DA’s position on economic empowerment

Issued by James Selfe MP and Gwen Ngwenya MP –
06 Aug 2018 in News

At the last Federal Council of 14-15 July, the party discussed and considered a range of ideas on how we can begin to grow the economy and broaden access to economic empowerment for those previously locked out of opportunities.

It is clear that the ANC’s model of Broad-Based Black Economic Empowerment (B-BBEE) has failed dismally. It has doomed millions to the despair of unemployment, and has serially enriched a politically connected elite.

The DA is, therefore, seeking ways to broaden economic inclusion for those that have been previously and deliberately excluded by virtue of race, but also gender and disability, to name but a few.

Our goal is to advance the empowerment of disadvantaged South Africans, the majority of whom are black. Therefore, the DA unequivocally supports the empowerment of black South Africans.

The painful legacy of apartheid persists in our society today, and continues to largely define opportunity and life chances. This is wrong, and is inimical to a fair society, which is a core value of the Democratic Alliance. It is therefore both a moral and economic imperative to take active steps to redress this legacy.

Crucially, we have always said that we aim to achieve a society in which race is not a determinant of opportunity. We have argued that empowerment policies need to become less race-focused over time, as the policies begin to do their work in redressing the legacy of apartheid.

The only reason the ANC government has had to focus ever-increasingly on narrow racial categorisation, is because their empowerment policy has failed so dismally.

We believe that it is possible to design an empowerment framework that will deliver equality of opportunity for all South Africans over time.

As Mmusi Maimane said in February this year:

We need a wholesale change in empowerment policies, to move away from race-based policies that enable elite enrichment, towards policies that fundamentally break down the system of deprivation that still traps millions of South Africans in poverty.

A proposal to this effect was delivered by the Head of Policy at the last meeting of the Federal Council. As a result, the ANC’s model of BEE was rejected. This gave our policy unit a mandate to work on alternative models of empowerment.

There are numerous possibilities for a new empowerment framework designed to empower poor, primarily black South Africans. These include:

a) The World Bank’s proposal of a contributory pension which would help provide more South Africans with pension savings and thus exposure to the wealth created by financial assets.

b) The model of Economic Empowerment for the Disadvantaged (EED) proposed by the South African Institute of Race Relations.

c) The Pact for Inclusive Empowerment (PIE) that develops an empowerment index for listed and non-listed companies. This could provide a way for market pressure and shareholder activism to drive corporate behaviour towards a positive social impact.

d) A tax credit for those who support adult dependents. This would lower the tax obligations of those who support adult non-taxpayers. In other words, provide support for what has become known colloquially as ‘black tax’.

The above is by no means an exhaustive list, but illustrates that the ANC’s model of BEE is not the only way to conceive of an inclusive economic offer.

The DA position on black empowerment is thus clear. We reject the ANC’s narrow-based BBBEE. We will offer our own, alternative model of real, broad-based empowerment.

The Federal Policy Unit, under the direction of Gwen Ngwenya MP, is in the process of setting up various commissions to produce new policy, working within the framework agreed to at the Federal Council of 15 July.

We will continue to develop the DA’s offer on economic empowerment, taking an evidence-based approach, and we look forward to announcing our revised policy platform ahead of the 2019 elections.