What a long-awaited mea culpa for all us wanna BEEs - the latest candid observations by the Harvard University-led panel of international and local economists charged with the mammoth task of identifying potential points of growth within the domestic economy. Empowerment as it stands has a very shadowy value-add, they say.

Affectionately dubbed the Harvard voice, their study contains some sobering thoughts on the fiercely contested approach to BEE. Moreover, it gives flesh to some of the not-so-fresh proposals frequently touted as a panacea - a case in point in this regard being entrepreneurship.

But nevertheless some of this may not fly, especially in the face of the ANC left’s resurgence, courtesy of Jacob Zuma’s triumph in Polokwane. There is just no way the ANC’s communist and labour allies will allow a neo-Thatcherite interpretation of our labour legislation, especially the proposal that allow businesses to provide training without stringent obligations of hiring the trainees.

Besides, for them, empowerment largely remains a goal pursued by an insouciant elitist enclave, oblivious to the pressing need to genuinely empower the working class and the entire society at grassroots levels.

Equity ownership stakes in established businesses by a handful of the previously disadvantaged and dishing out senior positions to a select few of the tiny pool that is the black professional class only perpetuate the deep inequities and inequalities that has plagued this society for centuries. It does not effective deracialise the mainstream economy and hasten the process of structural transformation. The strategy only delivers on symbolism, period.

Dismissing the panel‘s observation as trite and mundane is not the way to go - the fact is the observations are quite cogent.

The panel’s report incisively notes the crux of the empowerment dilemma: “There is substantial anecdotal evidence that BEE rules may be sending a negative message to both young white university graduates and those in senior management. In addition, BEE rules are increasing the demand for highly-skilled previously disadvantaged South Africans at the time when they are already facing very high and rising demand.”

Almost daily mega-million deals are announced, with almost the self-same consortia acquiring this or that stake.

Institutions such as Moody’s Investors Service (a rating agency), still applauds the policy without a comprehensive breakdown in terms of palpable benefits accruing to the ordinary folk.

Recently, the agency found that BEE has a “profound impact” on the domestic economy as a one of the current key drivers of the country’s corporate activity. This is based on  the fact that in 2007 an estimated 153 transactions amounting close to R96 billion in value were concluded, compared to R56 billion the previous year ( 2006) and R56, 2 billion in 2005. The agency says BEE transactions concluded in the past decade are in the tune of R200 billion.

Says Moody’s, “This is considered a world-high in terms of expected ownership churn. BEE has been an important driver of corporate activity such as mergers and acquisitions and private equity in South Africa and this trend is expected to prevail for at least the next five to seven years.”

Now, the key questions are: was there new wealth created, what about jobs, who benefited in terms of skills transfer and most importantly where are the new faces and have their material conditions changes?
 
The topic of invisible empowerment beneficiaries has consistently and continuously dominated dinner tables, stokvels meetings, political gatherings and other avenues where discussions around social capital issues are likely to dominate conversations.

Indeed, there is nothing wrong with cultivating a select group of elites, but everything untoward if this is done with the view that this is all that is needed to normalise our society and effectively deracialise the mainstream economy. This is why the panel’s fresh proposals should be welcomed with both open hands and minds and be integrated into the body of economic discourse as regards facilitating the process of shared growth and creating a prosperous, winning nation. The proposals include:

• A review of the BEE Scorecard in the Codes of Good Practice for Broad-Based Black Economic Empowerment to include new elements that enable the creation of new firms, employment/ job creation and promote learnerships and training.

• Elimination of equity participation requirement for BEE deals that facilitate creation of new firms. However mechanisms should be introduced to prevent old equity firms from using sophisticated financial engineering methods to circumvent the equity requirements provisions.

• The introduction of elements to focus explicitly on bottom–up empowerment interventions and economic growth initiatives such as spatial development, apprenticeships and firm creation.

• Develop a comprehensive and credible system to collect information on BEE for the purpose of evaluating progress and determining future policy directions.

Sello Mabotja writes in his personal capacity.