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South Africa
Why BEE should be abolished
Africa
November 29, 2009 Edition 1
World
Local Moeletsi Mbeki
Opinion
BLACK economic empowerment is one of the most destructive
Lifestyle
policies that have been adopted by the ANC government since the
Entertainment advent of democracy in 1994.
Sport
Sadly, conventional wisdom in South Africa thinks BEE has been a
Today's Front Page pillar of strength for South Africa's democracy. The reality is that
Browse By Page while BEE has enriched a significant minority among the blacks, for
Past Front Pages the great majority of black South Africans evidence shows that their
Supplements condition has been deteriorating over the last 15 years.
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South Africa's human development index has declined systemically

Partner Sites in the past decade, culminating in a steep fall in life expectancy. In
1999 South Africa was ranked 94 in the index; by 2007, it had
IOL News
dropped to 129 out of 182 countries.
IOL Sport
IOL Business
IOL Games Our life expectancy has dropped from 53.9 years in 1999 to 51.5 in
IOL Jobs 2007. These figures reflect the deterioration in living conditions for Browse by page »
IOL Entertainment South Africa's black masses, especially Africans and coloureds.
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IOL Motoring When the new black political elite gained control of state power in
IOL Parenting 1994 it faced several difficult questions, including what to do with its
IOL Property new political power.
IOL Technology
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Personal Finance Should it use its power to enrich the black masses who had been
IOL Shopping exploited, especially by the mining industry, for the better part of
100 years? Should rich whites be allowed to keep their wealth or
should it be taxed and to what extent?
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Big business had anticipated all the questions and came up with its
Cape Argus own solution. It offered to transfer a small part of its assets to
Cape Times individual leaders of the black resistance movement in return for
Daily News them leaving the business environment as they found it. The
Isolezwe leaders found this offer of instant wealth hard to resist.
Post
Pretoria News The co-option of the black nationalist elite by big business came to
Sun. Independent be known as black economic empowerment or BEE.
Sunday Tribune More News articles
The Independent on
Sanlam created Nail by transferring control of one of its small English single malt has Scots in froth
Saturday
The Mercury subsidiaries, Metropolitan Life, 85 percent of whose policyholders Bunions not so Posh
The Star were black, to several ANC and Pan Africanist Congress affiliated Sexwale, Sisulu make peace
leaders. The device used was to split shares of MetLife into a small Gym buddy takes a shiner to House star
package, dubbed high-voting shares, which gave the politicians
Newsletters who were funded by a loan from the IDC, control of the company.
ONLINE SERVICES
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Business Overnight the politicians were transformed into multi-millionaires
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Motoring without having had to lift a finger because all the financial wizardry
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Entertainment was performed by Sanlam's senior executives. All that the
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Jobs politicians had to do was show up at the launch party of Nail and
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thank their benefactor. Even the debt the politicians incurred was
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largely fictitious as MetLife had to pay it back to the IDC.
Sunday Tribune City Guide
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About Us The feeding frenzy of politicians and their senior civil servants and Life Insurance
Advertising parastatal bosses thus began and continues to this day, with state Life Insurance for Women
Booking Deadlines revenue now thrown in. Logo Design
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Readership This financial razzmatazz was designed to achieve a number of Medical Aid
Terms & Conditions objectives. It was intended to wean the ANC and PAC from radical Mobile Business Directory
economic ambitions, such as nationalising major elements of the Online Shopping
economy, by putting cash in the politicians' private pockets, Personal Loans
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Sunday Tribune: Why BEE should be abolished Page 2 of 3

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Jobs @ IOL packaged to look like atonement for the sins of apartheid - that is, UK & Euro Lottos
Advertising reparations to black people in general.
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It was to allow those economic oligarchs who wanted to shift their
company's primary listings and headquarters from Johannesburg to
London to do so. It was to give the oligarchs and their companies
the first bite at government contracts that interested them.
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And it was intended to protect the oligarchs from foreign and
domestic competition while opening up the rest of the economy, Search Any Suburb For Sale Go
especially the consumer goods and manufacturing sector, to the
chill winds of international competition.

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With the wealth of the rich whites thus protected through BEE, the Newsletters | IOL on your phone
only other source besides BEE shares for the enrichment of the new Group Links
black political elite available was state revenue. This has proven to
be the central internal contradiction of South Africa's era of black
rule.

This contradiction can be summed up as follows: who gets what © 1999 -

share of state revenue between the black elite's private 2009 Sunday Tribune &
consumption and the poor people's welfare consumption; Independent Online (Pty)
investment in social and physical infrastructure; payments to other Ltd. All rights reserved.
claimants such as workers in the public sector. Reliance on the
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Competition between these claims on state revenue has become and Privacy Policy.
increasingly explosive. South Africa is, therefore, now entering a Independent Newspapers subscribes
new phase of conflict - between the black political elite and the to the South African Press Code that
masses over how to distribute state revenue between them. prescribes news that is truthful,
accurate, fair and balanced. If we
This struggle is commonly referred to as a struggle over service don't live up to the Code please contact the Press
Ombudsman at 011 484 3612/8.
delivery which, in a limited way, it is.

South Africa's largest companies - despite their deal with the black
politicians - realised that conflict between the black political elite and
black masses was inevitable and would probably be even fiercer
than the struggle between the black masses and Afrikaner
nationalism.

Thus, within five years of black politicians taking control of the state
in 1994, South Africa's largest companies - Anglo American
Corporation, Old Mutual, Billiton, South African Breweries and
Dimension Data - moved their head offices and their primary listings
from Joburg to London.

So, has BEE achieved the objectives of its creators? There is no

doubt it has. A new class of rich blacks, many of them ANC
politicians and former politicians, has emerged in South Africa
whose interests are virtually indistinguishable from those of the old
economic oligarchy that has controlled the South African economy
for over a century.

This new class supports the perpetuation of the migrant labour

system and South Africa's continued reliance on mineral exports.
And the business environment has not changed from the system put
in place by the National Party in the 1950s.

Meanwhile, the condition of the masses continues to deteriorate.

This is why, in my view, BEE must be abolished if we are not to tear
the country apart.

http://www.sundaytribune.co.za/index.php?fArticleId=5265425 2009/11/29
Sunday Tribune: Why BEE should be abolished Page 3 of 3

Moeletsi Mbeki is deputy chairman of the SA Institute of

International Affairs, an independent think tank based at the
University of the Witwatersrand. He is the author of Architects of
Poverty: Why African Capitalism Needs Changing. This paper was a
presentation made at the Gordon Institute of Business Science.

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