South Africa’s BEE policies result in economic failure, crisis, or underdevelopment

Professor William Gumede said the ANC government implemented the same empowerment policy which failed in Zimbabwe and Nigeria.

Gumede is an Associate Professor at the School of Governance at the University of the Witwatersrand in Johannesburg.

He is widely regarded as one of South Africa’s foremost experts in governance, political economy, and democratic development.

He shared his views on South Africa’s governance, the ANC, and standard economic policies in a recent SMWX podcast.

Gumede said it was important to understand that black economic empowerment (BEE) is a policy tool and not transformation.

“It is merely a route to transformation. There are many alternative methods and policies, but the ANC, as the dominant governing party, chose BEE,” he explained.

“Because there are so many other options, it is vital to understand this distinction, as a lot of people mistakenly equate BEE with transformation itself.”

He said that South Africa copied the wrong policies. South Africa’s BEE strategy looks exactly like the indigenisation strategies of Nigeria, Zimbabwe, and Ghana.

“All of these strategies failed and led to collapsed states. Yet, almost every country repeats the same playbook,” he said.

He asked why, when these policies have consistently failed across the continent, South Africa keeps adopting them.

“South Africa’s black economic empowerment policy approach has proven to be an underdevelopment trap,” he said.

“There are many alternative paths to true economic transformation, but we locked ourselves into a model that has already failed in Zimbabwe, Ghana, and Nigeria.”

Gumede said that South Africa is now seeing the same consequences play out as in Zimbabwe, Ghana, and Nigeria.

The ANC’s history with black entrepreneurs

Gumede said that in the 1980s, during the anti-apartheid struggle, the ANC turned sharply against the business sector.

They labelled white-owned businesses ‘white monopoly capital,’ but they also vilified black entrepreneurs.

The narrative was that if you run a butchery or a spaza shop under apartheid, you must be a collaborator. “They sidelined that entire group,” he said.

He said the ANC should have implemented a private-sector empowerment strategy that backed those existing 5 million black small-business owners.

“Giving them access to finance, market opportunities, and state contracts would have fundamentally transformed this country,” he said.

Instead, the ANC’s development model for BEE was to turn politicians into business people, effectively creating a class of political capitalists.

“Taking someone like Tokyo Sexwale, who had never run a business in his life, and artificially making him a corporate player was a fundamental and fatal flaw,” he said.

Gumede said that the private sector simply played along because they read the room and the political climate.

“They realised that to survive and thrive under the new government, they couldn’t be hostile,” he said.

Their strategy became: “Let’s bring their deployed political cadres onto our boards, hand them contracts, and pull them into our BEE deals so they will protect us”.