Black consciousness leader Steve Biko and Daily Dispatch editor Donald Woods, who was banned by the apartheid government after Biko's death in detention in 1977.
BOOK REVIEW
Was the implementation of race-based affirmative action and
black economic empowerment necessary after the advent of black majority rule in
1994, when the ANC won the first non-racial elections?
Or did this new form of racial engineering, in a bid to
redress the effects of apartheid, have precisely the opposite effect to what
was intended, boosting white entrepreneurship and making black people
increasingly dependent both on white business and on the state?
John Kane-Berman, for decades chief executive of the SA
Institute of Race Relations, in his recently published memoir “Between Two
Fires – Holding the Liberal Centre in South African Politics”, makes a
persuasive case to show that it did the latter.
He does so just as the debate intensifies around so-called
white monopoly capital and the supposed need for “radical economic
transformation”.
Seen from the viewpoint of black youth, where unemployment
is at record levels, the growing clamour for radical action on the economy is
understandable. Any objective observer will note that clearly, in the private
sector anyway, white people continue to rule the roost. They are the main
owners of businesses that generate jobs, create wealth, contribute tax revenues
and drive what little growth there still is in the economy.
But it need not have been like this. Kane-Berman explains
what went wrong and why. In a chapter titled “Race and redress”, he writes:
“Apartheid was so pervasive and so destructive, as I myself
had described in countless articles and speeches over so many years, that there
was powerful appeal in the argument that only interventions by the state on a
similar scale in the name of ‘transformation’ could reverse its effects. But
even before the change of government and constitution in 1994 I questioned
this. The real alternative to apartheid, we said, was not another form of
social and racial engineering, but a society which prized economic as well as
political freedom and which was founded on equality before the law. This ruled
out racial discrimination in the form of affirmative action. Given the
Institute’s history and who we were, the decision to oppose affirmative action
and other racial legislation was the most important taken while I was running
the organisation. Nothing has altered my conviction that this was the right
decision.
“That conviction has been strengthened as it has become
clear that the racial policies being pursued by the ANC go far beyond the
affirmative action contemplated in the Constitution. The National Democratic
Revolution described in the previous chapter of this memoir seeks not merely
redress for the past, but to impose an entirely new doctrine of demographic
proportionality on the country. Cyril Ramaphosa, deputy president of both the
country and the ANC, has thus said that ‘race will remain an issue until all
echelons of our society are demographically representative”. I commented:
‘Given the country’s human needs and its skills profile, this can only have
dire consequences.’ “
Kane-Berman said the Institute “opposed affirmative action
legislation in its entirely, including the two most important statutes, the
Employment Equity Act of 1998 and the Broad-Based Black Economic Empowerment
Act of 2003”.
“The main objective of the first was to require employers to
use ‘preferential treatment’ for blacks (as well as women and disabled people)
to bring about ‘equitable representation’ at all levels and in all occupations
in companies with more than 50 employees or annual turnovers above certain thresholds
[…] within successive five-year periods. The main purposes of the second were
to get companies to hand over 26 per cent of their equity to blacks and procure
70 per cent of their goods and services from firms which had done the same.”
Kane-Berman says the first of these was gazetted as a bill
in 1997. “When we denounced it the labour minister, Tito Mboweni, accused us of
orchestrating public confusion.” Kane-Berman’s colleague Anthea Jeffery was
labelled a racist when she spoke out against it at a labour law conference in
Durban. Veteran anti-apartheid activist Helen Suzman, however, said it would
“deter foreign investment”. Press reaction was mixed.
“Our opposition to the Employment Equity Act meant that from
very early on we were fundamentally at odds with the ANC on a key component of
its package of policies. We were also at odds with Cosatu and the SACP, as well
as with most business chambers, the media, and civil society. We still are.”
Then he cuts to the chase.
“Right from the start we took the view that racial
discrimination, even if now supposedly designed to promote equality rather than
maintain white supremacy, was still wrong in principle. It violated the maxim
of equality before the law.”
