Even if this unsupported and contentious position were true, B-BBEE would still be an inherently elitist policy that caters for an entrenched elite already equipped for high levels of economic participation, and leaves the poorest behind.At best, it is an entrenchment policy and not an empowerment policy. At worst, it is a cynical smokescreen to justify the continual incestuous enrichment of an elite, using the unallayed socio-economic hardships of millions as justification.If we take economic empowerment to mean a credible route from poverty to at least sustainable membership of the middle class, an honest assessment of the simple socio-economic facts will show that in South Africa, and likely elsewhere, blackness doesn’t cause poverty, nor does poverty cause blackness. The fact that there are wealthy black South Africans makes a factual mockery of any idea that having a black skin causes poverty. And the fact that there are poor white South Africans debunks any idea that a black skin leads to poverty.For black children from an economically deprived place like Atteridgeville, there are, quite simply, multiple obstacles to their upward socio-economic mobility and the chance of one day joining the middle class. If their skin colour might be one of these factors, even the most ardent champion of B-BBEE cannot honestly say it’s the only one. Let’s take a clear-eyed view of what obstacles lie between black children and their joining the middle class..Read more:.ANC stands firm on BEE despite US pressure.Unsafe neighbourhoods and high crime-rates expose children to violence and chronic stress, undermining learning and school attendance. Parental absence, widespread in South Africa due to spatial apartheid, migration, and family breakdown, reduces emotional stability and parental guidance. Overcrowded housing, poor sanitation and unreliable healthcare further erode health and learning prospects.Compound disadvantageEducational obstacles often compound disadvantage. The 2021 PIRLS study found that 81% of Grade 4 learners could not read for meaning. Linking this tragedy to socio-economic disempowerment, Spaull and Kotze’s findings in a 2014 working paper, Starting Behind and Staying Behind, showed that early learning gaps in poor communities persist and widen. Even when children succeed academically, they face weak local labour markets, as Raj Chetty’s seminal 2014 research on mobility and opportunity in the United States touched on. They also face limited social networks to access bursaries, internships or jobs.One often hears the argument that B-BBEE’s implementation, rather than the policy itself, has made it an elitist policy that enriches the wealthy rather than empowering the poor. It is possible to debunk this contention wholesale.In a country where the socio-economic obstacles standing between children born in poverty and their rise to join the middle class are entrenched and cruel, what happens if race-based policies like B-BBEE or employment equity race targets are enacted? Is it reasonable to expect a wholesale, broad-based wave of empowerment cascading across the country and bringing upliftment to those most removed from rising to the middle class by these multiple factors?Unfortunately for those arguing that policies like B-BBEE and employment equity targets aren’t inherently elitist and incapable of aiding the poor, the clear answer is a resounding ‘no’.Even if we entertain the flimsy premise of the pro-B-BBEE camp: that a black skin in South Africa today is an obstacle to socio-economic upliftment, removal of this obstacle through racial favouritism in state interventions evidently and logically cannot uplift the vast numbers of black South Africans trapped in poverty.Deepest crevassesFar from allowing empowerment to reach into the deepest crevasses of socio-economic deprivation, the only possible beneficiaries of policies like B-BBEE will be those black South Africans who have already overcome the formidable and entrenched obstacles discussed above.And far from allowing an entire racial group to experience a rising tide, race-based empowerment policies like B-BBEE can only further entrench the relative socio-economic privilege of those already occupying the most privileged positions within the said group. These policies create within the identity groups, in South Africa’s case the black population, insurmountable divisions between the already-haves and the never-will-haves. It isn’t a bug – it’s a feature.For B-BBEE policies to truly benefit across the board – to be, as the label claims, broad-based – the multiple other obstacles to economic empowerment will first have to be dealt with. Two strands of irony creep into this scenario:Firstly, B-BBEE’s eschewing of merit as the prime consideration in appointments and dealings, contrary to the recommendation of former Chief Justice Zondo in his commission report, harms those people most in need of capable and expansive state support and reliable service delivery. By allowing race-based policies instead of merit to dictate the allocation of financial and human resources, state support and delivery to the poorest are sabotaged in terms of both quality and quantity. The primary victims of this in South Africa? The poorest black people in our society.Secondly, were the various obstacles to socio-economic upliftment to be removed so comprehensively as to level, as it were, the playing field of opportunity, and for the racial favouritism of policies like B-BBEE to be applicable and useful to the entire black population, the favouritism itself would be redundant.Actually remove obstaclesFor B-BBEE, therefore, to stand any chance of actually removing obstacles to economic empowerment in the poorest parts of South Africa and creating the fabled ‘level playing field’, either B-BBEE itself will have to be suspended to ensure a merit-based capable state able to ensure proper service delivery and social support, or the holistic eradication of all other obstacles to socio-economic upliftment must have been so effectively dealt with that B-BBEE as a tool of engineered substantive equality becomes instantly redundant.Economic empowerment and disempowerment in South Africa therefore reveal B-BBEE at its best to be irredeemably elitist, where it isn’t utterly impotent. The problem for the advocates of all race-based empowerment policies is a fundamental misdiagnosis of the socio-economic obstacles faced by South Africa’s poorest. The mere fact that there are wealthy black South Africans and poor white South Africans casts sufficient doubt on the simplistic assumption is that a black skin is an obstacle to socio-economic upliftment.The uncomfortable truth is that B-BBEE has not merely been poorly implemented, creating an elite beneficiary class whilst leaving the rest behind. The fact is that all race-based empowerment policies like B-BBEE are conceptually misaligned with the real barriers to and engines of economic upliftment.By mistaking race for the root cause of poverty, it diverts attention and resources away from the structural obstacles that actually entrench deprivation, while those at the top gain ever more wealth and privilege. Benefits can only ever flow to the relatively few who have already surmounted those obstacles, not to the millions still trapped behind them.As a result, B-BBEE operates less as a ladder for the poor than as an elevator for an elite already on the inside. A genuine empowerment policy would directly target the obstacles to prosperity that do not discriminate on race: the deep, layered impediments to upward mobility.Cascade of empowermentThis is the heart of the IRR’s Freedom From Poverty Bill, a draft legal instrument that replaces BEE with Economic Empowerment for the Disadvantaged (EED). Instead of misguided or cynical assumptions about socio-economic obstacles, EED focuses on the three most immediate and tangible knots that, if untied and untangled, can trigger a cascade of empowerment at a grassroots level: education, housing, and healthcare..Read more:.EED over BEE: A smarter path to true economic empowerment.By creating a tax-funded voucher system for each of these socio-economic mobility choke points, state funding will flow directly to those who need it most. Not only will this stir economic activity across the country and cut out countless bureaucratic or corrupt hurdles currently sapping the life out of state support for those in need. It will give the fundamental dignity of consumer choice to those who have been excluded from it.Until South Africa embraces such an approach, racial favouritism dressed up as empowerment will remain what it has always been. More and more South Africans are seeing policies like B-BBEE to be incoherent in theory, elitist in practice, and unjust in outcome..*Hermann Pretorius studied law and opera before entering politics and, latterly, joining the IRR as an analyst. He is presently the IRR’s Head of Strategic Communications. He describes himself as a Protestant, landless, Anglophilic, Afrikaans classical liberal..This article was first published by Daily Friend and is republished with permission

How BEE became a ladder for the elite, not the poor

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