Our moral and social commitment to empowerment must remain as steadfast as ever, but we need to change its mechanisms, writes Fani Titi.
Thirty years into democracy, South Africa remains a nation of unfulfilled promise, held back by sluggish economic growth and persistent economic exclusion.
Section 9 of our Constitution enshrines the moral and legal imperative to correct historical disadvantage and promote substantive equality. The policy of Broad-Based Black Economic Empowerment (B-BBEE) sought, in response, to create a fairer, more dynamic economy, expanding participation through skills development, enterprise and supplier development, socioeconomic development, and ownership. The goal was never simple redistribution; it was rather to harness the ingenuity and enterprise of all South Africans for the benefit of the broader society. Yet, despite a comprehensive policy framework intended to include them, millions continue to languish at the margins of a stagnant economy, with access neither to commercial opportunities nor decent public services.
There is a growing narrative that B-BBEE is a failed social experiment: a tax on investment that we can ill-afford, and a recipe for rent seeking and the appointment of unqualified cadres to key public positions. Sadly, this view is not entirely without basis. But to regard these failings as reason to abandon the principle of economic inclusion would be a profound mistake. Apartheid’s shameful legacy of institutionalised inequality stands as a painful reminder that growth without inclusion is neither just nor sustainable. But equally, our more recent history has shown that economic inclusion without growth is a non-starter.
Reiterating the urgent steps needed to drive South Africa’s economic growth is beyond the scope of this article. Suffice to say we have ample evidence that economic inclusion and growth are not mutually exclusive. One need only think back to the years between 2002 and 2008, following the initial enactment of BEE in our law. This era saw a sharp rise in black and female representation in management and control roles, along with broader access to skills development and expanded opportunities for black- and female-owned businesses. It was also a period in which economic growth averaged 4% a year, business confidence was at historical highs, and unemployment fell from about 28% to 21%.
Had this trajectory continued, today’s South Africa would look markedly different. According to Investec research, the economy would now be worth roughly R12 trillion instead of R7.5 trillion, resulting in higher levels of employment and a broader tax base, expanding state spending capacity for investment in education, healthcare, policing, and social security.
Consider the opportunities that such conditions would present for young professionals, or the prospects of startup enterprises. Most of those professionals and businesses would be black, and a good proportion female, simply based on South Africa’s demographics. Consider also the knock-on impact on families and communities enlivened by dignity, self-reliance, and hope for a brighter future.
This is not merely an indulgent counterfactual. It is a picture of what is possible if we can return to a path of inclusive economic growth. It also demonstrates that economic inclusion, implemented with integrity, and in the broad interests of society, is not merely consistent with, but supportive of investment, business confidence, and productivity. I say this with the personal conviction of one for whom economic inclusion policies afforded a chance to realise my potential and contribute meaningfully to society. And my own example is one of many. Indeed, the progress made over the past thirty years in transforming the management, control, and ownership of an economy dominated by an exclusively white and male elite is nothing short of remarkable. Today, many thriving black-owned and -controlled companies are making significant investments in the economy. More progress is still needed.
But too often the noble aim of opening doors once closed to the majority has been tainted by greed and systemic corruption in procurement processes, perpetrated under the guise of B-BBEE. The Tembisa Hospital saga is a painful example: alleged tender fraud amounting to R2 billion—money meant to deliver critical healthcare to society’s most vulnerable—represents theft not only from the state and citizenry, but from the nation’s moral fabric. During the COVID-19 pandemic, procurement processes were similarly exploited, diverting emergency funds from those in need into the pockets of the greedy and dishonest.
These are symptoms of a malaise that metastasised in the era of state capture, leaving the country on the brink of economic collapse. A decade that should have been spent accelerating inclusive growth instead put our economy in reverse, undoing prior gains in employment and equality. In its wake, the energies of public institutions tasked with addressing injustice have instead been consumed by efforts to restore lost credibility and public trust.
