A Stake in Growth
The whirlwind pace of political change in SA, from the onset of negotiations to the democratic transfer of power in the space of 10 years, was always highly unlikely to be matched for speed and thoroughness in the economic sphere. Not only was change in business going to be a much slower and more complex process, but its scope would be more limited given that white business was likely to remain a relatively powerful force for some time to come.
Nonetheless, black business participation has forged ahead in most sectors of the economy, notably in mining, financial services, liquid fuels, telecommunications, media, fishing, arms and, more recently and controversially, the forestry sector. This rapid accumulation of wealth has drawn in trade unions, women's and community groups, foreign capital and state assistance to further the advance of black economic empowerment.
The drive to match political empowerment with economic muscle has not been without controversy : the auditor-general's report on the arms acquisition process highlighted several questionable incidences of conflict of interest. Tony Yengeni, the ANC MP and former chief whip, is appearing in court on charges related to the arms deal, and the acquisition by empowerment consortium, Zama, of formerly state-owned forests has run into trouble over allegations of payments made to officials involved int eh tender process.
In other cases, political figures have quit public life to concentrate instead on business, with Cyril Ramaphosa, the former ANC secretary-general leading the trend, and other leading political icons such as former Gauteng and Mpumalanga premiers Tokyo Sexwala and Mathews Phosa following suit.
Business has been criticised for being less than enthusiastic about black economic empowerment. But behind the obvious need to deracialise the economy, an even more pressing issue suggests itself : namely whether empowerment should seek merely to add social and racial weight to an already skewed pattern of ownership in a society marked by glaring inequalities in ownership, or whether empowerment should be vested with broader social and economic objectives : in other words how to shift ownership and promote growth, rather than merely putting new faces in old boardrooms.
It is precisely this conundrum which faces the government as it prepares its formal response to the report on empowerment handed to President Thabo Mbeki last year. Since then the trade and industry department has been central to drawing up a new, and as-yet unseen policy document that will form the basis for a major debate in government on BEE in the near future.
Hard choices will have to be made amid the clamour for empowerment. But government needs to define black empowerment care fully, deciding how best to promote it and in what sectors, and agreeing on how it can be monitored. There is a call from some for a prescriptive approach, backed by a Black Economic Empowerment Act, to enforce racial targets of ownership.
As with affirmative action, government will have to decide whether the social aims are worth the imposition of another duty on the business sector, namely to police and enforce ownership targets. The danger with enforcing targets, apart from a new cost to doing business, is that less profitable divisions and activities are likely to be handed out to meet targets, with little regard for their ability to generate growth.
Rather than the heavy hand of bureaucracy, a government-sanctioned empowerment policy should have its aim the promotion of economic growth in the high-value industries of tomorrow, and the promotion of a new class of entrepreneur and, more important, manager, whose activities will boost new business activity, while increasing a black state in growth.
With acknowledgements to Business Day.