Afrikaner plan a far cry from ANC looting
Last week, Water and Environmental Affairs Minister Edna Molewa wrote a reaction in Business Day to Richemont chairman Johann Rupert’s comment that radical economic transformation was “a code word for theft”.
In the process, she likened black economic empowerment (BEE) to
“volkskapitalisme” of the apartheid era, commenting that it was “regrettable that this scathing critique of the black-majority government came from a beneficiary of the largesse of the interventionist apartheid state”.
This comment was just one of a host of distortions and inaccuracies in Molewa’s argument, but I really don’t mean to pick on her. The view she exposes is pretty commonplace in ANC circles nowadays and, in fact, her arguments were unusually well expressed.
The second thing I should say is that simply because apartheid was fundamentally evil doesn’t mean we should entirely dispense with historical accuracy. More importantly, Molewa and the radical economic transformation crew are not actually focused on the past but on the present. They are desperate to try to normalise BEE and ignore its shortcomings. In the process, they are grasping at analogies that are just wrong.
This is not to say there are no comparisons to be made; apartheid was a form of economic interventionism in favour of a designated group. But its evil lay not, or at least not to the same extent, in designating winners in the economy (which is the ANC’s policy), but rather in suppressing racial competition to benefit its supporters.
It’s also true that “Afrikaner” companies were given a helping hand on occasion. Naspers, along with Sanlam and Volkskas, one of the companies launched in the
effort, held state publishing contracts, some at vastly inflated rates.
Much later, the Oppenheimer empire helped found Gencor, which became Billiton (which then became Australian). But there was never anything close to the huge gobs of legislation forcing firms to give up equity, buy from designated groups, or do the training for one group only that we see today.
But the big difference was that volkskapitalisme was never conceived as a plan to force the dominant “English” businesses to give up huge slices of their equity through legislative fiat and bullying. The idea was exactly the opposite: it was to go into direct competition with English business by fully owned Afrikaans businesses. The underlying notion was to leverage Afrikaner agricultural wealth into formal businesses that would be “ours”, in the idiom of the Afrikaner leaders of the time.
How did Anton Rupert’s empire fit into this notion? As it happens, not very well. It totally flies over the heads of politicians of our day, but in the early days of the union, when Rupert was setting up shop, there was a big difference between Cape Afrikaners, who didn’t join the Anglo-Boer war and Transvaal and Free State Afrikaners who bore the brunt of the fighting.
Rupert was a Cape Afrikaner and, as time went by, he became increasingly at odds with the more statist movements up north. For his day, he was positively revolutionary, supporting entrepreneurs as he became richer, as testified by the backing of the Small Business Development Corporation. His own business was started in his garage.
Was he helped by the Afrikaner establishment? Sort of. When the UK cigarette company Rothmans, which was struggling at the time, was looking for buyers, Sanlam lent him the money to buy it. Did it help that he was part of the Afrikaner establishment? Probably. But it was generally a straight business deal that helped Sanlam as much as it did Rupert. And that was it as far as government support goes.
When Molewa claims Rupert’s son, Johann, is a beneficiary of apartheid government largesse garnered by his father, she is largely speaking nonsense.
Rothmans happened to have a small luxury goods business attached to the Dunhill band when Rupert senior took it over, and from that tiny start, Rupert created what is Richemont today.
Richemont was worth about $10bn in 1996 and is worth five times that today.
The point is that the majority of the Rupert family’s wealth happened after, not during, apartheid.
But what really intrigues me is why the ANC should want to copy anything from the apartheid era? Surely, the lesson is not that apartheid made a section of the population rich, but that it made everybody poorer? At the start of apartheid, SA was economically about half the size of Australia, the other large southern hemisphere economy in the British commonwealth. By the end of apartheid SA was, and remains, about a quarter of the size of Australia, despite having three times as many people. SA’s per capita GDP is about $7,000 today. Australia's per capita GDP is $55,000!
The problem for Molewa is that the game is up. The justification for syphoning off billions from the fiscus in the name of BEE doesn’t wash anymore. This notion of the ANC being a “capable state” overseeing the “normalisation” of SA is contradicted by the government pumping another R3bn of taxpayers’ money into South African Airways, which remains, if I have this correct, illegally headed by one of the president’s girlfriends.
There is nothing South Africans need or want more than a fair economy that affords everybody respect and dignity for what they attain by their own effort. There are, of course, great BEE companies that have achieved lots with the step-up they have been granted by the government.
BEE is not the same as radical economic transformation. And Rupert might have overstated the case by claiming radical economic transformation is code for stealing. But he isn’t entirely wrong either.
SURELY THE LESSON IS NOT THAT APARTHEID MADE A SECTION OF THE POPULATION RICH, BUT THAT IT MADE EVERYBODY POORER?