WeeklySA_AdminREDRESS: The 1970s’ equal opportunities employment programmes were part of a ploy to glorify capitalism…
By Sandile Swana
The idea that company budgets must be used to improve the living standards and quality of life of the black majority in South Africa started in the 1970s as a way of negating the effects of apartheid.
A number of chief executives of both multi-national and local companies embraced the economic inclusion of the black majority.
Those in power started programmes of even seeking to create exclusive facilities for the black middle class who benefited from equal opportunity in employment and in various programmes seeking to introduce the free-market system and entrepreneurship to black peoples.
Exclusive black townships like Diepkloof Extension, Spruitview, and Selection Park, among others, were created to distinguish black achievers from the lower income groups.
The Western corporations, the apartheid state, and local companies, wanted to create a buffer – a group of black people to experience the benefits of Western capitalism, who were willing to protect it from radicalised black activism.
Some of the early BEE philosophies and guidelines were crafted by American black activists such as the Reverend Leon Sullivan in 1977. He launched the Sullivan principles which included certain clauses such as these:
• Non-segregation of the races in all eating, comfort, and work facilities;
• Equal and fair employment practices for all employees;
• Equal pay for all employees doing equal or comparable work for the same period of time.
• Initiation of and development of training programmes that will prepare, in substantial numbers, blacks for supervisory, administrative, clerical, and technical jobs;
• Increasing the number of blacks and other in management and supervisory positions;
• Improving the quality of life for blacks outside the work environment in areas such as housing, transportation, schools, recreation, and health facilities;
• Working to eliminate laws and customs that impede social, economic, and political justice.
The economic empowerment of black people as envisaged by the programme would be a gradual incremental process, and would not cover the whole black majority at one fell swoop.
It was funded by the employers or owners of wealth. The white tycoons have not complained about the money they spent to fund the project – this from the 1970s to 2018.
Opposition to the Black Economic Empowerment (BEE), and later Broad-based Black economic Empowerment (B-BBEE), started during the presidency of Cyril Ramaphosa for reasons related to loss of political power, and not costs or economics. A similar process to the BEE had been previously used to empower poor whites, especially the Afrikaners. Stable multi-generation wealth in white population was achieved during the past 31 years, 1994-2025.
Over the past 40 years whites have produced tertiary-educated four generations in a straight line for the first time. That process of empowering poor whites has been in process since 1910.
Black multi-generational educational attainment and wealth accumulation are at the earliest stages of formation, and both have not yet spread out into the main body of black people in the country. Scholars generally agree that the BEE was started by white business corporations and had a number of components, including large-scale bursary schemes in collaboration with major universities in the 1980s.
Companies such as Eskom were at the forefront of creating equal employment opportunities at their workplaces, and the “electricity for all” programme which deracialised access to electricity in the 1980s and early 1990s.
According to the company’s statement: “Eskom began implementing equal employment opportunities in 1986 when it established an Equal Opportunity Committee to address discrimination and promote new policies.
“This initiative included commitments to the education and training of black employees, increasing the number of black managers, and putting all employees on unified salary scales.” These policies and practices clearly targeted the economically excluded black people. Even those programmes could not cover the bulk of the black majority at one go, and were largely controlled by white executives – the owners of wealth, and not by the state.
Sanlam is regarded as a pioneer of creating large-scale black share ownership – to introduce shareholding to the black community, and by extension, make Western capitalism and Free-Market system attractive to black elites.
The company is considered a pioneer for creating large-scale black share ownership, particularly through its partnership with Ubuntu-Botho Investments (UBI) and its 1994 BEE transaction involving Metropolitan Life.
These initiatives, which included broad-based empowerment transactions, and the creation of the first large black-owned company listed on the Johannesburg Securities Exchange, significantly contributed to transforming the country’s economy.
In the process of time, the state promulgated B-BBEE which is described by Moneyweb in these terms: ”The overwhelming majority of shares owned by black people on the JSE are broad-based ownership schemes that benefit employees and communities. “The vast majority of the BEE schemes were poorly designed and thus sank or made a financial loss.
“Insurer Sanlam has had to begin unwinding its failed R8-billion Broad-based Black Economic Empowerment transaction implemented in March 2019.
“The deal, which saw a 5% stake in the financial services group effectively issued to five new beneficiary trusts and existing empowerment partner Ubuntu-Botho, has been under water since early 2020, when the effects of the Covid-19 pandemic rattled through markets.”
Looking at the wealth of the black majority, and associated skills development and educational attainment, black people have been in reverse gear, especially after the 1994 political breakthrough in which the ANC won the right to run the democratic state.
As we speak blacks own about 1.2% of the total JSE while making about 93% of the country’s population. The project BEE has been conflated with criminality and incompetence in the state procurement systems and patronage in the appointment of civil servants. Those phenomena are international in their scope, affecting virtually all procurement systems in the absence of effective internal controls in any nation or company.
Most of the state procurement budget goes to the large white-owned corporation starting with the Arms Deal and many questionable deals involving Bain, McKinsey, KPMG, British Aerospace, and many more. Nations, in each era, have sub-groups that need special attention and state support in their development. The farmers of the Netherlands made the Netherlands an agricultural export superpower through targeted state policies and budgets.
The US has over-invested in the ICT sector or silicone valley to achieve worldwide supremacy- while neglecting other sectors, including farmers.
The black people need systematic intervention and education to create multi-generational wealth, among other things. The white owners of wealth have always paid for and led black economic empowerment. As things stand, they now want that activity to be unregulated and conducted by them as charity work on their own terms.
The thinking among them is that state power might fall into the “wrong hands” – such as the EFF and MKP – who must not have the legislative power to enforce the B-BBEE if they were to take over political power.
There are many bogus calculations that do not tie up with the formal study of economics, but rely on voodoo accounting to make wild claims about the costs of the B-BBEE.
Senior economist Duma Gqubule put that matter to rest, stating the following: “At the end of 2022 there was black ownership of R228-bn within the top 50 companies on the JSE, which accounted for 93% of the exchange’s market capitalisation. This was equivalent to 1.2% of the market capitalisation of the top 50 companies. After excluding the value of foreign assets of listed companies, black ownership was 5.8% of the value of SA assets.”
The detractors of BEE attribute the failures of the country’s macro-economic policy to BEE, declaring the investment is down because of the public sector investment strike started by Zuma and deepened by Ramaphosa.
Private sector investment follows aggressive state infrastructure investment which Ramaphosa has not done. The BEE is not a factor, ask Microsoft, Ford or Amazon. Mbeki achieved record levels of investment while BEE was in force. Proper B-BBEE as originally envisaged by the legislators has not yet been implemented in the country.
The following factors need consideration. The large white-owned companies have over the years favoured certain BEE beneficiaries in order to capture the ANC.
The ANC has lost absolute political power, so they now want other avenues of pursuing corruption. The BBEE transactions were badly designed such that the vast majority made losses for black investors.
• Sabelo Swana is a political and governance analyst for local and international media, independent consultant on governance, leadership and strategy
