Black economic empowerment should seek not only the deracialisation of ownership, but also the fundamental transformation of the economy to the benefit of all our people, writes Kgalema Motlanthe.
The ANC has declared 2005 the "Year of Popular Mobilisation to Advance the Vision of the Freedom Charter". In our January 8th Statement we said that our task, the task of all progressive and democratic South Africans, is to translate the ten clauses of the Freedom Charter into solid progress towards the realisation of a better future. We said: "All the structures and cadres of our movement have the duty to honestly re-examine their work in the light of the Charter's political, social, economic and moral vision".
With respect to the economy, the Freedom Charter demands: "The people shall share in the country's wealth." This is the starting point for the ANC's approach to economic transformation in general, and black economic empowerment (BEE) in particular. The Freedom Charter claimed for all South Africans the restoration of their economic heritage because it rightly equated 300 years of colonialism and apartheid with a systematic campaign of dispossession, expropriation and confiscation of all forms of productive wealth in the hands of Africans in particular and black people in general. The explicit intent of racial domination was to suppress any path to the accumulation of assets in order to consign black people to the status of permanent helots in a land of abundant wealth.
Fifty years have passed since the Congress of the People, but the economic conditions that the Freedom Charter demands we eradicate have not disappeared. Indeed, for four of those five decades, the campaign of dispossession was brutally intensified. The last remnants of African wealth were systematically expropriated, as houses were demolished, families forcibly removed from their lands, and black entrepreneurial endeavour ruthlessly crushed. Perhaps with foresight, the human engineers of apartheid sought also to suppress the accumulation of knowledge, information and education among black people, factors that have become the most important productive assets in the twenty-first century economy.
This is the historical basis upon which our economy remains divided into two economies. By this we mean the division between a First Economy, which is globally integrated and fast growing, and a Second Economy, which remains mired in poverty and underdevelopment and which is incapable of self-generating growth.
Inspired by the Freedom Charter, it is the vision of the democratic movement in South Africa to overcome the two-economy divide and create a united and integrated economic system, in which fragmentation and injustice are consigned to history. This, we know, is the only sustainable basis on which we can build a genuinely non-racial, non-sexist, prosperous and democratic South Africa: the alternative society envisioned by the Freedom Charter.
A PROGRESSIVE AGENDA FOR EMPOWERMENT
The thrust of all our programmes, both in government and in society more generally, is to achieve exactly these objectives. Black economic empowerment is but one of a range of interventions designed to actively transform our society away from the past. What is required is not the acceptance or rejection of BEE as such, but the development of a progressive and democratic agenda for BEE.
The elements of such a progressive approach to BEE include the following:
CONSCIOUS AGENTS FOR CHANGE
To achieve such outcomes BEE should be led and directed by agents for change who are able to act collectively in a manner consistent with our vision of the future. Left as individuals, without the support of organisation, those participating in BEE transactions can easily be led down the path of least resistance, that of narrow-based enrichment.
Only as part of a coherent movement, with clear goals and common ideals can we hope to achieve the outcome we desire. The beneficiaries of BEE transactions have a particular role to play in this regard. They must be at the front-line of combating the negative tendencies that have undoubtedly cast a shadow over the programme of BEE.
We know that capital never behaves philanthropically, at least not to an extent that would interfere with its profits. As we have already noted, apartheid has dispossessed black people of all forms of productive wealth. Capital is largely concentrated in the banks, insurance companies and pension funds that make up our highly sophisticated and globally integrated financial sector.
It is good that we have such an advanced financial sector. However, observing that blacks own no capital, and realising that capital is not philanthropic, means that the only way that blacks can participate in 'transfer' BEE is by buying debt from the banks. Given these realities the fact is that, in large measure, it is the banks that have been the primary beneficiaries of this type of private sector led BEE. After all, it is the business of a bank to sell debt.
The private sector also engineers BEE to focus on a very narrow base, especially in respect of the transfer of ownership of assets to individual beneficiaries. Certainly, the freedom we fought for includes the freedom to trade, and through their individual efforts there is nothing inherently wrong with individuals participating in many deals. However, it should not be (and it is not) the objective of the democratic movement or the purpose of government policy to support or advance such multiple, narrow based empowerments.
As agents for change we must also resolutely oppose and defeat all forms of fronting. In the context of 'fronting' and 'renting out', the 'broad based' provisions of BEE that we seek to advance can sometimes be reduced to an attempt at wholesale theft, where 'broad-based' partners can on occasion become, knowingly or unknowingly, the agents which lend credibility to narrow self-enrichment.
