By Lauren Hermanus (17 Aug 2010)
It is easy to dismiss Black Economic Empowerment (BEE) as a vital component of socio-political transformation, given the lack of trickling down from the top, and persisting stench of cronyism and corruption in the upper echelons of the South African economic pyramid. Yesterday’s Cape Times reported two BEE related scandals. The first voiced questions directed at the legitimacy of Arecelor Mittal’s BEE deal that secured its new mining rights. The second is the allegation of fraudulent BEE scorecards in Massmart’s supply chain. The Business Day reported, again, on the banks’ protracted ‘victory’ limiting black equity targets to 10%. And, Mamphela Ramphele, black business woman, suitably empowered, publically denounced BEE last week. Not the first and probably not the last BEE controversies to be confronted.
This is not another blog bemoaning BEE and affirmative action. I have had experience of not being black enough to be given opportunities; and not being white enough to not have my race used to undermine by ability when offered opportunities based on ability, qualifications and my contribution to equity considerations. BEE will only be redundant when there are no longer structural barriers to self-empowerment that specifically affect black South Africans.
The systemic need to address these barriers does not negate the need for general social empowerment, broad-based development, or racial integration and it is bigger than flippant political posturing and my hurt feelings.
Inequality is a feature of all capitalist societies, but South Africa’s racially structured inequality is the worst in the world. (Incidentally, this blog is also not a communist rant, though a healthy dose of red – and green – interrogation of our present system would not go entirely amiss). We are faced with three very real challenges:
1. The economic gap between the top and the bottom needs to be reduced;
2. In a country with a large black majority and racist history, the distribution of wealth at the top of the pyramid must reflect the demographics of the base;
3. This must be achieved without exacerbating racial cleavages in SA.
If these challenges seem to you to be irreducibly opposed, then you have realised the complexity of the task at hand.
Socio-economic inequality erodes social capital. It has been correlated with lack of trust among citizens and violent crime. The black – and here I include all non-white South Africans with an expedience I loathe to enforce – middle class grows, but poverty remains a profoundly entrenched reality for this, our country’s majority.
Working towards equality is vitally important, not only because it can and must be ethically motivated. Its importance is strategic. Equality, both real equality and symbolic gestures thereof, is good for political stability, which means that it is good for business and good for communities. Social capital is a public good from which all South Africans benefit.
The government is responsible for creating a more equal society. Holding businesses accountable to legislated standards on equal racial (and other) representation and ownership arguably makes businesses responsible for the delivery of a public good. This is one way of thinking about it.
There is another way: BEE enables businesses to internalise and address a socio-economic problem to which they contribute, in a way that adds to social capital and ultimately makes good business sense.
There are real challenges to the implementation of BEE:
- Balancing the opposed short-term interests of shareholders and community stakeholders.
- Effectively communicating the long-term interest in building social capital shared by all parties.
- Ensuring the effective and transparent communication of BEE projects.
- Balancing large symbolic deals with grassroots level social enterprise developments.
- Implementing systems – preferably countrywide – to monitor and report on the effectiveness of real and shared Black Economic Empowerment.
- BEE must be implemented with care not to stigmatise black South Africans or marginalise white South Africans.
BEE is about ensuring the sustainability of our political and socio-economic gains in South Africa post but not past apartheid. Is business rising to the challenge? Will business rise to the challenge? Inequality will not disappear if we bury our heads. We have to criticise specific BEE failures without undermining the urgent underlying problem. It is time to restart the BEE debate, within the framework of this open-ended list and the context of the deeply interrelated economic, social, environmental, and political sustainability of our system.