South Africa: The history and character of `black economic empowerment'

One of South Africa's new breed of capitalist tycoons, multimillionaire Kenny Kunene. Others include former mineworkers' union leader Cyril Ramaphosa and former ANC Gauteng leader Tokyo Sexwale.

By Dale McKinley

January 10/February 9, 2011 -- South African Civil Society Information Service -- Amid all the usual political propaganda and grandstanding at the African National Congress (ANC)’s 99th anniversary rally in Polokwane on January 8, 2011, it was none other than ANC Youth League (ANCYL) president Julius Malema who came up with the most honest statement of the day. Defending himself against charges that he and his ANC Youth League cronies were continuing to economically benefit from associated businesses awarded government tenders; he argued that business is intrinsically elitist. As such, Malema claimed, “BEE will never be broad” – and in this rare case, he got it right. 

To understand why though, we first need to have a clear understanding of the core historical context within which "black economic empowerment" (or BEE in South Africa) was incubated and subsequently pursued. If we go back to the beginning of the 1900s, we can see that the initial impetus for the formation of the ANC – as an organisational expression of black nationalism -- derived from a combined "protest" over the lack of political and economic opportunities of the small (but influential) black petty bourgeoisie. It was this social force which wanted to find a political and organisational means to stem the racialised assault on its own specific class interests – as well, of course, on what they saw as the political and economic wellbeing of Africans in general.

The majority of this new ANC cadre not only brought with them their particular class politics but also a heavy dose of Christian (Calvinist) education and corresponding social mores. This led to a perspective that incorporated a politics of non-violence and of incorporation in which the main priority became one of persuading the "civilised" British that the educated, propertied and "civilised" Africans could be incorporated into the mainstream of South African society. In other words, as applied to their own economic interests, the leadership of the early ANC simply wanted a specific section of the black population to become an integral part of the capitalist system. 

From this point on, BEE was framed by this approach and understanding but (to varying extents) was mediated by the macro-nationalist politics of the ANC which provided a sense of collective (predominately racial) and de-classed "ownership" over the emerging struggle against the racialised organisation of South African society. This was best exemplified in an early call by ANC founder P.I. Seme that, “we are one people”. Thus, from a very early stage, the concept of political freedom for all black South Africans was aligned to a nationalist politics that accepted the capitalist class system and thus the specific (and dominant) need for economic empowerment of the class of blacks that could join (and potentially eventually replace) white capitalists as the precursor to wider-scale "economic empowerment" of the black masses.

Working class sidelined

However, after the rank failure of the early ANC to organise and mobilise the black majority behind its program of incorporation, the next phase in the development of "black empowerment" came in the late 1930s and early 1940s when the ANC and the Communist Party of South Africa (CPSA) joined forces under the "people’s front" strategy. While in theory, the "people's front" strategy stressed the need to bring together all social forces that might play a positive role in furthering the demands of national liberation, in practice it meant two crucial things: sidelining the black working class as a major force for radical change in favour of "progressive" white labour, "liberal"  British/international capital and a decidedly narrow black African nationalism; and, identifying the struggle against capitalism (i.e., socialism – working-class politics and mass economic empowerment) as a mostly foreign (white) ideology that was not appropriate to "African conditions" and thus a general obstacle to the national liberation of the black majority.

The affirmation of this approach is best represented by the remarks of Dr. A.B. Xuma (ANC secretary general) in 1945 when he said, "it is of less importance to us whether capitalism is smashed or not. It is of greater importance to us that while capitalism exists, we must fight and struggle to get our full share and benefit from the system.”

This conceptual understanding and practical approach to black "empowerment" was then consolidated as the dominant expression of the liberation struggle from the 1960s onwards (codified in the ANC’s 1969 Strategy & Tactics document). Here, the "new" basis for the pursuit of "black empowerment" was set against the theory of "colonialism of a special type".  

The core of the argument was that apartheid emanated from the era of monopoly capitalism and that South Africa reflected “a combination of the worst features of imperialism and colonialism within a single national frontier” in which black South Africa was a colony of white South Africa. As the African population was seen as having “no acute or antagonistic class divisions at present” (i.e. a seamless identification of all blacks as being part of a common and oppressed "class" of people) it was only logical that the immediate task was to fight for the national liberation of the "colonised". As such, this task would be carried out through a "national democratic revolution" with the multiclass liberation movement (the ANC) acting as the main vehicle, but with the working class constituting the leading revolutionary force within it. Since not all classes had an objective interest in a fundamental (anti-capitalist) economic transformation of a post-apartheid South Africa the working class' leading role would – theoretically – ensure that the struggle could be extended towards a second stage of socialism. 

