Is Black Economic Empowerment (BEE) Working?

BEE or Black Economic Empowerment is a tool employed by the South African government supposedly to address the racial injustices of the past and to also redress the economic imbalances created by South Africas past apartheid system.

The other organisations which participated in this alliance included the allies of the ANC, the South African Indian Congress, the South African Congress of Democrats and the Coloured Peoples Congress.

Nelson Mandela’s brand of Black economic empowerment included a complete overhaul of the national economy, where the state decisively intervenes to change the very structures of the economy.

History has it that it was not until 1992 at that conference, Davos at the World Economic Forum when Nelson Mandela finally and completely dropped his pursuit for Black economic empowerment through nationalisation.

Nelson Mandela and the ANC basically told these business people to continue in their ownership of South Africa’s economy and to give to black people whatever crumbs that fall off from their tables.

The reality is that without BEE there would not have been the same level of black participation in the economy, says Martin Kingston of Rothschild, which advises companies on BEE. Pitifully few black South Africans have grown rich by creating entirely new businesses, perhaps because it seems so much easier to make money by acquiring stakes in existing firms.

The collapse in stock prices in 2008 left many would-be tycoons with assets that were worth less than the loans taken out to buy them.

The binding constraint on greater black participation in the economy is education, says Lucy Holborn from the South African Institute of Race Relations, a think-tank that has called for BEE to be scrapped.

The proportion of professionals who are black is 36%, fairly close to the share of degrees held by blacks, which is around 40%.



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