Earlier in his book, Kane-Berman talks about how, in the
1970s and 1980s, “the industrial colour bar had broken down during the ‘silent
revolution’ when shortages of white skills forced employers to train and
promote blacks despite the apartheid laws designed to prevent this. The way to
speed up this process of erosion in the post-apartheid era was to speed up the
rate of economic growth. If there were not more blacks in skilled and
managerial jobs, this was the result not of a shortage of demand for them but a
shortage of supply. This in turn would have to be remedied by repairing the
country’s education and training system.”
Remember talk about “black diamonds”? These were, and still
are, any black people with a decent tertiary education who are in such demand
they can command ludicrously high salaries. Kane-Berman explains how that came
about:
“A survey had shown that nearly two thirds of companies
experienced ‘poaching’ of black professionals, while salary premiums paid to
such professionals were further evidence of both their scarcity and the demand
for them. Even before the employment equity legislation was enacted, a firm of
human resources consultants had said a third of companies were already paying
up to 50 per cent premiums on white salaries to get top black personnel. We
said it was absurd to require that Africans should comprise 50 per cent or more
of top management when only 3 per cent of Africans had tertiary qualifications
and only 25 per cent fell within the 35 to 64 age cohort from which managers
were usually drawn.”
He explains how the imposition of these racial quotas aimed
at achieving “full demographic representation across all levels” was enforced
on pain of fines which started at R500 000 for a first offence, but under
amended legislation has risen to fines of up to R2.7-million or 10 per cent of
turnover.
This first negative impact had been on service delivery.
“Though we criticised the legislation right from the start,
we actually underestimated the harm affirmative action would do to the public
as opposed to the private sector. The latter operated under the constraint that
poor appointments risked damaging businesses. No such constraints applied to
the public sector, where affirmative action has been applied without regard to
cost or consequences. Large numbers of skilled whites, including teachers, have
been retrenched, posts left vacant rather than filled with whites, and plenty
of people promoted or appointed for reasons of race alone. The police, the
defence force, provincial education departments, public hospitals, local
authorities, sewerage systems, and Eskom are among dozens upon dozens of public
entities that fail to work properly. The ANC has eviscerated large parts of the
civil service on which it relies to implement its policies. This has done as
much damage to the state and to the ANC’s own supporters as to the whites who
have lost or been denied jobs.”
But what of the impact on economic growth and black
self-esteem and self-reliance?
“Our critique of BEE was essentially twofold. In the first
place the funding of BEE deals would come at the cost of funding new investment
in plant and equipment, and so be detrimental to growth. The second problem
involved a paradox. Instead of promoting black entrepreneurship, BEE required
white companies to do things for blacks. What was being measured was not black
success but white success. This was a strange form of liberation.
“As long as this approach continued, BEE would fail to
capture the critical component of entrepreneurial success. Twelve years later,
the ANC itself bewails the absence of black industrialists – but fails to
acknowledge that BEE created the wrong incentives.”
Kane-Berman spelt out these likely effects of BEE in a
speech to the Johannesburg Rotary Club in 2009, entitled “Empowerment that
disempowers”. It is worth quoting at length from this speech, which really
captures the lunacy of BEE. He said:
“About 10 years ago the Institute hosted a panel discussion
about affirmative action. One of the speakers was Temba Nolutshungu of the Free
Market Foundation. He predicted that the main beneficiaries would be whites.
Formerly protected white youth who found that the Employment Equity Act limited
their job prospects would be forced to turn to the technical trades or become
entrepreneurs. Young blacks, on the other hand, would be channelled into
‘low-risk soft-option’ positions. This would reinforce white dominance and
blunt the entrepreneurial spirit among young blacks.
“Another factor undermining black entrepreneurship relative
to white is that so many blacks have been absorbed into the public service.
