Africa-Press – South-Africa. Black Economic Empowerment (BEE) in South Africa has become a tool to redistribute wealth from some people to a select group of connected individuals without creating new wealth, growing the economy, or increasing participation.
While this may not have been BEE’s initial intention, it is what the policy has enabled in South Africa and has had a negative impact on economic growth and development.
For BEE to work in South Africa, it has to be a policy that focuses on expanding the participation of marginalised people in the economy through skills development, education, infrastructure, and safety.
In other words, the policy should focus on creating an enabling environment for businesses and the economy to grow and absorb young South Africans into the workforce.
This is feedback from Efficient Group chief economist Dawie Roodt, who recently outlined some of the problems with BEE and how the policy framework could be changed to improve economic outcomes.
“When you talk about BEE and transformation in South Africa, it means that you take resources from one group of people and give them to another group of people,” Roodt told Biznews.
“Let’s be honest about this: the resources are given to a select group of people. So, actually, what we have in South Africa is the empowerment of a very small group of connected individuals.”
Roodt made it clear that he supports transforming the South African economy, but his definitions of transformation and empowerment are different from those currently being implemented in South Africa.
The way empowerment and transformation are implemented in South Africa does not increase access to economic resources for the majority of the population or create wealth for the country.
BEE and transformation currently redistribute existing wealth among individuals, and do not grow the economy to create more wealth for South Africans.
Professor William Gumede from the Wits School of Governance estimated that up to R1 trillion has been redistributed to just 100 individuals and companies in South Africa under BEE.
“I have not done the calculations myself, but I think that could be quite close to the mark, with the beneficiaries of BEE being a handful of individuals that do not add value to South Africa,” Roodt said.
How BEE can be fixed
Efficient Group chief economist Dawie Roodt
For BEE to work in South Africa, it has to go back to the basics in terms of what empowerment and transformation mean.
Without clear-cut definitions of those objectives, it would be impossible to implement or judge whether the policies implemented are working.
Furthermore, as is the case in South Africa, a lack of clear definitions has resulted in the policy being corrupted to benefit a few individuals.
“In my book, what it means to transform or to empower is very different from what we are doing in South Africa,” Roodt said.
“Real empowerment is where you give people tools and create an environment where they can better themselves financially and economically.”
A key part of this is to give people the right skills through adequate education and improved pathways from education to the labour market.
Currently, South Africa’s education system does not produce enough of the skills demanded by businesses in the labour market, resulting in many university graduates being unemployed.
“If you look at skills development in South Africa, it is not only bad but is sometimes even the worst in the world,” Roodt said.
“The majority of people who get these skills in South Africa are black. The education in South Africa is horrible, and the people who suffer the most from that are black people.”
“I would like to see a dramatic improvement in education and skills development in South Africa because that is how you get out of poverty and are empowered.”
This has to be coupled with an environment conducive to conducting business and growing companies that can absorb an expanding workforce.
“Create an environment of empowerment. Give people a pavement. Give people electricity and water. Most importantly, give people a safe environment,” Roodt said.
“Those are the things you need to do in order to empower people. The state cannot empower anybody. The best the state can do is to create an environment for people to empower themselves.”
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