Some of the beneficiaries of BEE processes appear to jump between one deal and another with a view to making money as fast as possible, rather than accumulating wealth in a sustainable manner. There is nothing inherently wrong with sitting on 35 boards and owning small segments of a hundred large firms, while controlling none. No doubt such activities will provide a steady stream of income.
Genuine empowerment must focus on the black entrepreneurs who build viable and sustainable businesses. These are the real agents of transformation because the end result of their work is the consolidation of wealth in a manner that will eventually result in their own independence from existing white corporate financing.
Such entrepreneurs, by thus consolidating their wealth and securing their own financial independence, will be able to empower others in turn, and will be able to reap full advantage from the new vistas of opportunity that emerge as we integrate the Second Economy into the First.
Once endowed with sufficient capital to sustain themselves over the long run they will thus be able to contribute to the broader moral, political and economic imperatives of BEE that we pursue.
Indeed, it could be said that there are three types of empowerment beneficiaries: the 'deal-maker', the 'manager' and the 'entrepreneur'. There is nothing wrong with black people making deals that add no particular value to the economy but enrich themselves personally. But as a democratic movement the focus of our empowerment programmes should be (and are) squarely on the entrepreneur.
We also require much more work on the small and micro-enterprise aspects of BEE. Empowerment will continue to be regarded by many as a narrow, elite-based affair, unless clear and evident programmes are seen to benefit the small entrepreneur and the micro-enterprise. Perhaps this aspect of BEE has not received so much attention because it is much more difficult to engineer. It requires us to address the problems of access to credit. It requires us to address the challenge of skills development, including mentoring. It requires us to shift the focus of our empowerment programmes from the 'deal maker' to the 'entrepreneur'.
This in turn means that we must be prepared to take risks because, as we know, many small, new businesses fail. But if we are not prepared to take risks we will not identify the gems that will make a difference. And this brings us to the potential role of social capital, a potential that we have not yet fully realised.
The entrepreneurs who are at the forefront of genuine empowerment have a powerful ally in the form of social capital. In our country the state controls large amounts of capital, either directly or indirectly, that can be deployed in terms of an agenda that is not solely determined by the imperatives of profit maximisation. But social capital is not confined to the state. For example, huge assets are controlled and directed by pension funds, in which the union movement plays an important role.
The full empowerment potential of the deployment of social capital has not yet been realised. This applies to both state capital and that controlled by the union movement. The reasons we have not realised this potential are complex. Over the last ten years we have been on a steep learning curve, confronting the problems of directing institutions in a sustainable manner toward the goals we set ourselves.
State agencies that control capital, either directly or indirectly, are taking the lead in this regard. Institutions such as the National Empowerment Fund, the Umsobomvu Fund, the Industrial Development Corporations and others have the potential to shift empowerment towards a much more broad based and entrepreneur-focussed paradigm.
Paramount for all the progressive people who have a role to play in the deployment of social capital is how to ensure that it too contributes to expanding the frontiers of economic activity, particularly in respect of the second economy.
A PROGRESSIVE MOVEMENT FOR BROAD BASED EMPOWERMENT
Capital cannot be depended upon to transform itself. Rather than genuinely respond to the needs of transformation, it will seek to advance its own worst features through the programme of BEE.
As a movement, we seek not only the deracialisation of ownership, but also the fundamental transformation of the economy to the benefit of the masses of our people, who continue to live in conditions of poverty and underdevelopment. Rather than throwing up our hands in the air and decrying the regrettable features of capitalism, it is our duty as revolutionaries to act to achieve different outcomes. Whereas capital cannot lead transformation, it is the duty of the democratic movement to do just this.
This requires us to unite in a common programme to realise the goals of the Freedom Charter. It requires that we act together, as black entrepreneurs, the progressive union movement and the agencies of government to realise an authentically transformative and broad-based approach to black economic empowerment.
This is the content of the ANC's resolution at Stellenbosch, which reminds us all that "limited participation of black people in the economy limits our ability to expand the productive base, sustain economic development, eradica te poverty and contribute to a better life for all. [Therefore] Black Economic Empowerment (BEE) is a moral, political, social and economic requirement of this country's collective future".
It is only if we are able to unite in a collective endeavour for fundamental change that we can hope to influence the logic of capital and ensure outcomes that genuinely transform our economy.
Kgalema Motlanthe is Secretary General of the ANC.
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