By Nco Dube

Black Economic Empowerment (BEE) was introduced in post-apartheid South Africa as a policy to redress the economic imbalances created by decades of racial discrimination. The intention was to facilitate and fast-track the meaningful participation of black South Africans in the mainstream economy. 

However, the implementation of BEE has been marred by allegations of cronyism and the enrichment of a politically connected elite, often at the expense of broad-based transformation.

In the years following the transition to democracy, a symbiotic relationship emerged between big business and influential members of the ruling African National Congress (ANC) party. These businesses, eager to maintain their dominance, sought to curry favour with the new political elite by offering lucrative BEE deals. In return, the ANC politicians used their power and influence to secure favourable policies, government contracts, and other business opportunities for their corporate partners.

This mutually beneficial arrangement has allowed a small but wealthy class of politically connected individuals to amass fortunes, often without having to contribute much in the way of actual business acumen or entrepreneurial effort. Examples abound of ANC leaders and their associates becoming overnight millionaires and billionaires through these BEE deals.

One of the most prominent examples is that of Cyril Ramaphosa, the current President of the ANC and the country. Ramaphosa, a former trade unionist and ANC stalwart, co-founded the Shanduka Group, a diversified investment holding company. Through Shanduka, Ramaphosa acquired stakes in various blue-chip companies, including MTN, Lonmin, and Coca-Cola Sabco. These deals were facilitated by Ramaphosa’s political connections and influence within the ANC.

Another example is that of Tokyo Sexwale, a former ANC politician and anti-apartheid activist. Sexwale’s Mvelaphanda Group benefited from a number of lucrative deals in the mining and property sectors, often with the backing of the ANC government. These included the group’s acquisition of a stake in Gold Fields, one of the world’s largest gold mining companies.

Mzi Khumalo, a prominent ANC member, also leveraged his political connections to secure a stake in Eskom’s coal supply contracts through his company, Khumo Power. This deal, criticised for its lack of transparency, allowed Khumalo to profit handsomely from the state-owned power utility.

Saki Macozoma, a former ANC activist and current business leader, has also been the beneficiary of lucrative government deals through his company, Safika Holdings. Safika has secured contracts with state-owned enterprises like Transnet and Telkom, often with the backing of ANC politicians.

Patrice Motsepe, the founder of African Rainbow Minerals (ARM), is another example of an ANC-connected businessman who has amassed significant wealth through BEE deals. ARM has expanded its mining operations through a series of acquisitions, many of which were facilitated by Motsepe’s political connections.

While these individuals and their companies have become increasingly wealthy, the broader black population in South Africa has seen very limited economic gains. This blatant and selfish abuse of BEE by crony capitalists has entrenched the power of big business and the political elite while failing to transform the economy meaningfully in any way.

The symbiotic relationship between big business and ANC politicians has also compromised the ruling party’s transformation agenda. Instead of using BEE to empower a diverse range of black entrepreneurs and small businesses, the policy has been hijacked to enrich a select few. This has undermined the ANC’s credibility and its ability to deliver on its promises of economic justice and inclusive growth.

Addressing the abuse of BEE will require a multifaceted approach. Firstly, there needs to be greater transparency and accountability in the implementation of BEE deals. The process of awarding contracts and allocating BEE stakes must be subject to rigorous scrutiny and public oversight.

Secondly, the focus of BEE should shift from the enrichment of a political elite to the empowerment of a broader range of black entrepreneurs and small businesses. This could involve setting more stringent criteria for BEE compliance, with a greater emphasis on skills development, enterprise support, and the creation of sustainable jobs.

Thirdly, the ANC must demonstrate a genuine commitment to rooting out corruption and cronyism within its own ranks. This will require a willingness to hold its members accountable and to prioritise the interests of the broader population over the narrow interests of the political elite.

The abuse of BEE by crony capitalists has undermined the transformative potential of this policy. Instead of empowering a diverse range of black South Africans, BEE has been used to enrich a small but politically connected elite, often at the expense of the broader population.

Addressing this challenge will require a concerted effort to increase transparency, accountability, and a focus on broad-based empowerment. The ANC must also demonstrate a genuine commitment to rooting out corruption and prioritising the interests of the many over the interests of the few.

Only then can BEE fulfil its promise of creating a more inclusive and equitable economy in South Africa.

(Dube is a Political Economist, Businessman, and Social Commentator on Radio and various newspapers. Read more of his articles here: ncodube.blog)