The DA could scrap BEE if it were brave enough to try

While the Democratic Alliance’s (DA’s) proposed bill to scrap the Broad-Based Black Economic Empowerment (B-BBEE) is likely dead on arrival in Parliament, it can still do so in the six departments it oversees.

These are the views of David Ansara, Chief Executive of the Free Market Foundation, who said that “the DA can still scrap B-BBEE in the departments it runs on Monday morning – it just needs to be brave enough to try.”

Last month, the DA gazetted its Economic Inclusion for All Bill  in Parliament, which aims to do away with BEE legislation and, in its place, institute a new public procurement system.

At the announcement of the Bill, the DA said that B-BBEE has not done what was promised when it was introduced in 2003: reduce black poverty and alleviate black unemployment.

“BEE is nothing but state-sponsored fraud and corruption. It’s making people poorer, and we have evidence of that,” said the DA’s Ivan Meyer. 

The DA cites the research of Wits University Professor William Gumede, who estimates that a hundred families have benefited directly from BEE schemes to the tune of R1 trillion.

After gazetting the bill, which will now embark on its long journey through parliament, Head of DA Policy Mathew Cuthbert said that this was “the first step in the legislative process that will bring South Africa a new, inclusive empowerment model ending decades of BEE failure.”

Ansara said that this ambition it is not matched by the political reality. 

Support from the ANC seems scarce, consistently stating that while they may be open to ‘tweaks’ of the policy, they have repeatedly defended what they call the “constitutional imperative” of B-BBEE.

ANC doubled-down on 11 November that scrapping BEE is an attempt by the second-largest party “to undermine the gains of our struggle… aimed at rolling back over 300 years of subjugation of our people.”

“Without the backing of the ANC in Parliament, the chances of the DA’s Bill being passed are next to zero. Such are the dynamics of the Government of National Unity (GNU),” said Ansara.

The GNU consists the ANC, DA, Inkatha Freedom Party (IFP), Patriotic Alliance (PA) and six other smaller parties.

Newsday reached out to parties in the GNU as to whether they would support the DA’s bill, and was met with a resounding no.

Shifting perceptions

Ansara said that civil society pressure has been key in shifting public sentiment around B-BBEE.

He noted that groups like Sakeliga and the Institute of Race Relations (IRR) have been “pushing back against race-based policy,” with the IRR even drafting its own No More Race Laws Bill.

He added that the Free Market Foundation (FMF), together with the Solidarity Research Institute, published a report in June estimating the cost of B-BBEE compliance at “about R290 billion per year.”

Without it, he said, South Africa’s GDP could have grown “2–4% more per annum and created 4 million more jobs.”

Ansara said the report “clearly hit a nerve,” drawing backlash from those benefiting from the BEE industry.

However, he believes the “zeitgeist is shifting,” with even international outlets like The Economist and Financial Times now critiquing the policy, and the DA “riding the wave.”

On the DA’s proposed replacement bill, Ansara praised the ambition but doubted its prospects: “It’s not matched by political reality.”

Ansara said that he believes the President “has no genuine interest” in non-racial reform, while the ANC and its Tripartite Alliance partners remain firmly opposed.

Scrap BEE in the departments you run on Monday morning

Ansara argued that the DA should leverage public support to advance non-racial procurement, starting in areas they govern.

He noted that in the Western Cape Provincial Government (WCPG), B-BBEE requirements are still embedded in procurement processes.

Ansara said the DA “should find a way of circumventing the more onerous provisions” of the Preferential Procurement Policy Framework Act, even if it means challenging Pretoria in court.

“The same goes for DA members of cabinet, who can and must resist B-BBEE in their respective portfolios,” he said.

The DA currently heads the Departments of:

• Agriculture;
• Basic Education;
• Communications and Digital Technologies;
• Forestry, Fisheries and the Environment;
• Home Affairs; and
• Public Works & Infrastructure.

Ansara argues that the DA has not been walking the talk thus far when it comes to B-BBEE.

While party leader John Steenhuisen has criticised B-BBEE publicly, Ansara said that his Department of Agriculture continues to enforce B-BBEE-based AgriBEE regulations.

When questioned, Steenhuisen blamed “muscle-memory” from previous administrations.

Ansara pointed out that DA ministers, despite nominal control, face resistance from civil servants who may not share their agenda.

Nevertheless, Ansara said, “while the Economic Inclusion for All Bill might be dead on arrival, the DA can still scrap B-BBEE in the departments it runs on Monday morning. It just needs to be brave enough to try.”