Notes towards a lecture, 4th May 2005
Delivered at the Centre of International Political Studies, University of Pretoria, 4 May 2005 By Blade Nzimande, SACP General Secretary
1.0 Introduction
Thank you for the invitation to address your centre on an important topic of Black Economic Empowerment
I intend to cover the following matters:
The political and economic context of BEE
The elitist origins of BEE
BEE and the development of productive forces in our economy
Towards a developmental and transformative BEE
2.0 The political and economic context of BEE
2.1 I would start by arguing that, generally in public discourse, BEE is not being properly located in its broader political and economic context, thus tending to reduce it only to the question of redressing racial imbalances, important as this is, but losing focus on its potential or otherwise, in the developmental challenges facing our country.
2.2 The current conjuncture – eleven years after the 1994 democratic breakthrough – can be characterised as a democracy with substantial political power in the hands of the majority, but whose substantial economic power still resides with the same old (white) capitalist class as under apartheid. This is one fundamental contradiction characterising the current period
2.3 For our democracy to be further consolidated it is this particular contradiction that must be confronted. This contradiction is manifestly reflected in the current growth path. It is an accumulation path that continues to reproduce the national, class and gender patterns of the apartheid era, despite many achievements and advances made by our democracy. The jobloss bloodbath underway continues to marginalize the black, particularly, African working class and especially African women, thus reproducing a situation not too dissimilar to the racial, class and gender regime under apartheid.
2.4 This means that the marginalisation and exploitation of the black majority is not just a legacy of the past, but it continues to be reproduced daily through the current accumulation regime, despite major legislative transformation of the labour market since 1994.
2.5 It is because of this reality that BEE is absolutely essential as part of changing this reality and confronting the contradiction identified above. However, at the same time, unless BEE is firmly located within the broader imperative of transforming the current accumulation regime, it can simply reinforce it, with cosmetic and minimal co-option of a new black elite without fundamentally changing the accumulation regime.
2.6 It is because of this that government has added an important prefix to BEE, ‘broad based’. This is because, the type of BEE practiced during much of the first decade of our freedom has essentially been elitist, benefiting a tiny minority of the black population without any substantive impact on the overwhelming majority of our people. I would like to turn to some of the reasons for the elitist nature of BEE – its history and that it has been delinked from attempts to devise an alternative developmental path to the current accumulation regime.
3.0 The elitist origins of BEE
3.1 The concept 'BEE' is new in the vocabulary of our movement and alliance. It is totally absent in all the pre-1994 major policy documents of our Alliance. Of course, this does not mean that there is anything wrong with the emergence of new concepts and programmes in line with the tasks of deepening and consolidation of the national democratic revolution.
3.2 From the Freedom Charter in 1955 through to the 1994 democratic breakthrough we spoke about building people's power in society as a whole, including the economy, as the central platform for transforming economy and society to serve the interests of the overwhelming majority of our people. This language and conception has fallen off our radar screen, particularly in relation to economic transformation, and instead has been replaced by the new concept of 'black economic empowerment'. The question is whether building people’s power in the economy and BEE mean the same thing. Whilst theoretically they can mean the same, in practice there is a clear divergence, if not contradiction
3.3 Concepts do not inherently and always imply particular courses of action, or a particular evolution of the phenomenon they describe. However, at the same time, concepts are not neutral and are always the subject of (class) contestations and meanings. Whilst this concept of BEE is relatively new in the vocabulary of our movement, it is not new in South Africa.
3.4 Its origins can be traced back to the aftermath of the 1976 student uprisings and the murder of Steve Biko by the apartheid regime in 1977.
3.5 The above two developments led to increased international pressure for the isolation of the apartheid regime and for economic sanctions to be tightened. One of the major responses to this, led by American corporations who were resisting the disinvestment lobby and pressure, was to train and promote black managers in the corporations under the rubric of what became known in the late 1970's as 'Black Advancement'.
3.6 The main agenda of black advancement was to show that there were benefits to black people through foreign investment and some 'Black Advancement' experiments by big South African corporations. 3.7 Another key part of this agenda was the creation of a small black corporate petty bourgeoisie to try and convince black South Africans that capitalism is in their interests. This was aimed at countering what they saw as the socialism of the liberation movement.
3.8 As an interesting aside isn't it indeed ironic that today some of these foreign investors were pursuing the creation of some form of a black elite corporate class under white minority rule, but today the very same foreign investors are complaining about the costs of BEE under a democratic government!
3.9 I would argue that today there are very strong continuities in the practice of 'Black Advancement' and BEE. Whilst under 'Black Advancement' upward mobility was only limited to senior managerial positions, in many window-dressing type instances, BEE has broken into the capitalist ownership stakes. Yet the underlying agenda of BEE as practiced by private capital is the same as that of 'Black Advancement' ' co-opting a few to project a deracialised capitalism.
3.10 Whilst we should not underestimate the very important difference of having a democratic government during the era of BEE, as opposed to an illegitimate regime during the era of Black Advancement. Whilst government is committed to broad based BEE, the white capitalist class – with its huge economic muscle – is interested only in promoting an elite, thus maintaining the continuity between Black Advancement and BEE.
