“Black economic empowerment in post-1994 South Africa: ANC curse and/or socialist/communist covenant?” AUTHORS Louis P. Krüger https://orcid.org/0000-0003-3632-427X Louis P. Krüger (2016). Black economic empowerment in post-1994 South Africa: ARTICLE INFO ANC curse and/or socialist/communist covenant?. Problems and Perspectives in Management, 14(3-1), 162-178. doi:10.21511/ppm.14(3-1).2016.03 DOI http://dx.doi.org/10.21511/ppm.14(3-1).2016.03 RELEASED ON Tuesday, 06 September 2016 JOURNAL "Problems and Perspectives in Management" FOUNDER LLC “Consulting Publishing Company “Business Perspectives” NUMBER OF REFERENCES NUMBER OF FIGURES NUMBER OF TABLES 0 0 0 © The author(s) 2021. This publication is an open access article. businessperspectives.org Problems and Perspectives in Management, Volume 14, Issue 3, 2016 Louis P. Krüger (South Africa) Black economic empowerment in post-1994 South Africa: ANC curse and/or socialist/communist covenant? Abstract After more than 21 years under the leadership of the African National Congress (ANC), post-1994 South Africa finds itself yet again embroiled in race-related politics. Government policies such as black economic empowerment (BEE) and employment equity (EE) have not brought about the economic growth, social development and political democracy that the late former President Nelson Mandela had envisaged and what the ANC had promised to all the people of South Africa. South Africa is currently disengaging itself from the West including the Unites States of America (USA) and certain European Union (EU) countries and appears to rather embrace and align itself with countries such as Russia and China that pursue socialist and communist ideologies. Both these two issues may have a profound impact on how businesses will be managed in the future. In an exploratory, qualitative study using a “5 Star” research methodology, the direct and indirect impacts of BEE policies were investigated and the possible movement in South Africa’s ideological stance was explored. BEE does not appear to have helped to bring about high economic growth to help to reduce unemployment and eradicate the high levels of poverty and inequality, and government graft and corruption have increased at all levels of government, including local municipalities. BEE appears to have become the ANC’s curse to economic, social and political progress and should be scrapped. A national debate should follow on whether the ANC’s current covenant with pro-socialism and pro- communism rather than Western free-market capitalism is the appropriate ideology for South Africa to pursue. Keywords: black economic empowerment (BEE), employment equity (EE), African National Congress (ANC), capitalism, socialism, communism. JEL Classification: M14, M21. Introduction Black economic empowerment (BEE) is but one of the many initiatives and pieces of legislation that the Dr Anthea Jeffery, a respected political analyst who is ANC has implemented in South Africa post-1994 in the head of the policy research unit at the South an effort to improve the lives of the majority, African Institute for Race Relations (IRR), in a recent eradicate poverty and address unemployment of (3 September 2015) online article wrote the following: citizens who for many years were excluded on “The ruling African National Congress (ANC) seems account of apartheid policies. It is also probably one intent on alienating the West and adopting a rigid pro- of the more controversial measures taken, because, Russia and pro-China stance. However, the Western firstly, it is based on the empowerment of a countries it is busy targeting have long been South particular race, and, secondly, it represents a Africa’s most important investors, whereas investment fundamental shift and alignment with the socialist from China and Russia has, thus, far been very and communist ideologies of Russia and China, limited”. She, then, provides the financial figures for away from the Western and European, free-market foreign direct investment (FDI) and non-direct foreign capitalist systems, which have been the prominent investment in South Africa, which is overwhelmingly and enduring economic systems since the founding dominated by Western countries (but excludes Canada of the Republic of South Africa in 19611. and Australia, along with Japan and Taiwan) (85% or R1 350 bn of a total of R1 600 bn) and (90% or The present level of corruption in South Africa has R2 435 bn of a total of R2 695 bn), respectively. In been acknowledged by the ruling party as “… a cancer contrast, FDI by China is paltry at R59 bn or 3.5% of that has no place in the ANC nor South African society the total, with Russia’s FDI being even less. Similarly, …” (SAPA, 2014a) and is considered “… a cancer to non-direct investment of China is R14.5 bn or 0.95% development … which is hampering economic of the total, while that of Russia is again negligible. Dr integration … and Africa’s social and economic Jeffery goes on to caution the ruling party, the ANC, development ”. BEE, which is unfortunately and that it “cannot afford to put anti-Western ideology predominantly associated with many cases of before the urgent needs of the economy. Nor should it corruption, fraud, nepotism, favoritism, and the so- assume that China and Russia – both of which are called “tenderpreneurs” with their BEE procurement themselves in increasing economic difficulties – will practices, has either been hailed or feared in South be able make up for the Western investment now being put at risk” (Jeffery, 2015a). 