The ANC clings to its flawed, elite-enrichment BEE — and SA pays the price

Many ANC’s leaders are insisting on continuing with the current flawed model of black economic empowerment (BEE), because many ANC leaders see BEE as a panacea for ANC state and policy failures caused by ANC cadre-deployee state incompetence, corruption, ideological policies and ANC elite-enrichment private and public procurement BEE.

Changing the course on BEE also appears too politically costly for the ANC since it will cause more rebellions in the already deeply divided party if it ended cadre deployee state incompetence by introducing merit into the state, seriously fighting state corruption by taking on corrupt ANC cadres, and ending ideological and populist policies for evidence-based, fact-based and pragmatic policies. 

The ANC has a policy of cadre deployment in which its approved members can be appointed to key positions in the state, state-owned enterprises, democratic oversight institutions, and non-state democratic public institutions such as sports, cultural and arts bodies. The ANC’s policy of cadre deployment also deploys approved party cadres to senior positions in critical private sector firms which do business with the state, and need state trading licences and state approval to operate. 

Given the fact that so many ANC-connected individuals and entities became overnight billionaires and multimillionaires, solely based on their connectedness to the party, rather than on entrepreneurship, talent or skills, many ANC figures who have not yet benefited see a continuation of the current ANC elite-enrichment BEE as an opportunity for them to also get in on the wealth accumulation. 

Some ANC supporters wrongly see it as a “right” for their leaders to use state resources to enrich themselves. In fact, some supporters of the ANC and other African liberation movements wrongly believe that their leaders who led the liberation “struggle” are “entitled” to become rich using state resources – and they would do the same if they were in the same position.  

Many members supported then ANC and President Jacob Zuma who did R246-million worth of renovations to his private Nkandla compound using state resources. Many party leaders also see themselves as entitled to reap the material benefits for their involvement in the “struggle”. BEE is seen as a way to reward ANC leaders for their role in the “struggle”. 

Smuts Ngonyama, the former head of the ANC presidency during the ANC and South African presidency of Thabo Mbeki, claimed “I did not struggle to be poor” when he was asked why he was the recipient of a multimillion-rand BEE deal in the telecommunications sector solely because of his political connectedness to the ANC. 

As the ANC declines electorally there are fewer opportunities for its leaders and members to access state positions and resources. The South African economy is shrinking because of ANC-deployee state incompetence, corruption and ideological and populist policies, which also means decreasing deployment and empowerment opportunities in the state and private sectors for party cadres. Partially because of this, some ANC leaders are pushing even more fiercely for the continuation of elite-enrichment BEE. 

At the local level there has been a mushrooming of “construction mafias”, community development “forums” who also use the ANC’s elite-enrichment BEE policy to get a “BEE” slice of local development projects.

Selling the ‘transformation’ line

The ANC has been successful in selling the current ANC elite-enrichment BEE model as synonymous with economic “transformation”, rather than as just one approach to “economic transformation”. There are many other different, more sustainable and inclusive models of “economic transformation” that are not based on elite enrichment. 

The ANC has made BEE its central “transformation” instrument as part of its central post-apartheid ideologies. “Transformation” through BEE has become ideologically fundamental for the ANC. Government policies should be pragmatic, flexible and open to change. Once a policy is a fundamentalist ideology, it is almost impossible to release it, even if it fails. 

The ANC has made BEE part of its party identity. It has also managed to turn BEE for many of its black supporters into part of their black identity. For many ANC members there is an emotional identification with BEE. It has become the holy grail for many ANC leaders and supporters. Once a policy is part of a group or community’s identity, abandoning that policy, for many, will feel like destroying part of their identity. Government policies should never become part of a group, colour, ethnic or community identity. Neither should government policies be chosen based on emotions. 

Many ANC leaders and members are unable to admit failure of the current elite-enrichment BEE, because it would be admitting to the failure of “transformation”. And since many ANC leaders have made BEE part of their group identity, part of their “black” identity and their foundational ideology, and the fact that many ANC leaders and members are emotionally attached to the BEE policy, ANC leaders are dogmatically persisting with this one policy despite its failure to provide broad-based empowerment to previously disadvantaged communities. 

Policy and outdated ideology 

The ANC- in-government’s style of policymaking has also been deeply flawed. The party makes policy based on outdated ideology, wishful thinking, on emotions and on revenge, rather than based on evidence, fact or pragmatism. ANC leaders do not count the impact and consequences of policies beforehand, or compare alternatives, or experiment with policies on a limited scale before rolling out these policies on massive, irreversible scale. 

ANC leaders often write policies in an echo chamber, only commissioning their own supporters or like-minded researchers or those agreeing with their ideologies to do critical policy research. Unsurprisingly, this produces flawed policies. Research from experts with independent or different views to the official ANC ideology or party positions is rejected or ignored. The ANC often recycles the same like-minded researchers to be part of official state and party policy inquiries, giving input in ANC and government forums. 

This means that opposing policy views are not widely discussed or circulated in the ANC and the ANC state, meaning poor policies are continuously recycled. All successful governments write policy in collaboration with the private sector, civil society, independent academics, professionals and the leading sector experts. ANC leaders and ANC state officials, many of whom have never worked in the real economy outside politics or the state, often write policies about economic sectors they have not worked in, without consulting those with first-hand working knowledge of these sectors. 

