Black Economic Empowerment (BEE) is one policy decision by the ANC that has done immense and lasting damage to the country’s economy.
It has been described as an “unnatural economic structure” that rewards political connections over merit, hollowing out entrepreneurship, distorting markets, and bankrupting state institutions.
This is according to Gerhard Papenfus, CEO of the National Employers’ Association of South Africa (NEASA), who said his comments were triggered by Mineral Resources and Energy Minister Gwede Mantashe.
During a discussion on Newzroom Africa about the mining sector, Mantashe claimed that anyone who debates BEE promotes white supremacy.
He said that BEE enabled black people to become owners, executives, and managers at South African companies.
He added that white dominated parties, like the Freedom Front Plus and the Democratic Alliance, hate black economic empowerment.
“They hate BEE because it is changing what they were built on. They are dependent on white capacity,” he said.
Following this, Papenfus said that he had to respond to that and just point out to the minister that he’s simply wrong.
“It’s not a question of white anger. I think everybody, except those who really benefit from this scheme, doesn’t like it at all. We detest it,” Papenfus said.
According to Papenfus, BEE has fundamentally distorted South Africa’s economy. “We don’t live in a normal economy,” he said.
“We live in a common economy where an economic structure is created [BEE] where certain people get preference not on the basis of merit, but purely based on political alliance and colour.”
He argued that compliance with BEE is not voluntary but enforced through economic coercion.
“If you want to compete or even participate in the economy, you have to participate in this model,” he said.
Papenfus said the system excludes capable businesses while inflating costs across the economy. “It excludes a huge number of businesses that can offer better quality products at better prices,” he said.
It is bankrupting South Africa
Papenfus called BEE an elitist system that allows only certain people to participate, and that costs the country a lot.
He pointed to state-owned enterprises as prime examples, and said inflated procurement costs have played a role in their collapse.
Beyond the financial damage, Papenfus believes BEE erodes the very essence of entrepreneurship.
“If you create something out of nothing, that brings a huge amount of satisfaction,” he said.
“If you get somebody who joins you at the top and enjoys the benefits of what you’ve created, you can never enjoy the fruit of your labour in the same manner. I think that leaves you empty.”
He argued that BEE creates riches, not empowerment. “We didn’t empower people. We made some of them rich,” he said.
“This is not sustainable, and money made in this way will most probably get lost.” He added that such wealth teaches nothing about how value is created.
The head of the Solidarity Research Institute, Connie Mulder, told BizNews that its study shows BEE policies cost South Africa around 3% of its GDP every year in compliance costs and lost economic activity.
This translates into an absolute cost of around R226 billion a year, using the latest GDP data from the Reserve Bank.
Papenfus is especially critical of what he calls “parasites” in the system—those who gain ownership or directorships without having built anything.
“They want to ride on the success that somebody else has built over 10, 20, 30, 40 years. They bring no benefit, make no contribution. That’s a parasite,” he said.
He rejected the idea that opposition to BEE is about protecting white wealth. “That’s simply wrong,” he said.
“There’s nothing more that we want than to see people coming out and doing real entrepreneurship.”
He pointed to the township economy as evidence that genuine transformation is already happening. “There we see entrepreneurs doing their thing. That’s wonderful. That’s real entrepreneurship.”
Papenfus noted the solution is simple but politically difficult: scrap BEE and return to awarding contracts based on price and quality.
He believed the country would continue paying the price for what he sees as a single catastrophic policy choice. “The country cannot afford this. It is bankrupting South Africa.”
