Nelson Mandela and his then-wife Winnie raise clenched fists upon his release from prison in Cape Town, South Africa on February 11, 1990. The ANC leader had served over 27 years in detention.
South Africa’s ruling African National Congress (ANC) swept to power in 1994 on a pledge to “build a better life for all,” winning almost 63% of the vote in the country’s first democratic election.
Fast-forward 30 years and Nelson Mandela’s erstwhile liberation movement, which triumphed over the racist apartheid government, risks losing its parliamentary majority for the first time, according to opinion polls and analysts.
When South Africans vote Wednesday, an unhappy combination of rampant corruption, soaring joblessness, crippling power cuts and feeble economic growth will likely be top of mind.
The economy has gone backward over the past decade, evidenced by a sharp fall in living standards. According to the World Bank, gross domestic product per capita has fallen from a peak in 2011, leaving the average South African 23% poorer.
A third of the labor force is unemployed, more than in war-torn Sudan, and the highest rate of any country tracked by the World Bank. Income inequality is also the world’s worst. There are 18.4 million people on welfare benefits, compared with just 7 million taxpayers, according to Oxford Economics, a consultancy.
Black South Africans, who make up 81% of the population, are at the sharp end of this dire situation. Unemployment and poverty remain concentrated in the Black majority, in large part due to the failure of public schooling, while most White South Africans have jobs and command considerably higher wages.
Moreover, the government’s flagship policy for driving economic inclusion and racial equality in post-apartheid South Africa — Broad-Based Black Economic Empowerment, known as triple-BEE or simply BEE — has failed to achieve its aims, with wealth still concentrated in the hands of a few at the expense of the many.
“Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice,” Harvard University concluded in a report published in November by its Growth Lab following two years of research.
‘Elite enrichment’
Under apartheid — and colonial rule before that — Black South Africans were violently oppressed and denied many basic human rights. They were also systematically excluded from owning land, living in certain areas, and accessing a decent education and jobs.
The end of White minority rule could not on its own compensate for such extreme and prolonged injustice. Restitution was needed — and that’s what BEE set out to deliver.
There is now almost universal agreement that the policy failed to transform economic reality for the majority of Black and other South Africans who were historically disadvantaged, including Indians and Coloureds, the official term for South Africans with mixed heritage who have a distinct cultural identity.
President Cyril Ramaphosa, who has previously described BEE as “a must for (economic) growth,” promised Saturday the ANC would “do better” if reelected, with a focus on creating more jobs. The Democratic Alliance, the official opposition party, has said it would replace BEE with an “Economic Justice policy” that “targets the poor black majority for redress, rather than a small, connected elite.”
Critics of BEE argue there has been an overemphasis on increasing Black ownership of established businesses through giant deals that have, in fact, enriched only a handful of politically connected people.
This is a view held by Moeletsi Mbeki, brother of former President Thabo Mbeki and chairman of the South African Institute of International Affairs, an independent think tank located at Wits University in Johannesburg.
BEE “creates a class of rich politicians who are then beholden to the people who are making them rich, but it disincentivizes people from becoming entrepreneurs,” he told CNN. “If I became president, the first thing I would do would be to scrap BEE,” he added.
By Moeletsi’s telling, White executives devised BEE as a way to “coopt ANC leaders” in the early years of democracy by giving them shares in companies that they would then be disinclined to nationalize, a policy many in the party favored.
Still, despite tens of billions of dollars’ worth of BEE deals, Black ownership of companies stands at just 34% on average, according to the latest report by the B-BBEE Commission, which monitors adherence to the policy.
“Inroads are being made on the participation of Black people in the economy, although there is much further to go to realise the objectives (of BEE),” Commission head Tshediso Matona told CNN.
Black people are also poorly represented in top management, another of the policy’s focus areas. According to a recent PwC report, just 19% of the 200 most valuable companies listed in Johannesburg are led by Black, Coloured, Indian or Asian CEOs.
Many companies in the private sector “are not implementing the spirit of the (BEE) legislation… they’re (only) ticking boxes,” said Kganki Matabane, the CEO of the Black Business Council, a lobby group for Black business. “Businesses cannot continue to exclude the majority, they’ll render the country ungovernable one day,” he added.
Matthew Parks, the parliamentary coordinator for the Congress of South African Trade Unions, an umbrella body for labor unions and an ANC partner, says BEE has helped grow South Africa’s Black middle class but that more must be done for workers, particularly those on minimum wages.
He also argues that the policy needs more time to bear fruit. “Three decades given to overcome the impact of three centuries (of White oppression) is not enough.” According to Matona, of the Commission, BEE is “only one part of a suite of policy tools to achieve transformation,” which also includes laws around public procurement, competition, employment equity and skills development. “The overall outcome of economic transformation requires an assessment of all of these policies,” he said.
Three decades … to overcome the impact of three centuries is not enough.
Matthew Parks, the Congress of South African Trade Unions. The sharpest criticism of BEE is that it has been corrupted by private interests, leading to severe maladministration in the public sector. “It’s a huge driver of corruption in the country,” said Mbeki. He and other experts who spoke to CNN explained that under the auspices of advancing empowerment, politically connected Black people have in some instances been put into senior positions in state-owned companies despite not having the right qualifications or experience.
Similarly, some officials have abused public procurement rules that favor Black-owned businesses, awarding government contracts at inflated prices to under performing companies in exchange for bribes, a phenomenon sometimes referred to locally as “tenderpreneurship.”
Infrastructure collapse
“Tenderpreneurship” has devastated state-owned companies and local governments across the country, said Ricardo Hausmann, the director of Harvard’s Growth Lab, a hub for research on economic growth and development. “Poor implementation of affirmative action in the public sector” has contributed to “collapsing state capacity,” he told CNN. “The poster child of this is the electricity sector.”
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