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Black Economic Empowerment – the “Winners” and the “Losers”

By Gerhard Papenfus
‘We make a living by what we get. We make a life by what we give’ – Winston Churchill
BEE, at its best, is a complex and sensitive issue, but the ‘elephant in the room’ – race – the cause of huge discomfort and economic alienation, and although discussed in private, is not dealt with openly and honestly. However, if our nation wants to unite, progress and prosper, this issue has to be debated with brutal honesty; innovative and inclusive models have to be found.

I suffer from a fair amount of prejudice, in a wide range of areas. I do not have all pervading knowledge – very far from it; like all of us, my views are influenced by what I know. I can only strive to know and to understand more, but I will never be able to see the whole picture. None of us will. Living in denial though, remaining quiet for the sake of peace and safety, won’t bring me closer to the truth.

In addressing this issue, and since I am a so-called white (without any scientific base), I risk being called a racist and ‘anti-progressive’ (I still don’t know what it means). But for the sake of South Africa and all its people, I will take the risk.

This article has nothing to do with the empowerment of black people, but everything to do with ‘forced’ business ‘marriages’, done for the wrong reasons, not based on a natural merging of talents, abilities and a shared vision, but forced upon business for the purposes of short term commercial gain, even survival. That is whilst history taught us that sound decisions can never be based on skin colour.

This article is inspired by the increased challenges ‘white’ owned SMME’s and family businesses are facing, due to BEE demands, in obtaining any form of business from larger companies, let alone the state – which, for all practical purposes, in respect of these businesses, is now a dry pit. The biggest potential job creator (existing SMME’s) is effectively side-lined. The consequences are obvious.

The BEE scheme is designed for some to win and others to lose. The criteria is skin colour – similar to the pre ’94 arrangement. It is modelled on a similar evil, only with a different colour. This noble aim, the argument goes, is to correct the wrongs of the past.

The ‘new wrong’, however, can never correct the previous one. You can’t fix a ‘wrong’ by applying a similar ‘wrong’. The ‘new wrong’ will simply compound the already extremely challenging and complex issue, the result of the previous ‘wrong’. It will turn out that BEE/EE, in the way it is currently executed, will inevitably compound the harm which apartheid has caused.

The ‘new wrong’, just as the case in the past, creates divides, on the basis of race, of winners and losers, but quite a different (in fact surprising) kind of ‘winner’ and ‘loser’.

The eventual “losers” are the individuals and institutions who:

  • rely on the state, and the institutions controlled by the state, as the source of financial provision, where that reliance is economically unjustifiable and ethically questionable. That is because the state’s resources will become increasingly scarce, whilst the demand for easy money will increase. The fact that the beneficiaries realise this is perhaps the main driver of corruption;
  • add limited value or even no value at all, but only focus on redistributing that which already exists, that which is on the surface, easily accessible, but already somewhat obsolete;
  • lose their ability to identify and cultivate new resources and generate new wealth.

The eventual “winners” are the individuals and businesses (of all races), who are confronted with the realities of the real world, battling to develop or find products, struggling to find markets, working long hours, those who fail and get up, again and again, painfully looking on as conventional resources are drying up and old business arrangements are becoming obsolete. These warriors are the potential ‘winners’ if they realise that:

  • real ‘wealth’ and abundant living is not found in materialism;
  • we haven’t even scratched the surface of South Africa’s potential real ‘wealth’;
  • real and unimaginable wealth does not lie on the surface, that it has to be discovered, but that is only accessible by the wise, the resolute and the upright;
  • in our quest to find undiscovered wealth, in its widest and wisest sense, that we will have to think and act in a completely new manner, breaking with the old obsolete patterns of the past, not with the purpose of merely making a living, even to become rich, but to make a difference, to improve the lives of all South Africans, to make South Africa a better place.

But these individuals and institutions will only be the ‘winners’ if they act according to these beliefs, if they act not only in their own interest, but also in the interest of others, even those who do not appreciate their invaluable contribution, and if they illustrate the desire and resolve to persevere, no matter what.

South Africa is their only home; it is here where they have to make it work.

Let us all be winners 

“You do not strengthen your weakness by weakening your strength”, I once heard the cricket player Darryl Cullinan say. Marginalising one part of our population, won’t place lasting wealth in the hands of others. We will never prosper unless the potential of all South Africans is unleashed and optimised.

South Africa will never experience sustainable prosperity if any of its people are structurally marginalised. Race driven policies will remain a stain on this nation’s conscience, which inevitably will inhibit creativity, suppress productivity and prohibit overall economic growth.

We cannot ignore the past, but we will have to be much more innovative if we want to redress it. We will have to come up with a completely new model, not only use the flip side of that old coin as our point of departure – that complete unrealistic, obsolete and unrighteous old model.

Hard work and integrity is the only way to ‘wealth’. There’s no other way. Riches, in respect of those who desire it, can be obtained through other means, with apparent good short term results, but that is never sustainable.

After 20 years of democracy, South Africa in many areas, is a much better place. There is so much counting in our favour. But we also find ourselves in huge danger. Right in front of our eyes we see, in a number of areas, how our country is failing. Our race based policies play a huge part in these self-created challenges. Tightening the screws in order to manufacture a particular result, to quicken the pace of race-transformation, won’t solve any of these problems, instead it will speed up the decline.

All is not lost yet; but bringing about real change, stimulating the economy, creating real jobs, bringing the poor and disenfranchised into the main stream economy, will require a new ideology, an inclusive approach and, above all, very strong leadership. It’s up to us.

This opinion piece is by Gerhard Papenfus, Chief Executive of the National Employers’ Association of South Africa (NEASA)