Posted on February 4, 2011
By Harry Alford
Oh, it was a great moment when Black South Africans freed themselves from the yolk of Apartheid being administered by the White Afrikaners. However, we must remember that civil rights and political clout without economic empowerment will become borrowed events. The leaders of South Africa have recognized this and are trying to formally do something about it. So far there have been little results. What they have implemented is the Black Economic Empowerment Program.
According to Wikipedia, “ Black Economic Empowerment (BEE) is a program launched by the South African government to redress the inequalities of Apartheid by giving previously disadvantaged groups (Black Africans, Coloreds, Indians and Chinese – declared as Black in June 2008 – who are South African citizens) economic opportunities previously not available to them. It includes measures such as Employment Equity, skills development, ownership, management, socioeconomic development, and preferential procurement. After the end of Apartheid in 1994 and with the advent of majority rule, control of big business in both the public and private sectors still rested in the hands of white individuals. According to Statistics South Africa, Whites comprise just under 10% of the population, meaning that most of the country’s economy was controlled by a very small minority. BEE is intended to transform the economy to be representative of the demographic make-up of the country.”
It sounds like a noble cause but there is just one thing. It is not working. It is poorly implemented and is wrought with corruption, fraud, and misrepresentation. A few colored and Asians are getting the lion’s share of the business while the Black population continues to be left out of the economic infrastructure. Among the 295 companies listed on the Johannesburg Stock Exchange, Blacks account for just 4% of chief executive officers, 2% of chief financial officers and 15% of other senior posts (The Economist). Entrepreneurship is basically void and a start in this area is desperately needed. Even President Jacob Zuma seems to agree. “Instead of redistributing wealth and positions to the Black majority, they have resulted mainly in a few individuals benefiting a lot,” he says, “while leaving the leadership of most big companies in White hands. The Black masses, the intended beneficiaries, have hardly gained.” Well, Mr. President, what are you going to do about it?
South Africa must turn this opportunity into a success. Affirmative Action is written into its constitution so there can be no legal challenges of a direct and aggressive program. That being the case they should look at models that have worked. There has been no more successful model than our Small Business Administration’s 8(a) program. This business development program has made more Black millionaires than all of the other economic empowerment programs combined. South Africa needs to form an agency such as the Small Business Administration and begin working on a program that will work.
In addition to business development there should be a pool of capital set aside for business start up and expansions. Capital is the “life blood” of any business and to try and implement an economic empowerment program without ready reserves becomes an impossible task by itself.
Here again, the SBA lending programs can be emulated or even improved with less paper work.
The South African government must set aside a pool of contracts for participants in the program to compete for. There can be some subcontracting also but prime contracting is the key to business growth. Develop large Black owned businesses and demand that they subcontract to other Black owned firms.
Black should be Black. They must not aggregate all ethnic groups under the label of Black. They should separate and monitor each group. You can’t tell me that the colored, Indians, and Chinese endured Apartheid in an equal manner to Blacks. The typical executive in South Africa makes $80,000 per year. A typical Black makes $800 per year. This disparity is intolerable and must be dealt with immediately. Entrepreneurship and business development are the direct ways to correcting the situation.
Collectively, South Africa is a financially strong nation. It is the only first world nation on the continent of Africa. The problem is the distribution of wealth. Some of the richest families in the world reside in South Africa while the poverty levels rival many third world nations. The crime and violence are rampant and soon, if they don’t address it, it will evolve into rebellion and than full scale revolution. The time for change is immediate and the potential for greatness is obviously attainable, if the leaders would become more accountable and take their people to greatness. There is no other nation on earth with such potential for great change. God bless South Africa.
*Posted on http://www.defendernetwork.com