Empowerment vs enrichment

Posted On Monday, 04 October 2004 02:00 Published by
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THE extent of black ownership of productive property has not significantly changed in the past decade.

TRANSFORMATION/Kgalema Motlanthe

THE extent of black ownership of productive property has not significantly changed in the past decade. The commanding heights of our economy remain in white hands, whether one looks at it from the point of view of management, control or ownership.

Noting this lack of progress, the African National Congress (ANC) conference in Stellenbosch in 2002 resolved to recommit our movement to promoting affirmative action and black economic empowerment. The conference was clear:

not only are these moral and political imperatives, but they are fundamental to addressing economic and social maladies our society wrestles with.

We resolved that we should ensure that black economic empowerment is broad-based; that it is supportive of collective ownership programmes by working people and communities ; supportive of the creation of an entrepreneurial class and the accumulation of assets by the poor, and have a focus on the development of rural economies .

In pursuing these objectives, we also resolved to "work with the emergent black capitalist class to ensure joint commitment and practical action to attain increased investment, job creation, employment equity and poverty alleviation".

We also said that the ANC would "promote the design and implementation of broad-based sector or industry empowerment programmes with clearly defined targets, based on agreements between stakeholders", and would "enhance the effective use of government's instruments such as licensing, procurement, state asset restructuring and provision of finance, to target black economic empowerment".

Since the conference, government has initiated a number of steps to advance the process of empowerment. Most notably are the passing of the Broad-Based Black Economic Empowerment Act, and the negotiation of a number of sector-specific charters .

However, in order that we make better progress towards our objectives, we must not shirk our responsibility to assess the reasons why progress to date has been slow. If we are to improve upon our performance to date, it is necessary that we are open and frank in these assessments.

In this vein, I would like to offer a number of challenges in the black empowerment process so far. The first is one that I am sure we are all familiar with: the question of "fronting".

This can take many forms. Capital is infinitely ingenious in its ability to invent new ways to subvert and avoid progressive policies in order that it achieves its profit-making objective. The broadbased provisions we seek to advance can sometimes be reduced to an attempt at wholesale theft, where broad-based partners become, knowingly or unknowingly, agents which lend credibility to self-enrichment.

Another problem in the black empowerment process has been its narrow base, especially in respect of the transfer of ownership of assets to individual beneficiaries. It seems certain individuals are not satisfied with a single bout of empowerment. Instead they are the beneficiaries of repeated bouts of reempowerment. We see the same names mentioned over and over again in one deal after another.

Perhaps, in order to forestall this and broaden the base of black empowerment we should declare that, once an individual has been empowered, he or she should no longer be regarded as an historically disadvantaged person, but should rather accept the status of an ordinary business partner.

Perhaps it is time to move to limit one person to one empowerment, at least where this involves significant state resources.

Another weakness in the empowerment programme is that it has been focused on transfer rather than transformation. By "transfer" I mean the ceding of existing assets to individuals in a manner that does not in any way alter the economic structure. By "transformation" I mean the creation of new markets, new investments, new drivers of domestic demand in the economy.

The problems of "transfer" empowerment are numerous. The most serious problem arises from the fact that capital never behaves philanthropically, at least not to the extent that would interfere with its profits.

As we are all painfully aware, apartheid created a situation in which black people do not own capital. Rather, capital in SA is largely concentrated in the banks, insurance companies and pension funds that make up our globally integrated financial sector.

The only way that blacks can participate in the "transfer" of black economic empowerment is by buying debt from the banks. Given these realities, the fact is that in large measure it is the existing banks who have been the primary beneficiaries of this type of black economic empowerment. After all, it is the business of a bank to sell debt.

Rather than accumulating equity, the so-called beneficiaries of these schemes often find themselves mired in debt, even until the grave. We must move from this "transfer black economic empowerment" toward "transformation black economic empowerment".

Black empowerment should be linked directly to the expansion of the economic base and the restructuring of society. Rather than being a cost, empowerment should become the driver of new growth.

All government's plans to transform our society should provide the basic starting point for accumulation of capital by black people. Transformation can become an opportunity for empowerment.

We are expanding domestic demand through the emergence of purchasing power among an ever-stronger black middle class, which is benefiting from affirmative action. Will these processes fuel capital accumulation among blacks, or will existing white-owned business tap into these new sources of demand for their own consolidation?

We are breaking down the old spatial patterns of the apartheid city, integrating communities that were formally segregated into black and white, rich and poor and rolling out housing stock on a massive scale. How can this provide new opportunities for black empowerment?

Government has put in place an elaborate set of policies for skills development, including education and training authorities, or Setas, in every sector. How can we ensure that empowerment benefits skills development and skills development benefits empowerment?

Individual enrichment through the transfer of existing assets funded by debt is perhaps the inevitable outcome of the fact that organised black business is weak and dis organised.

Organisation was fundamental to Afrikaner empowerment. Because it was organised, emerging Afrikaner capital was able to link itself directly to the national movement of the Afrikaners. As a result, apartheid emerged as a plan not only to oppress and impoverish blacks, but also to create rich whites.

Organisation is also essential for creating a social consciousness that goes beyond self-enrichment. Organisation must create new value systems able to root the beneficiaries of black economic empowerment in the communities from which they emerged .

Motlanthe is secretary general of the African National Congress. This is an edited version of his speech to a Black Management Forum meeting last week.

Publisher: Business Day
Source: Business Day

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