Note to Editors: Please see the below speech by Mat Cuthbert MP during today’s DA-sponsored debate in Parliament.
House Chairperson,
Since the introduction of the Broad-Based Black Economic Empowerment (BBB-EE) Act in 2003, the political elite have become more affluent, whilst the vast majority of black South Africans remain trapped in dire poverty.
During the same period, growth has remained capped at approximately 1 percent, and our unemployment rate has soared from 27 percent to 31.9 percent.
Rather than implementing policies that generate inclusive growth, the ANC has chosen a path of “trickle-down redress,” the notion that using companies to transfer assets, positions, and contracts from one elite to another will somehow foster inclusion.
The failure of the “trickle-down redress” model is presented in vivid detail in a recently released World Bank report entitled “Driving Inclusive Growth in South Africa,” which highlights how BEE policies and laws impede investment and economic growth.
The report recommended that enhancing and expanding market competition, as well as developing more efficient and supportive institutions, are the only means to achieve inclusive growth.
Furthermore, it included a series of recommendations that affirmed our diagnosis of the barriers to inclusive growth and the measures needed to achieve it, as outlined in our party’s policies.
We have actively fought to include these policies in the Government of National Unity’s Medium-Term Development Plan.
Securing energy supply and enhancing market competition by connecting renewable energy projects to the grid.
Concessioning out the railway network and strengthening the state’s capacity to regulate ports and rail.
Making it easier for young workers to enter the labour market.
Creating an attractive environment for foreign and domestic businesses to invest
Reviewing BEE, local content, collective bargaining, and direct support policies to alleviate the administrative burden on businesses and unlock growth.
Increasing the impact of public spending through efficient procurement.
And lastly, accelerating the professionalisation and digitalisation of the public administration.
Yet, despite empirical evidence demonstrating the failure of the ANC’s race-based policies, they have repeatedly responded by asserting that the government must intensify its efforts by implementing even more BEE-style policies.
The most recent example is Minister Parks Tau’s announcement that his department will introduce a Transformation Fund to mobilise R100 billion over five years.
It is important to note that this is in addition to the tens of billions of Rands already allocated exclusively to black-owned businesses through development finance institutions such as the National Empowerment Fund and the Industrial Development Corporation, which have failed to meaningfully empower black South Africans.
To make matters worse, he wants businesses to pay three percent of their annual net profit after tax under the auspices of the BBEEE Codes of Good Practice and further utilise the Competition Commission’s public interest participation in order to capitalise the fund.
This is frankly outrageous. Considering the significant tax burden that businesses already face and the considerable backlash the Minister’s party received from South Africans for presenting a pro-tax and anti-growth budget just two days ago.
While there is little doubt that we need to address the historical injustices of the past, South Africans have had enough of the ANC’s “trickle-down redress” and are seeking an alternative that allows for genuine empowerment.
For far too long, our people have been excluded from opportunities and forced into accepting the scraps left behind for them by the politically connected elite.
If Minister Tau and his party are as committed to fostering growth and creating jobs as we are, he would join hands with us to change the status quo and consider our alternative.
However, this requires the GNU to address the true drivers of inequality.
These include an incapable, crony state that allowed itself to be captured.
Persistently high levels of poverty and childhood stunting.
Long-term unemployment for a significant proportion of our population and poor quality educational outcomes.
Low savings and investment levels which exacerbate existing wealth inequality caused by historical injustices.
The breakdown of the family unit and inequality in the provision of healthcare services.
And lastly, spatial inequalities that were caused by Apartheid spatial design and a painful history of legislated discrimination.
As outlined in our party’s Economic Justice Policy, our approach to redress aims to target poverty as the proxy for disadvantage instead of race.
Our empowerment model is based on the internationally recognised United Nations Sustainable Development Goals Framework (SDGs), which businesses accept as an effective way to fulfil their corporate social responsibility commitments.
While the current redress model only targets an already enriched elite, the DA’s model targets the vulnerable and disadvantaged, ensuring that no South African is excluded.
It is public knowledge that BEE has enabled corruption and expanded patronage networks. In contrast, the SDGs allow us to identify areas of need and disadvantage, making it more difficult for those already empowered to benefit in perpetuity.
Furthermore, BEE’s narrow race-based criteria disregard many of the private sector’s potential economic, environmental, and social contributions. However, the SDG Framework, if achieved, will result in a more inclusive society, enabling the private sector to contribute to areas where it can make the most significant impact.
BEE compliance is notoriously costly and introduces layers of bureaucratic red tape, whereas the SDG Framework is a globally recognised model that enjoys support from businesses and governments worldwide.
Crucially, BEE deters both domestic and international investment, while our model can attract investment by businesses with a strong commitment to the SDGs.
As members of the GNU, we have a unique opportunity to foster an inclusive economy that promotes growth, creates jobs, and makes tangible progress towards genuine empowerment.
However, this requires recognising that the empowerment policies attempted over the past 22 years have failed to achieve their objective and that we need a fresh approach to redress.
Honourable members, let us not allow this opportunity to pass us by.