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Power to black power

Good legislation is made when it achieves the careful balances required to satisfy the different interests in society. Such balance means a law does not favour any particular interest group and therefore prejudice another.

Viewed through such a prism, the black economic empowerment (BEE) strategy and draft law approved by Cabinet this week is a well-crafted piece of work. Its principled support for broad-based empowerment is particularly welcome.

This broad-based empowerment pivots on the belief that empowerment is about equity transfer, management control, enterprise and skills development. Ownership or equity is given an equal weighting to skills development in the tally of whether a company or sector can be said to be “empowered”. This is a striking balance between the needs of black business and that of labour.

Narrow BEE, geared only to creating opportunities for big black business, would also have created the risk of South Africa falling into a dangerous pattern of wealth transfer, where the outcome would change only the colour of the money, not its redistribution throughout society.

Such a model would have raised the spectre of the South African economy mimicking the classic African model of a tiny elite and a huge underclass.

Equally vital is the strategy’s imperative: that BEE must be linked to growth. Too much empowerment since 1994 has been about merger and acquisition activity and not the actual business of starting, running and sustaining a business, of providing jobs and showing a profit. Big black deals have often been loud-sounding nothings, creating little other than huge commissions for the sellers of luxury sedans.

Rightly, the national strategy to transfer wealth must focus on improving wages (as skills improve, so do pay packets) and on stimulating small and medium-sized businesses (SMEs). SMEs are responsible for about 60% of gross domestic product so future growth lies in the hands of an entrepreneurial base.

If the government’s spending on BEE is going into SMEs, a lot will have to be done to improve the institutions it has set up to support the sector. Since 1994 institutions like Khula and Ntsika have been badly managed, with little to show for the tens of millions in public finance that have been pumped into them.

Many hurdles lie in the way of a successful execution of the policy. White business is skittish about state intervention in the market and BEE success lies in it becoming a partner, by bringing both finance and skills to the table. Black business is unhappy because it believes the policy is not interventionist enough. Labour worries that because BEE is the belle of the ball, jobs will not get a look-in.

Some concerns are justified, others not. Jobs have to be the centre-plank of economic policy. The market (and consequently, income distribution) is so skewed in South Africa that some intervention is vital. It should be (and is being) tempered.

Black business should be wary of the Malaysian model that has created corporations too dependent on the state instead of encouraging vibrant, independent enterprises.

All in all, a good job’s been done with a policy that could very well have become a hornets’ nest.

Please explain, Mr President

The Movement for Democratic Change’s (MDC) by-election victories in Harare, following the powerful statement of last month’s two-day stayaway, are an event of great significance.

Despite the savage harassment of opposition supporters by Zanu-PF youth, resulting in the hospitalisation of hundreds; despite the arrest of 500 people under Draconian public safety laws; despite the systematic lies and distortions of the state-owned media; and despite the cynical use of food aid to bolster the ruling party’s prospects, the two constituencies were comfortably retained by the MDC.

President Robert Mugabe had been desperate to demonstrate that the MDC’s showing in the 2000 parliamentary election and last year’s presidential poll was a flash in the pan, and that Zanu-PF remains the authentic voice of Zimbabwean nationalism in both rural and urban areas. The by-elections blew such delusions out of the water.

The poll results hold an equally potent message for our government, which persists in viewing the MDC as a British MI5 front and has loudly declared it will never publicly criticise Mugabe’s regime, no matter how ghastly its abuses. President Thabo Mbeki tried to convince the Commonwealth that the human rights crisis in Zimbabwe is on the mend.

Last week Zimbabwean Justice Minister Patrick Chinamasa announced he had no intention of softening the tyrannical Public Safety and Order Act — despite Mbeki’s assurances to the contrary — because it was needed to deal with the “unpatriotic” MDC. This week the MDC’s deputy leader, Gibson Sibanda, became the latest senior opposition member to be dragged into court under the Act.

As matters in Zimbabwe go steadily from bad to worse, Mbeki needs to take South Africans into his confidence. Perhaps he knows something that we do not. Could he please explain what three years of South African “quiet diplomacy” on Zimbabwe have achieved?

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