Whites displaced to make way for them have been forced to set up their own
businesses. Professor Lawrence Schlemmer […] observed in April 2007 that the
number of small businesses owned by whites had increased very rapidly because of
the exodus from the public service.”
Kane-Berman continued, tellingly, in that 2009 speech, which
he reproduces in his book: “BEE is more about white than black achievement.
White-owned companies are given ratings for doing things for blacks. BEE empowers
white firms to get contracts from the black government. Black individuals
benefit, but do they have to perform in a competitive marketplace? What are the
government’s priorities: making backs independent or whites compliant?
“Brian Molefe, CEO of the Public Investment Corporation,
complained in August 2007 that whites were not doing enough to develop black
talent. But how much are blacks doing to develop it? Given its record in
education, the government is certainly not doing very much. Nor is ‘transformation’
doing much. This is because the focus is on making white companies harness
blacks, rather than on creating new black or non-racial institutions.”
Then the crux of the argument, which brings in a struggle
hero from the 1970s.
“I wonder what Steve Biko would have thought. Professor
Sipho Seepe, at the time president of the Institute, wrote in September 2007:
‘Given Biko’s emphasis on self-reliance, it is reasonable to assume that he
would have great discomfort with affirmative action and the current form of
BEE. These forms of intervention discourage self-reliance and
self-actualisation. They perpetuate the victim mentality and discourage an
enterprising spirit. They also encourage a debilitating sense of entitlement.’
“
Note that here Kane-Berman was quoting a prominent black
academic. He then addresses another key factor:
“It is sometimes suggested that BEE requirements are not
very different from the policies used by Afrikaners to build up their economic
power. But there is a difference: in the 1930s the savings of tens of thousands
of individual Afrikaners were mobilised to start financial institutions. Why
have the savings of the burgeoning black middle class not been similarly
mobilised to create black financial institutions?
“Joel Netshitenzhe, until recently a top man in the
president’s office, said that apartheid had crushed the entrepreneurial spirit
among blacks. But the present government’s policies are doing little to
liberate that spirit. Quite the reverse. Vincent Maphai, chairman of BHP
Billiton, commented in July 2009: ‘Under apartheid people were most creative
and the community flourished. People did not sit back and think what will the
state do for me? They were empowered by apartheid but ironically disempowered
by liberation.’ ”
Then Kane-Berman tackles the impact on foreign investment:
“BEE requirements have almost certainly deterred foreign
direct investment (FDI), in the mining industry in particular. Lower FDI has
meant lower rates of economic growth, so BEE has retarded the generation of
jobs. So we can reconfigure President Thabo Mbeki’s old ‘two-nations’ divide.
Instead of rich-and-white versus poor-and-black, we have a growing divide
between whites who have to look after themselves and blacks who are becoming
increasingly dependent on the state. This is profoundly disempowering. As
Professor Achielle Mbembe of Wits wrote in April 2007, ‘It risks codifying
within the law and in the minds of its beneficiaries the very powerlessness it
aims to redress.’
“What will all this mean for race relations?” asks
Kane-Berman. “In May 2002, Tim Modise wrote: ‘One problem with seeing ourselves
as permanent victims is that it makes those who believe they are racially
superior feel vindicated.’ In August 2008 Professor Jonathan Jansen, now rector
and vice-chancellor of the University of the Free State and also president of
the Institute, said that affirmative action ‘perpetuates the myth among white
people that black people are inferior’.”
So the next time the likes of Black First Land First, and
other racially obsessed groups vent their anger against white journalists currently
exposing Gupta-Zuma corruption or “white monopoly capital”, they might want to
reflect on the view that it was the ANC’s own policies, implemented over the
past two decades, which have, according to the above evidence, disempowered the
very people they were meant to empower.
Clearly a major policy shift towards a more liberal,
non-racial democracy is long overdue if we are to prevent the already badly
holed ship of state from sinking completely.
* “Between Two Fires” by John Kane-Berman is published by
Jonathan Ball
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