Many ANC individuals who write BEE policies are often the same people who directly benefit from BEE – they see no conflict of interest. They are therefore not neutral when they write or defend BEE policies, because they are the direct beneficiaries. 

As the ANC’s ideological, populist, emotional, non-reality-based, non-pragmatic policies continue to fail spectacularly in government, many ANC leaders are increasingly using BEE as the remedy for the failures of all other economic, industrial and growth policies. BEE, therefore, for many ANC leaders becomes the industrial, growth and economic policy. 

ANC leaders and supporters of the current elite-enrichment BEE have often used state resources to attack, slander and spread misinformation online, and marginalise critics of its elite-enrichment BEE, calling them anti-transformation, racist and “right wing” if they are white and sellouts and “puppets” of whites if they are black. 

What empowerment should look like

The most important empowerment strategy for previously disadvantaged citizens is an effective, non-corrupt state, state-owned entities (SOEs) and democratic public oversight institutions that deliver public services, such as quality education, decent hospitals, effective public transport, working infrastructure and able policing, to ordinary citizens. However, the ANC has destroyed the South African state, SOEs, public infrastructure and democratic public oversight institutions through cadre-deployee incompetence, corruption, ideological and populist policies, undermining the capacity of the state, SOEs and democratic public oversight institutions to empower previously disadvantaged citizens.

ANC cadre-deployment incompetence, corruption and elite-enrichment BEE have led to the malfunctioning of Eskom, the state energy utility, which caused power outages that closed many companies, and led to capital and skills flight and unemployment; the malfunctioning of Transnet, the state public transport SOE, which also caused many companies to close down or leave South Africa. The failures of both have increased unemployment, poverty and inequality among previously disadvantaged communities.

South Africa’s public education system is broken because of a combination of ANC and ANC-aligned trade union cadre deployees in the education public service, and ANC ideological and populist education policies. Many government schools do not teach mathematics, accounting, economics and science. The ANC introduced a 30% pass rate and mathematics literacy, rather than proper mathematics, which disempowers previously disadvantaged children for life. 

The ANC downscaled the artisan system. This disempowered many previously disadvantaged individuals. The ANC closed down many technical and vocational colleges and introduced the Sector Education and Training Authorities, which, through ANC cadre deployment and ANC elite-BEE and ideological policies, have largely failed and disempowered many previously disadvantaged communities. 

Corruption is one of the biggest causes of state, SOE, public infrastructure and democratic public institution failure, and is therefore among the biggest causes of the disempowerment of previously disadvantaged communities. Reducing corruption will richly empower previously disadvantaged communities. However, the ANC, and sadly many poor, middle-class and even intellectual black South Africans, appear unable to directly link corruption by ANC-elected leaders and state officials to the failure of the state, SOEs and public infrastructure, and therefore to the increasing disempowerment of previously disadvantaged citizens. 

Incompetence is another reason the state, SOEs, public infrastructure and democratic public institutions fail. The ANC appoints and promotes its cadres in the state, SOEs, public infrastructure entities and democratic institutions, based not on merit, skills or competence but on ANC political connectedness – causing state and policy incompetence. Introducing merit and competence to the state, SOEs, public infrastructure entities and democratic institutions will make them effective and improve the quality of policies adopted, which would empower previously disadvantaged communities by providing them with quality public services and infrastructure. 

Economic growth-boosting, pragmatic and evidence-based economic, development and industrialisation policies, created in partnership with business and business leaders and civil society and civil society leaders, with proven domestic and global success and professional organisations, will empower formerly disadvantaged South Africans more broadly. 

The ANC as an African liberation movement is ideologically opposed to economic growth as a central pillar for industrialisation. The party sees the quest for economic growth as a “neoliberal” World Bank concept. The ANC as an African liberation movement is also opposed on an ideological basis to private business, unless it is controlled by ANC cadres or they are ANC cadre-BEE businesses or tenderpreneurs, arguing that private business is “white monopoly capital”, or the “Stellenbosch mafia”. The ANC as an African liberation movement believes in the state as the sole agency for economic development. 

The ANC as an African liberation movement is also opposed to small businesses, unless they are ANC cadre-controlled to tender for BEE state procurement or they are private sector BEE operators. The ANC sees small business as a World Bank conspiracy, although small businesses in all fast-growing economies create the most employment. Proper broad-based BEE would promote small, medium and micro enterprises that manufacture products South Africa and the world need, based on merit, not on ANC connectedness. 

The ANC as an African liberation movement is also opposed to foreign investment because it cannot control foreign-owned companies. Yet, foreign investors bring new capital, new products, new skills and new jobs to countries, enlarging their economies and empowering ordinary citizens. 

The ANC’s elite-enrichment policies are focused on giving slices of existing white-owned businesses, farms and entities to ANC-connected individuals. This concentrates the existing economy more between small groups of white-owned businesses and a small, elite group of ANC-connected cadres, their businesses and trusts. 

The ANC’s elite-enrichment BEE does not focus on creating new businesses in sectors South Africa currently does not have, or which are underdeveloped, but which the country and world needs. BEE policies that are focused on creating entirely new industries would expand South Africa’s economy and provide more broad-based empowerment to previously disadvantaged communities. DM