The "result" was that by the time serious mass struggles against the apartheid system took centre stage (in the 1980s), the entire concept of BEE was wrapped up in a hopelessly contradictory "liberation" paradigm. National liberation itself was analytically and practically circumscribed – i.e., the political side of the national liberation struggle had become detached from the economic side (the struggle for social and material liberation). In other words, BEE would, of necessity, have to be practically implemented as part of a deracialised capitalism (after political freedom) in which the logical aim would be the empowerment of an emergent and black capitalist class (bourgeoisie) as a means of overcoming general racial oppression. In turn, this empowerment would then trickle down to the black majority of workers and poor, who would, ostensibly somewhere in the distant future, rise up and overturn the capitalist system (and the newly empowered black capitalists within it).

By the time 1994 rolled round, the mould of any future BEE was set. The primacy of developing a black bourgeoisie as the accumulative vehicle for an extended BEE and the maintenance/enhancement of capitalist relations of production as the macro-developmental framework within which that took place (alongside political "freedom")  – was presented as the logical and indeed desired outcome of the liberation struggle itself.  Under the "cover" of the national, multiclass (but in reality predominately black working-class) struggle against apartheid, there soon emerged the widespread notion that there was a common – national and class – interest in pursuing such a "model" and outcome. 

From liberation movement to party

The ascension to and capturing of political power always has a way of (eventually) exposing the practical underbelly of the victor’s ideological dressage. And so it was with the ANC’s transformation from liberation movement to political party in the early-mid 1990s. 

Flush with their "overwhelming mandate from the people" in the 1994 election, the ANC leadership quickly abandoned any possibility of a radically redistributive socioeconomic developmental path that would (as had been proffered so many times in the past) begin a process of economically empowering the vast majority of South Africans, who were both black and poor. The quick step from growth through redistribution (as encapsulated in the Reconstruction and Development Program (RDP) to redistribution through growth (GEAR, the neoliberal Growth, Employment and Redistribution macroeconomic policy) was brutally decisive and wholly consistent with the historic development of BEE as understood by an ANC leadership, now with institutionalised political power. 

The open embrace, both institutionally and ideologically, of a capitalist political economy – grounded in apartheid socioeconomic relations – practically meant that there were only two possible ways of going about building and expanding the black ("patriotic") bourgeoisie that would constitute the foundation (indeed, the essence) of both a post-apartheid BEE and developmental path:

  • By encouraging and/or pressurising white corporate capital to facilitate such BEE through selling (non-core) businesses to existing and emerging black "investors", who in turn, would be assisted by (white-controlled) financial institutions through "special purpose vehicles";
  • By utilising the institutional and capital resources of the state to facilitate such BEE, mainly through the privatisation/corporatisation of state assets, awarding of government tenders, the provision of seed capital and the threat of effective expropriation (not nationalisation) through the unilateral imposition of quotas of black ownership in key sectors of the economy. This would then be combined with a separate "wing" of "broad-based" BEE that would target the empowerment of the black majority through increased capital expenditure, enhanced support for small, micro and medium enterprises (SMMEs) and facilitation of skills training and institutional capacitation.

For the first several years of ANC rule, the first "way" was dominant. A rash of "empowerment" deals between emergent/wannabe black capitalists (most often all with close political connections to the ruling ANC) and white corporate/finance capital took place. Best known amongst these was NAIL (Metlife, African Merchant Bank, Theta) and the NEC (Anglo’s Johnnic).

Black millionaires

Literally overnight, South Africa had "created" new black millionaires who publicly paraded their new found riches and loudly claimed that this was the start of a new dawn in which all black South Africans could share (for example, Cyril Ramaphosa and his "people’s" Ikageng Shares). ANC politicians lauded South Africa’s equivalent of the "American dream" and loudly endorsed the morality of blacks getting "filthy rich". However, when the Johannesburg Stock Exchange imploded in 1997-98, the dominant strawman edifice of this BEE strategy came crashing down as well. What made the exposure so politically damaging were two powerful (yet radically distinct) charges against the ANC government that had been its chief champion.