It is time to question whether the current transformation policy framework still serves the people of South Africa. The evidence suggests that we need a more innovative approach, premised on effectiveness, integrity, accountability, and a foundational commitment to rapid economic growth. The guiding principle of such a policy framework should be to reach the largest number of economically excluded citizens in the shortest possible time, with a clear focus on four key areas:
Value for money in public procurement
Taxpayers’ hard-earned money should be used to maximise the reach and quality of essential services. Current public procurement policies allow SOEs, municipalities, and government departments to spend significantly more than the lowest bid based on a B-BBEE preferential point system. This incurs an opportunity cost for ordinary South Africans, who might otherwise benefit from resources allocated to hospitals, schools, training colleges, or network industries crucial for economic growth. Any preference beyond value-for-money should be transparent and minimal.
An end to cronyism
The appointment of well-connected but unqualified people to public positions has done untold damage to state capacity and vital network industries. It has furthermore robbed highly qualified black and female candidates of professional opportunities. We must prioritise hiring the most qualified individuals to lead key government departments, municipalities and SOEs. Transparent hiring processes, and where possible public interviews of shortlisted candidates should be conducted.
Employee participation
The people most vested in the long-term success of companies are the people who rely on those companies for their livelihoods and are direct contributors to wealth creation. Broad participation of employees in company ownership is a far better mechanism for enduring and productive inclusion than highly concentrated equity deals that often serve only to benefit existing elites. The scales should swing towards employee ownership.
Equity equivalence
South Africa is blessed with many public benefit programmes that advance our nation’s long-term growth and equality goals. When managed with the hallmark efficiency of well-run private sector businesses—rather than centralised in mandated government programmes liable to abuse by patronage networks—such initiatives can deliver broad and durable impact. Companies’ contributions to these programmes should be more extensively reflected in their empowerment credentials.
It is worth dwelling on the concept of equity equivalence, as the expanded use of this mechanism would represent a significant innovation in our empowerment policy framework. It is already applicable to multinational companies. Samsung’s Equity Equivalent Investment Programme, initiated with a R280 million investment, actively supports the development of black-owned SMEs in the ICT sector. But there is no shortage of home-grown initiatives whose broad-based impact will be felt for generations to come. Jannie Mouton’s recently announced transformation of Curro Schools into a public benefit organisation is one vivid example. Others include the late Donald Gordon’s contributions to education and healthcare, and Kagiso Trust’s long-term investments in education and rural development.
Few businesses, let alone individuals, have the resources of a Donald Gordon or a Jannie Mouton. But there are ample opportunities for companies of all sizes to contribute to programmes that support youth employment like the Youth Employment Service (YES), which gives invaluable work experience to unemployed youth, or education support programmes like Promaths, which provides maths and science tuition to thousands of underprivileged learners.
The most delicate question is one we can no longer postpone: at what point should South Africa move beyond race as the primary proxy for disadvantage? Race shaped our history and still shapes access to opportunity; to deny that would be disingenuous. But inequality and underdevelopment are complex, global problems in which race is but one of many factors. Transformation efforts ought ultimately to be directed at poverty and capability rather than focusing solely on race and gender.
Economic inclusion policies should serve those who remain marginalised and excluded based on a credible economic means test. Notwithstanding the multi-generational impact of apartheid, race cannot forever remain the organising principle of our economy. It is far from ideal to live in a society in which competent black professionals are unfairly seen as token appointments, while their young white compatriots are left wondering if there is a viable future for them in the country of their birth. To paraphrase Martin Luther King Jr: our children should be judged on the strength of their character, not the colour of their skin. Perhaps the Springboks best illustrate what can be achieved if we commit to harnessing the abilities of all our people to form a world beating team; the pride of our rainbow nation, and a living embodiment of the great hope that freedom promised.
We stand at a seminal moment in the history of our democracy, facing a choice that will determine the shape and pace of social and economic development over the next 30 years. Will we continue to cling to ideological baggage weighing down our prospects for growth and equality, or will we have the courage to forge a new path towards a more prosperous and inclusive society? One is reminded of the dictum famously articulated by Deng Xiaoping when he steered China away from a Maoist command economy towards one organised around free market principles: “It doesn’t matter whether a cat is black or white, as long as it catches mice.”
Our moral and social commitment to empowerment must remain as steadfast as ever. But we need to change its mechanisms: to reward those who build, teach, employ, and create, and to measure what matters. Pragmatism, not ideology, should guide us. A system that values contribution over compliance and productivity over patronage would transform empowerment from a brake on growth into a flywheel for it.
That, ultimately, is what the country needs: a proverbial cat that catches mice.