3.11 It is this reality, I would argue, that has led to an elitist type of BEE. But it is not only the origins of BEE and continuities with the past, that explains its elitist character. There is another more important reality, that of being delinked from a broader transformative and developmental agenda, a point that has also been forcibly argued by the Secretary General of the ANC, Kgalema Montlanthe, in recent months.
4.0 BEE, the development of productive forces and an alternative developmental path
4.1 The SACP is not remotely convinced that the huge challenges of our society -and indeed of our world - can be effectively addressed within the closed parameters of capitalism. But we are not utopian dreamers; we recognise that we have to advance, deepen and defend our democracy in conditions not of our own choosing.
4.2 Even within capitalism a lot can be done. Take the challenges of our own economy:
The current accumulation path is continuing to reproduce, even exacerbate, racialised poverty and inequality.
our economy is excessively export-oriented and import-dependent;
it depends on producing raw materials – the very gold, diamonds and platinum that many BEE deals are built around - for export;
it is capital-intensive and growth tends to be job-shedding;
the national market remains narrow;
there is very little robust entrepreneurship;
there are high levels of liquidity and a lack of fixed capital investment;
while some progress is being made, the skilling of workers lags; and
the role of corporations in our region and continent is predatory rather than developmental.
4.3 The question is: Have ten years of increasingly frenetic, headline hitting BEE deals remotely contributed to addressing any of these systemic challenges? We believe that most of the celebrated BEE deals have had a neutral, and in most instances, probably a negative impact on addressing the real transformational challenges of our economy.
4.4 Even in terms of the new Broad-based BEE Act, the dominant approach remains narrow BEE, focusing on multi-billion rand ownership deals - the advancement of a small, exclusive black minority through equity acquisitions and individual promotion into senior management ranks. Apart from the narrowness of this approach, the equity acquisitions and similar financing arrangements in most of these deals amount, in practice, to diverting surplus into debt, instead of investing it productively, let alone developmentally.
4.5 Even through the latest initiatives in the BBBEE Charter deals, our white captains of industry and finance much prefer the short-termism of lending an aspirant, upwardly mobile elite the membership fees to the country club and the keys to the Porsche, than taking on the more challenging tasks of labour-intensive investment, or skills development, or ensuring that poor communities enjoy universal access to essential goods and services.
4.6 The arguments for and against narrow BEE have tended to be moralising and individualistic. Arguing for it have been the upwardly mobile aspirants, and the arguments have been about getting their “fair share”, with “equity” in the broad sense quickly becoming “equity” in the narrow, JSE sense. Empowerment is reduced to quotas, to scorecards, to ticking boxes.
5.0 Towards a developmental and transformative BEE
5.1 The test of BEE must be about development and transformation, measurable change. Unfortunately, the current crop of BBBEE sectoral charters could perpetuate narrow BEE rather than promote genuine broad-based BEE.
5.2 Our country urgently needs an alternative growth path whose key elements must include a strong state with a strong public sector. It is for this reason that we welcome government’s change of tack with regard to state owned enterprises, away from privatisation to retaining these as state entities and commitment to public investments of billions of rands.
5.3 Other elements of a new growth path were identified agreed to in the recent Summit of the Tripartite Alliance, including a competitively valued rand, sourcing of material by retail clothing stores locally
5.4 The growth and development summit held two years ago had also agreed that 5% of all investible income in public and private hands, including worker retirement funds, must be invested in infrastructure with an emphasis on labour intensive methods to absorb as many new workers as possible
5.5 It is within this developmental approach that BEE must be subjected. It is within the context of a state-led overarching industrial and developmental strategy that BEE should be implemented. In other words, the question we should seek to answer is to what extent are even the narrow BEE deals contributing to productive investment in the economy, to infrastructural development and to the expansion of jobs. This approach should indeed not just be limited to BEE, but to our entire approach to public and private capital and investments in our economy.
5.6 Our experiences from the SACP-led financial sector campaign, is that there is an absolute need for mass mobilisation in order to ensure that BEE does indeed address the issues outlined above. For example, were it not for the SACP-struggle in the financial sector, the Financial Sector Charter would not have produced the Umzansi account which now stands at close to a million new bank accounts (95% of which are first time account holders; 57% women and a quarter being youth below the age of 24). This is truly broad based BEE.
5.7 In addition, it was through the mass mobilisation led by the SACP that for the very first time in the history of our county, the banks, through the Financial Sector Charter, have set aside R42 billion to finance low-cost housing. We are however, as the SACP, calling for a new model of financing low-cost housing, doing away with the 20-year mortgage bonds calculated on the basis of compound interest. In a country plagued by retrenchments and job insecurity, we need a shorter paying period, thus guaranteeing housing for millions of our people. This to us, again, is truly broad based BEE!
6.0 Conclusion
We would therefore call upon our institutions of higher education in particular to participate and assist these debates about broad based BEE, through creating platforms like these, as well as through research and development of policy options to promote broad based BEE. BEE must be about addressing the needs of the overwhelming majority of our people. I thank you