From the side of the wounded black bourgeoisie came the charge that their government had not nurtured and protected them (raising parallels with the ways in which the apartheid state had done for white/Afrikaner capital) from hostile economic conditions both domestically and internationally. This was coupled with the charge that the ANC state’s neoliberal macroeconomic policy framework was inherently antagonistic to the sustenance of an emergent black capitalist class since its core policies were effectively facilitating the interests of domestic (white) and international corporate capital rather than "its own". 

From the side of the majority of black workers and poor -- as well as from sections of the ANC’s alliance partners, the Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP) -- came the charge that the ANC government’s neoliberal policies, with BEE at the centre, were responsible for massive job losses, increasing impoverishment and inequality, a lack of basic services and most damaging of all, a betrayal of the redistributive principles and vision of socioeconomic equality of the liberation struggle. Here, it was the creation and privileging of a small and politically connected black elite at the expense of the vast majority of poor black people that represented ample confirmation. 

Both private capital and the ANC scrambled to "repair the damage", or at least be seen to be doing so. The second "way" approach took over. By the early 2000s, a range of new empowerment deals, equity programs, social awareness plans and longer-term "empowerment" scenario planning had been put in place/publicly unveiled by white corporate capital which was clearly trying to preempt what they feared might well be a class and racial backlash. For its part, the ANC state embarked on a strategic approach that sought to "mainstream" BEE as part of an expanding "developmental" state dedicated to the social and economic upliftment of the black majority.

While it was stated, once again, that this would be achieved through creating a "national consensus" that recognised, but cut across racial and class lines, the reality was that such a strategy was nothing more than the logical extension of the historic corporatist logic of the ANC leadership; in other words, cutting up the capitalist pie more evenly without "revolutionary" disruptions to South Africa’s political economy. As usual though, there was no acknowledgment that the real issue is who is cutting up the pie and which "pieces" are being eaten by whom. 

Then-president Mbeki’s two-nation thesis provided the necessary analytical/explanatory rationale (utilising the implicit threat of social disorder) and the "turn" to a stated commitment to adopt a kinder/more human faced capitalism (social democracy) in the face of continued poverty and global inequality provided the necessary political rationale. Soon there emerged a range of new initiatives (such as the BEE Commission) and legislation that would "guide" BEE through a more systematic program of targeted "empowerment" deals and integration into the state’s capital expenditure outlays to ostensibly benefit the poor. Despite these manoeuvrings and more recent politically motivated forms of BEE initiatives, most black South Africans remain deeply sceptical and generally hostile to the way in which BEE has been, and continues to be, pursued. 

As a result, the ANC implicitly understands that it will not suffice simply to rearrange the BEE deckchairs but that it is, more than ever, necessary to make a reconnection with the real basis of the ANC’s continued legitimacy (i.e., the liberation struggle) in order for BEE not to be rejected by the majority of its own professed constituency. So, in order for what, in reality, continues to be a specific program of class accumulation and privilege to be "seen" and accepted as part and parcel of the historic mandate of the ANC (i.e., the economic emancipation of the workers and poor) there is the continued need to provide ideological "cover". As in the past, the "national democratic revolution" (NDR) is the associated talisman. 

Besides its more widespread "deployment" as the generic underpinning of South Africa’s "transitional" political economy – for example, in the service of the SACP and COSATU’s continued alliance with the ANC – what we now have is a concerted attempt by the ANC to resurrect the practical applicability of NDR theory as the macro framework for pursuing BEE and rationalising all its other associated and contradictory "developmental" policies and activities. In this respect, its crucial function is to provide justification for the existence and expansion of a (‘patriotic’) black bourgeoisie – which practically represents the leading "motive force" – alongside continued and close cooperation with white capital.

The result is that contemporary BEE in South Africa has become, more than ever, the prime practical vehicle for elite accumulation, rent seeking and corruption as well as the conceptual cover for extreme inequality.

[Dale McKinley is an independent writer, researcher, lecturer and political activist based in Johannesburg. This two-part article first appeared at the South African Civil Society Information Service. It is posted at Links International Journal of Socialist Renewal with the author's permission.]

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