100 politically connected entities extracted R1 trillion through BEE

Professor William Gumede said 100 politically connected entities, spanning both white and black interests, have extracted over R1 trillion through BEE.

He shared his views on Black Economic Empowerment (BEE) in a discussion with economist Dawie Roodt on kuierSAKE.

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.

In the discussion, he said that Black Economic Empowerment, as a policy in South Africa, is not implementable.

“We cannot implement it because large numbers of both black and white South Africans oppose it,” Gumede said.

“You cannot successfully carry out a policy when you face that level of opposition, so we have to fundamentally re-examine it.”

Gumede examined the numbers and found that approximately 100 politically connected entities have extracted over R1 trillion through BEE.

“These entities include companies, individuals, families, and trusts and served both white and black interests,” he said.

He previously explained that the same entities have been empowered and re-empowered repeatedly.

“South Africa’s BEE model has created a model of corruption because people set up companies just to get a contract,” he said.

He cited the mining industry, where a small number of politically connected people became extremely wealthy.

Gumede referenced an official report by one of South Africa’s business chambers in the mid-2000s, which was not made public.

This report revealed that BEE strategies largely benefited a small group of well-connected individuals.

“The former majority ANC government’s BEE strategies have largely benefited a small group of well-connected black and white individuals,” he said.

“47 politically connected individuals secured 60% of all the BEE mining deals, becoming billionaires or multimillionaires overnight.”

“They have not distributed their wealth. They have not trained black people. They’ve not put money into black education or into black housing.”

These newly minted multimillionaires and billionaires have also not developed black skills or funded civil society initiatives.

“They got money for absolutely no merit, but they have not made any contributions to the black cause on whose behalf they got this money,” he said.

He added that genuine South African entrepreneurs who are not politically connected do not benefit from black economic empowerment funding.

“Just think about what we could achieve with R1 trillion in terms of housing, education, and public infrastructure,” he said.

“Instead, the majority of South Africans are losing out while the economy fails to grow or move forward.”