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Poor must be the main beneficiaries of BEE
October 28, 2004
By Zamikhaya Maseti
The ANC has decided to set the cat among the pigeons by breaking its deafening silence on the problematic process of black economic empowerment (BEE).
It is therefore a very good thing that the ANC's secretary-general, Kgalema Motlanthe, has decided to enter the fray.
When entrepreneur Moeletsi Mbeki aired his reservations about the origin, form, content and logic of BEE to redress economic inequalities in our country, the main beneficiaries fell on him like a ton of bricks.
Mbeki's central thesis is that the BEE strategy has never been a project of the ANC and was initiated by the big conglomerates to create a buffer group among the black people.
According to him, this buffer group would then become an ally of big business in South Africa.
Big business would subsequently transfer the marginal assets to this new class in an attempt to maintain the economic status quo. Mbeki argues that this trend fosters a culture of dependency as opposed to one of entrepreneurship.
BEE is now becoming a bitter pill to swallow for the few empowered black elite.
My call to the intellectual community is very simple: "Arise, ye prisoners of intellectual starvation and fear no one!"
Mbeki has succinctly applied the theory of class formation in post-colonial Africa in analysing South Africa's economic transformation since 1994.
Those who are familiar with the work of great political economists like Walter Rodney, Bade Onimode, Issa Shivji, Samir Amin, Gunder Frank and Tomas Szentes, will echo similar sentiments.
The post-colonial African state's main challenge during the first decade of liberation was to make sure that the African masses were freed and truly liberated from all forms of economic exploitation.
It is a well-known fact that the post-colonial state emerged as a result of popular struggles for self-determination and was therefore expected by the ordinary people to play a liberating role, freeing them from poverty, disease, hunger and illiteracy.
The critical question was how the post-colonial African state responded to this challenge.
Through the creation of the indigenous, national or patriotic bourgeoisie, the proponents of this strategy were hoping that the African economies would be indigenised.
This became the buzz word in the literature of the early sixties and seventies. Kenya, Nigeria and Tanzania provide interesting case studies.
At the centre of the indigenisation strategy was the liberation of the African economies from foreign domination.
In Kenya, the indigenisation policy was implemented in the agricultural sector as 80 percent of the best land was reserved exclusively for Europeans.
The Kenyan government launched a scheme for the settlement of Africans on the white farmlands under what was known as the Million Acre Settlement Scheme in January 1961.
The British insisted, and got Kenyan leaders to agree, that Africans pay the full market value of whatever European land was transferred to them.
The indigenisation of the Kenyan economy became too costly for the state, whose material base was very narrow or almost non-existent.
Another problem was that the British determined the pace and content of the indigenisation policy.
In order for the Kenyan government to finance this programme, it had to rely on foreign borrowings and loans.
This situation exacerbated the debt burden of the state and recycled economic dependency. The British government took over the process and gave credit to the politically connected and already rich Africans.
In Nigeria, the indigenisation policy took off in 1972 after the state enacted the Nigerian Enterprises Promotion Decree.
The marginal sectors of the economy were reserved exclusively for the Nigerians. The most vital sectors of the economy were opened to aliens under certain conditions. In 1973, the Nigerian Bank of Industry and Commerce was established with 40 percent Nigerian ownership.
In terms of the decree, 40 percent of the total loans had to be made available to the Nigerian businessmen.
The irony was that the Nigerian Bank of Industry and Commerce would not grant loans of less than £10 000 (R115 000 today) to the Nigerian business people.
What this meant was that only the most affluent Nigerians could afford to apply for loans.
The indigenisation decree also demarcated the spheres of economic activities between the indigenous bourgeoisie and international capitalism, and diluted the potentially dangerous economic nationalism of the African bourgeoisie.
Nigeria is a petroleum economy, and oil accounted for about 85 percent of the government's revenue, according to the state records of 1974.
The indigenisation of the petroleum industry was dominated by the government, whose equity share was up to 55 percent in 1974. The state used its shareholding to entrench its power and influence over the economy and consolidated its relationship with the African bourgeoisie.
This gave rise to the tripartite alliance between the ruling elite, the bureaucracy and the comprador bourgeoisie, whose main objective was the pillaging of resources.
In Tanzania, the indigenisation strategy was fraught with a number of problems. The post-colonial state opted for the parastatal system to achieve the indigenisation of the economy.
The proliferation of the parastatals in Tanzania projected a face of a more socialised and nationalised economy.
The problem started when the Tanzanian state decided to nationalise foreign assets and had to pay for the acquisition of foreign equity as part of the settlement.
This was indeed sad and painful as the state had to buy back its economy from international capital and had to rely more on foreign capital and expertise.
The indigenisation of the economy was highly concentrated in state-owned enterprises and very little was done to foster an entrepreneurial culture at a grass roots level.
Another problem was that it gave politicians access to more resources and patronage. The penetrative capacity of political power and influence became too dominant in all economic spheres.
There are a number of lessons that the people of Kenya, Nigeria and Tanzania have learnt.
They were wrong to assume that the African bourgeoisie would remain loyal to the strategic objectives of the national liberation movement and owe allegiance to the rural peasants, urban poor and the working class.
To put it crudely, there is no way that the African bourgeoisie would have committed class suicide and delinked from international capital after it mastered the art of wealth accumulation.
In fact, the logic of capital is wealth accumulation through the creation of surplus, and that is done by entrenching the existing exploitative relations of production.
The African bourgeoisie shared the consciousness, the taste and the lifestyle of the metropolitan bourgeoisie, their newly found allies.
The most common thread that runs across these case studies is the marginalisation of the poor people from all these indigenisation processes.
Where does this put the deracialisation of the South African economy and the BEE project?
The answer lies in the theory of class formations in post-colonial Africa that I have used as the anchor of my analysis.
It's simple: we have just arrived at the indigenisation destination and our brothers and sisters from across the Limpopo are ready to warmly welcome us. This is very painful and disheartening.
In South Africa, ordinary people have not yet benefited from BEE. There are very few people who can easily get access to capital. Those who are lucky to gain or get access are subject to stringent and sometimes annoying procedures.
Big business determines the pace of economic transformation, especially in the financial services sector, and this process still remains too voluntaristic.
The manner in which the financial sector charter is being implemented leaves much to be desired. Shares are allocated to the most affluent blacks, who happen to be board members of these financial institutions. This is not real empowerment.
If big capital is serious about real economic transformation, it should go out of the boardrooms into the dusty streets of Tembisa and empower the disempowered.
Another disturbing phenomenon is the speed at which the already empowered black elite has assimilated the culture of the metropolitan and white bourgeoisie.
The black elite plays golf, stays in the golf estates, owns properties in foreign countries and goes overseas for holidays.
Whenever I engage some of my old comrades who are part of this class, they always tell me that they never struggled to remain perpetually poor.
This is the kind of response I would expect from an individual whose class consciousness has ceased to exist a decade ago.
If we are to fundamentally transform the second economy, the ANC must begin to intervene decisively and turn BEE around so that the poor can be the main beneficiaries of transformation.
Zamikhaya Maseti is a political economy analyst at the Development Bank of Southern Africa. He writes in his personal capacity
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