SA’s BEE Policies: Temporary measures turned permanent failures – Daniël Eloff - Biznews

Milton Friedman’s remark about the permanence of temporary government programs is epitomized by South Africa’s long-standing BEE, affirmative action, and employment equity policies. Initially meant to address historical injustices temporarily, these initiatives have become entrenched without achieving significant progress. Instead, they have perpetuated inequality and dependency, necessitating a shift towards economic growth and job creation for lasting change.

Daniël Eloff

Milton Friedman once quipped that nothing was so permanent as a temporary government programme. Nothing illustrates this colloquial truth as clearly as South Africa’s enduring experiment with Broad-Based Black Economic Empowerment (BEE), affirmative action, and employment equity.

In theory and initially, these initiatives were conceived as temporary measures to rectify historical injustices, providing a leg-up to marginalised communities until a more equitable state was achieved. However, decades later, these programmes remain entrenched in South Africa’s socio-economic landscape, our jurisprudence and stubborn bureaucratic agendas, while little to no progress has been made in achieving a better life for all. In fact, they have led to worse conditions for the majority of South Africans.

Since their inception, BEE, affirmative action, and employment equity have become fixtures of South Africa’s governance framework. The Employment Equity Act was enacted in 1998, followed by the Preferential Procurement Policy Framework Act in 2000, and Broad-Based Black Economic Empowerment in 2003. Despite the lofty ideals of these pieces of legislation, the practical outcomes have often fallen short of what was promised by the politicians who championed them and still champion them.

Temporary
Conceptually, Section 42 of the Employment Equity Act envisions employment equity as a temporary intervention, envisaging its cessation once demographic economic parity is achieved in the workforce. Moreover, in her 1995 book Who’s Afraid of Affirmative Action: A Survival Guide for Black Professionals, anti-apartheid activist Christine Qunta famously remarked that affirmative action “will temporarily give preference to qualified Black persons, to correct past imbalances, until a normal situation has been established.” The prevailing narrative during the 1990s and early 2000s suggested that these measures were necessary evils, expedients to pave the way for a future of equality.

The non-racial society South Africa finally achieved had to be put on ice temporarily in order to achieve equality. However, the passage of 30 years has revealed a different truth – one where racialised economic empowerment has failed to catalyse substantive change for the majority of South Africans, and has arguably further entrenched economic imbalances. The irony is palpable: despite the dismantling of racialised policies and the redistribution of economic and political power, the majority of South Africans – predominantly black – continue to languish in poverty. This stark reality begs the question: why have these supposed well-intentioned policies failed to deliver meaningful change?

A working paper from Harvard’s Growth Lab challenges the South African status quo, advocating for the elimination of BEE from specifically State-Owned Enterprises procurement to combat issues such as load-shedding. The paper contends that preferential procurement rules, intended to promote black economic empowerment and localisation, have instead burdened state entities and undermined their core functionalities. The Harvard authors argue for a strategic shift away from broad-based procurement requirements towards measures that support early-stage industries and promote local production.

They highlight the adverse impact of preferential procurement on state performance, suggesting that these measures are exacerbating rather than ameliorating socio-economic disparities. The crux of their argument lies in the recognition that these policies, while aiming to promote black economic empowerment and local development, have imposed significant costs on state functionality. Rather than fostering genuine progress, they have become burdensome obstacles, hindering for example the core functions of public entities like Eskom.

Glaring
The evidence is glaring: BEE and employment equity have not catalysed the transformational change purportedly envisioned by their architects. Instead, they have perpetuated a cycle of dependency and inequality, and have become cumbersome economic hurdles, further entrenching inequality within South African society.

Despite the now glaring failings of BEE, affirmative action, and employment equity, these initially temporary policies are now entrenched in South Africa’s politics, jurisprudence and bureaucracies. What was supposed to be a temporary solution to a temporary problem has now become an enduring feature of our socio-economic landscape. The 30-year perpetuation of these policies surely puts in doubt the efficacy of our government’s approach to redress.

BEE, affirmative action, and employment equity are temporary solutions to temporary problems and inequalities. To accept that BEE, affirmative action, and employment equity are not temporary measures is to accept that the historical injustices that South Africans faced are not temporary nor can they be addressed.

And if this were the case, what have BEE, affirmative action, and employment equity in the first place achieved, other than to soothe the conscience of those that have been elected?

Racial categorisation
If we admit that BEE, affirmative action, and employment equity are not temporary measures, it entails admitting that racial categorisation and division will continue, reinforcing the idea that individuals should be treated differently based on their race or ethnicity. This goes against the principles of equality, non-discrimination and non-racialism, which are fundamental to a just society and are at the core of our constitutional dispensation. In essence, we risk sacrificing these core values for short-term gains, which gains we never see.

The only viable path to addressing South Africa’s stark inequalities lies in ensuring robust economic growth and job creation. Rather than focusing on redistributive policies that have proven ineffective, the government should prioritise creating an environment conducive to entrepreneurship, investment, and innovation.

Economic growth generates new opportunities and wealth, which can be more sustainably and equitably distributed across the population. By fostering a dynamic economy that encourages job creation and supports small and medium-sized enterprises, we can empower individuals to improve their circumstances through merit and hard work, rather than relying on perpetual state intervention, which ultimately fails. Creating wealth is a more potent and enduring solution than the redistribution of existing resources, as it lays the foundation for long-term prosperity and reduces dependency on state mechanisms that have historically fallen short.

The enduring failed legacy of BEE, affirmative action, and employment equity underscores the perils of trading long-term principles for short-term gains. It is increasingly clear that the path to true equality lies not in perpetuating racial categorisation, but in upholding the fundamental principles of equality, non-discrimination, and non-racialism. To paraphrase Benjamin Franklin, sacrificing these core values for temporary upliftment yields neither lasting progress nor moral integrity.

Daniël Eloff is a believer, husband, father, attorney and writer

https://www.biznews.com/rational-perspective/2024/06/02/sas-bee-policies-daniel-eloff

This article was first published on the Daily Friend.