To BEE or not to BEE

What South africa’s eco­nomic em­pow­er­ment pro­gramme can teach us about our own.

The Star Malaysia - Star2 - - INBOX - CON­TRA­DIC­THE­ORY By dzof azmi

NEL­SON Man­dela’s death has im­pacted many around the world. For ex­am­ple, he was ref­er­enced in the clos­ing speech at the re­cent Umno gen­eral as­sem­bly, which ex­pressed “sad­ness and ap­pre­ci­a­tion for the free­dom fighter and man of peace of whom it is hard to find an equal, be­cause Umno fights on the same prin­ci­ples” (trans­lated from Ba­hasa Me­layu).

Some may note the irony that this was men­tioned at a con­fer­ence for a party that fights for the rights of one par­tic­u­lar race, while Man­dela was re­mem­bered as a man who fought to bring the races to­gether.

Yet, if we look more closely, we will see sim­i­lar­i­ties be­tween both South Africa and Malaysian eco­nomic poli­cies to im­prove dis­par­i­ties be­tween the rich and poor.

When the African Na­tional Congress (ANC) won power in South Africa, Nel­son Man­dela en­cour­aged blacks to put aside their dif­fer­ences with whites and build a bet­ter na­tion to­gether. But apart from the so­ci­etal di­vide, it was recog­nised that the eco­nomic gap be­tween blacks and whites also had to be bridged. In 1993, the av­er­age an­nual in­come of blacks was 10.9% that of whites.

Ini­tially, large com­pa­nies, es­pe­cially from the lu­cra­tive min­ing in­dus­tries, were man­dated to have a cer­tain per­cent­age of black own­er­ship. Al­most overnight, own­er­ship of some of the most prof­itable com­pa­nies in South Africa changed hands. In 1998, the value of such trans­ac­tions amounted to ZAR 21 bil­lion South African rand (then worth ap­prox­i­mately RM14 bil­lion).

Th­ese schemes cul­mi­nated in a for­mal pro­gramme called the Black Eco­nomic Em­pow­er­ment (BEE) (later fine-tuned and sup­planted by the Broad-Based Black Eco­nomic Em­pow­er­ment pro­gramme). Un­der the BEE, com­pa­nies were given score­cards, mea­sur­ing ev­ery­thing from how many blacks are hired in a com­pany (and in which po­si­tions), to the racial makeup of the com­pa­nies they pro­cure their sup­plies from.

(Iron­i­cally, the gov­ern­ment ini­tia­tive still car­ries the legacy of apartheid, be­cause the for­mal def­i­ni­tion of the ben­e­fi­cia­ries is based on the for­mer apartheid race clas­si­fi­ca­tion sys­tem that was so vil­lainised un­der the for­mer regime.)

How­ever, the decade and a half of try­ing to im­prove the lot of blacks through th­ese pro­grammes have only made a mar­ginal dif­fer­ence. De­spite large in­creases in av­er­age black salary, white house­holds still earn about six times more a year. Given the cur­rent trend, it will take un­til 2061 for white and black house­holds to earn the same av­er­age.

In de­tail, the prob­lem is more acute. The great­est eco­nomic dis­par­ity now is no longer be­tween whites and blacks, but be­tween rich blacks and poor blacks. De­spite the ini­tial ob­jec­tive of help­ing all blacks, it seems that how much you stand to ben­e­fit de­pends on how ed­u­cated you are – which cor­re­lates to how rich you al­ready were.

Or, if you be­lieve some sources, how con­nected you are. Ac­cord­ing to a pa­per pre­sented at a workshop or­gan­ised by Yale Univer­sity and Cape Town Univer­sity, “ma­jor in­fra­struc­ture in­vest­ments ... might be still more of­ten se­cured by golf-course hand­shakes rather than by so­cial and eco­nomic cost-ben­e­fit cal­cu­la­tions” and that “the lead­ing fi­nan­cial and min­ing con­glom­er­ates are in­creas­ingly reach­ing into the state and the up­per ech­e­lons of the ANC and its Leagues”. With such a de­gree of in­ter­re­la­tion­ship be­tween pol­i­tics and busi­ness, cor­rup­tion is seen to be rife.

On top of ev­ery­thing else, th­ese em­pow­er­ment pro­grammes have cre­ated a back­lash of re­sent­ment from some white South Africans. They claim that they are find­ing it hard to get jobs be­cause their places are taken by blacks who end up “fronting”: be­ing hired to ful­fil quo­tas but are not ac­tively in­volved in busi­ness op­er­a­tions. As a re­sult, white South Africans talk about leav­ing their home­land to find work abroad.

The par­al­lels with Malaysia’s sit­u­a­tion are ob­vi­ous. Even more so when you con­sider that the Malaysian Gov­ern­ment’s lat­est ini­tia­tive an­nounced in Septem­ber is called the “Bu­mi­put­era Eco­nomic Em­pow­er­ment” or BEE. It may be com­pletely dif­fer­ent in im­ple­men­ta­tion when com­pared to its South African coun­ter­part, but both have a sim­i­lar ob­jec­tive: To im­prove the eco­nomic dis­par­ity be­tween one race and the oth­ers.

The dis­par­ity in Malaysia is real, de­spite the many im­prove­ments over the last five decades. In his speech at the launch, the Prime Min­is­ter noted that al­though Bu­mi­put­era house­hold in­come has risen 2,500% be­tween the 1970s and now, the cur­rent av­er­age in­come by some­body who is Chi­nese is still 1.43 greater than that of a Bu­mi­put­era.

How­ever, of con­cern to me is that the risks that plagued the South African ini­tia­tives may still ap­ply in Malaysia. The rich will get richer at the ex­pense of the poor; pol­i­tics will in­ter­fere with busi­ness and vice-versa; and the mi­nor­ity will feel they are be­ing dis­crim­i­nated against.

Even while Man­dela was alive, there were pock­ets of re­sent­ment from blacks who be­lieved that he had let the whites keep too much in re­turn for peace. There are fears that this re­sent­ment will now spill over with­out Man­dela’s hand to keep the sim­mer­ing lid on. Al­ready last year, 34 min­ers at Marikana who were protest­ing for bet­ter pay were shot by the po­lice. Per­haps eco­nomic res­ur­rec­tion takes time, and any at­tempt to speed it up along racial lines is likely to be in­ef­fi­cient.

The ones most likely to take ad­van­tage of in­cen­tives are those with knowl­edge and re­sources, which is why large com­pa­nies and rich in­di­vid­u­als make the most of sub­si­dies and tax breaks. And no mat­ter how trans­par­ent gov­ern­ments are when en­sconced with busi­ness, al­le­ga­tions of cor­rup­tion will al­ways arise.

What­ever the re­al­ity of how ef­fec­tive the pro­grammes are, feel­ings of dis­con­tent­ment and dis­tress may over­shadow any good work done.

There is much to learn and be in­spired by Nel­son Man­dela and his suc­cesses. How­ever, I be­lieve there are also valu­able lessons from what he didn’t man­age to do, and it would do us well to learn from them.

Logic is the an­tithe­sis of emo­tion but math­e­ma­ti­cian-turned-scriptwriter Dzof Azmi’s the­ory is that peo­ple need both to make sense of life’s va­garies and con­tra­dic­tions. Speak to him at star2@thes­

Strife: de­spite the end of apartheid in 1993, many blacks in South africa – like th­ese strik­ing min­ers at marikana – still feel eco­nom­i­cally dis­crim­i­nated.

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