1 The Union of South Africa was formed on 31 May 1910 and became a sovereign independent state from Great Britain in 1934. Twenty-six years later, South Africa withdrew from the Commonwealth and Louis P. Krüger, 2016. became the independent Republic of South Africa on 31 May 1961 Louis P. Krüger, BSc (QS), MBA, DBA (UP) University of Pretoria, (Anonymous, 2014). After these early years, under the influence of the Professor in Operations, Project and Quality Management, Department of British political and economic systems, South Africa adopted a Western Business Management at the University of South Africa, South Africa. style (capitalist-driven) free-market economy. 162 Problems and Perspectives in Management, Volume 14, Issue 3, 2016 Africa and as “[h]elping or [h]urting?” (Jeffery, 2014) 2. who became citizens of the Republic of South or being “a curse or some form of a covenant?” Africa by naturalization: (Author’s note written on 13 November 2014). 2.1. before 27 April 1994; or This article reports the findings of an exploratory 2.2. on or after 27 April 1994 and who would have qualitative research study which adopted a “5 Star” been entitled to acquire citizenship by research methodology (developed by the author in naturalization prior to that date; and ‘broad-based 2014) to investigate this apparent dichotomy, of black economic empowerment’ means the viable whether BEE is “good” or “bad” for the country and if economic empowerment of all black people it is putting the country on a path which is more [including], in particular, women, workers, youth, aligned with the social, economic and political people with disabilities and people living in rural outcomes found in most socialist and communist areas through diverse, but integrated socio- ideological states. economic strategies that include, but not limited to: 1. Background to the research increasing the number of black people that The researcher has been involved with BEE research manage, own and control; specifically for more than five years and has thus far enterprises and productive assets; published five journal articles on this topic. In the facilitating ownership and management of fourth article, he attempted to assess South African enterprises and productive; managers’ perceptions and conceptions (or assets by communities, workers, cooperatives and misconceptions) relating to the practical implementa- other collective enterprises; tion prescripts, compliance measures and so forth of human resource and skills development; BEE (Krüger, 2014a). In the last article, to complete achieving equitable representation in all the circle, having covered the essence of what BEE is, occupational categories and levels in the which people or businesses are affected, how they are workforce; affected, and where BEE has its impact, it was preferential procurement from enterprises that are appropriate to lastly consider in an article (Krüger, owned or managed by black people; and 2014b), why BEE in business is justified at all. investment in enterprises that are owned or BEE or its extended version referred to as broad- managed by “black people”. based black economic empowerment (B-BBEE) in South Africa is legislated under Act 53 of 2003 and For the purposes of this research, certain “working was introduced during the first term of the second definitions” were accepted when referring to the post-1994 elected president, former president Thabo ideologies of capitalism, socialism and communism. Mbeki. The B-BBEE Act provides the legislative Working definitions refer to a general definition or framework for the promotion of B-BBEE and understanding of the term(s) used in the context of this empowers the Minister (of Trade and Industry) and research. They are as follows: the Department of Trade and Industry to administer Free-market economy – “A market economy all the provisions of the Act in order to advance based on supply and demand with little or no economic transformation and enhance the economic government control. “A free-market economy is a participation of black people in the South African market-based economy where prices for goods economy (DTI, 2016a). and services are set freely by the forces of supply The objectives of B-BBEE, according to the Act, are and demand and are allowed to reach their point of to “... promote the achievement of the constitutional equilibrium without intervention by government right to equality, increase broad-based and effective policy, and it typically entails support for highly participation of black people in the economy and competitive markets and private ownership of promote a higher growth rate, increased employment productive enterprises.