GNU fault lines grow: DA challenges ANC to scrap BEE

The Democratic Alliance (DA) has formally requested that the African National Congress (ANC) drop its stance on Broad-Based Black Economic Empowerment (B-BBEE) and support a new DA bill.

The DA governs alongside the ANC in the Government of National Unity (GNU), making up over 30% of the coalition bloc.

The party has announced its intention to table a bill that seeks to abolish B-BBEE and institute a new system for public procurement.

BEE was an ANC-introduced policy that uses a scorecard system to encourage companies to hire people of colour by offering access to lucrative government contracts and tax breaks. 

Matthew Cuthbert, the DA’s head of policy, said that “ANC economic policies have left South Africans unemployed and poor. This is not the inclusive country that we envisioned building in 1994.”

Since B-BBEE was implemented in 2003, conditions have worsened for the majority of South Africans, the DA said.

The unemployment rate for black South Africans has increased by 9 percentage points between 2014 and 2024.

The unemployment rate for white South Africans during this same time frame has marginally decreased by 1%. 

“Thirty million black South Africans are trapped in poverty, of a total 52 million,” Cuthbert said. 

The party quoted University of the Witwatersrand Professor William Gumede, who found that since 1994, B-BBEE has only succeeded in moving R1 trillion among fewer than 100 people.

The party emphasised that the B-BBEE system has benefitted only a small, politically connected elite and has failed in its goal to drive inclusion, while simultaneously repelling investment. 

“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. 

Meyer added that the policy and the goal of promoting an inclusive economy cannot just be abolished; it needs to be replaced. The DA’s proposed replacement for this is the “Economic Inclusion for All bill.” 

The bill is an amendment to the Public Procurement Amendment Act of 2024, to repeal race-based preferential procurement provisions and replace them with a needs-based empowerment system that is not race-based. 

The new proposed system is based on three components for procurement: value for money, economic inclusion and disqualification criteria for those who are implicated in fraud and corruption. 

A 30-year-long ideological debate

Procurement will then be based on a preference points system that grades suppliers based on demonstrated contributions to development and social impact. 

The bill includes the winding down of the BEE commission over 12 months and the systematic removal of references to BEE across legislation. 

This would align the policy with the constitution, according to the DA, which requires that the government’s public procurement system is fair, equitable, transparent, competitive and cost-effective.

Meyer argues that the current race-based system is not aligned with this. “We cannot simply have an ideological debate for 30 years,” he said. 

The party was questioned on how it plans to get the bill through parliament, given that its biggest partner in the GNU, the ANC, will likely not agree with abolishing its own B-BBEE policy.

Cuthbert responded that “we are calling the ANC to acknowledge that the public opinion on BEE has shifted. People see it as a cash cow for corrupt ANC cadres.”

“I don’t think the ANC wants to see how the public opinion has changed, but it is to their benefit to acknowledge this and get behind the bill.”

While the party is aware that the ANC will likely oppose the bill, the goal is to table the bill and shift the conversation in parliament, which should be a site for contestation of this kind, according to Meyer. 

In the 2024 general elections, the ANC lost its three-decade-long majority, receiving 40% of the vote.

It formed a coalition, or ‘GNU’, with the DA, Inkatha Freedom Party (IFP), Patriotic Alliance (PA), Vryheidsfront Plus (VF+), and five other smaller parties.

However, various parties within the GNU have complained about the ANC’s dismissive nature to the ideas, inputs and concerns of their coalition partners.

‘BEE is state-sponsored corruption’

BEE and the recently implemented Employment Equity Act have faced significant challenges recently, including court cases and criticism from the United States.

The ANC has continued to support the policy despite the criticism, asserting that pressure from outside forces will not make the party abandon its transformation agenda. The party has explicitly said in the past that it will not drop BEE. 

“We are not going to sit there and lap up what the ANC says,” Meyer said. “We are saying to the ANC, here is our homework sheet, here is how we think the system could be improved.”

Cuthbert added that he believes there has been a realisation within the ANC itself that BEE has failed to attract investment. 

“We are forcing the door open and making sure that this is acknowledged as a critical policy issue on the table for discussion.”

“We call on the ANC to do the right thing by prioritising the needs of the poor and vulnerable over their cadres.”