BEE helped white-owned companies to protect their turf

Professor William Gumede said Black Economic Empowerment (BEE) helped white-owned companies to avoid structural transformation and protect their turf.

Gumede, an associate professor at the School of Governance at WITS, shared this information during an interview with The Common Sense.

When the ANC came to power, it decided to create political capitalism through black South African industrialists.

“However, they did not go out and look for black South Africans who were already entrepreneurial,” he said.

“They didn’t look for the people who would have loved and benefited from access to finance and access to skills.”

Instead, they went for people in their inner circle who had struggle credentials. These were essentially people connected to the ANC.

“They didn’t care if those individuals had never done business before. They just gave the deals to them anyway,” he said.

This opened the door for white-owned and controlled companies to get an ANC-connected black person to be their partner, and they are protected.

He explained that this prevented large corporations from taking truly transformative actions, such as helping small businesses.

“With BEE, corporations did not need to build up small businesses or bring them into their supply chain, as there was no incentive,” he explained.

“You just hand over 30%, or whatever the percentage is, to a black person who has never been in business and who isn’t even actively engaged with your company.”

This, Gumede said, concentrates the economy so that only the big players can do the large BEE deals required to operate in many industries.

“Because of the apartheid era and sanctions, business was already highly concentrated anyway. What we have done is simply consolidate that concentration,” he said.

“We just brought black politicians into the existing big companies, so we haven’t actually opened the economy up at all.”

He said that this has made it very difficult for small and medium-sized companies to compete in South Africa.