The real truth of B-BBEE
· Citizen
The scale of the damage that the ANC has inflicted defies easy comprehension.
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Take economics, where black economic empowerment (BEE) – I’ll flag my bias by ignoring the government’s preferred “broad-based” acronym, B-BBEE – has become perhaps the most fiercely contested terrain in South African politics.
Here, the numbers are so sprawling, the structures so opaque, and the beneficiaries so often concealed that the public cannot see the wood for the trees.
BEE payouts benefit a few politically connected individuals
Fortunately, one of our most respected intellectuals, Prof William Gumede, has rendered the chaos comprehensible by reducing it to two savagely memorable propositions: more than R1 trillion has been transferred to fewer than 100 politically connected individuals, and the same people are “empowered” over and over again; and in mining alone, 46 politically connected people secured 60% of BEE deals, becoming multimillionaires overnight.
Gumede is no fringe polemicist. He is attached to the school of governance at Wits University. That is why the backlash has been so furious.
He has incurred the displeasure of President Cyril Ramaphosa, been attacked for “sabotaging” SA’s credibility in international investment markets and been challenged to “prove” his numbers.
He is also the target of a campaign of character assassination.
This is not a question that can be settled with a neat spreadsheet, though Gumede, this week, marshalled a formidable body of evidence in a private presentation to the Black Management Forum, an organisation representing many beneficiaries of the system.
It was received, he tells me, in “total silence.”
BEE operates across three deeply interlinked arenas. There are private-sector ownership deals.
There is public procurement. And there were the privatisation transactions of the early democratic years, where BEE participation was built into the disposal of state assets.
Some of Gumede’s source material is political dynamite. For example, the claim that 46 ANC fellow-travellers snagged 60% of BEE mining deals rests, he says, on research done in 2015 by a top-tier audit firm and a major bank for the Chamber of Mines.
The study, which was leaked to Gumede, remains confidential, and to this day, none of those involved will agree to be named.
So, while the evidentiary problem is real, that is not the same thing as saying the underlying claim is fanciful.
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Evidence points to systemic abuse, public sees little impact
Starting with the part that is actually visible, Intellidex calculated in 2015 that BEE deals by the 100 largest JSE-listed companies had generated R317 billion in net value by the end of 2014.
Then there is the much larger and murkier reservoir of procurement.
Gumede notes the state now spends “almost R1 trillion” a year this way, and cites Treasury official Willie Mathebula’s evidence to the Zondo commission, that of the 2017 procurement Bill of R800 billion, more than half was lost to “intentional abuse of the system”, including the manipulation of BEE rules for personal benefit.
Few, if any, of the ANC-linked billionaires amassed their fortunes through the slow, mundane business of building companies from scratch.
The official B-BBEE Commission has itself recorded major empowerment transactions worth tens and even hundreds of billions.
At the end of the day, the proof of Gumede’s thesis lies all around us.
The heavily compromised ANC intelligentsia may refuse to see it but, on the ground, the evidence is mounting.
Social surveys and voting patterns increasingly suggest that ordinary South Africans understand that the benefits of BEE are not what was promised – and are certainly not flowing to them
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