The dawn of democracy in South Africa brought with it a promise of economic transformation and social justice. The political transition that took place in South Africa after apartheid brought about economic reforms to stimulate growth, industrialisation and trade, as well as address historical legacies and promote human rights.
In her book ‘The Shock Doctrine: The Rise of Disaster Capitalism’, Naomi Klein observes that South Africa is “a living testament to what happens when economic reform is severed from political transformation”. While the country achieved political freedom, enshrining voting rights, civil liberties, and majority rule, it simultaneously surpassed Brazil as the world’s most unequal society regarding economic disparity.
Under the new dispensation, black workers and communities affected by apartheid had hoped for a profound change that would enhance their rights and move them out of what Boaventura de Sousa Santos calls the ‘abyss’, or Frantz Fanon’s ‘zone of non-being’. One such step would have been to address economic disparities and hold corporate players accountable for their actions, but this did not come to fruition due to economic considerations.
What is less often discussed is the fact that the Truth and Reconciliation Commission (TRC) investigated in the early 1990sand found wrongdoing against companies that not only collaborated with the apartheid regime but also violated the rights of black people. Its restorative justice approach to addressingbusiness-related human rights violations during apartheid was important since it attempted to find a way to deal with the legacy of apartheid that was both just and reconciliatory.
At the end of the day, the TRC was unable to secure reparations for mining industry workers who alleged abuse by companies. This was notwithstanding that it found that businesses had benefited from and perpetuated apartheid. Also, it proposed that wealth taxes be considered as appropriate restitution with regard to businesses, but the state was reluctant to implement them due to the country’s economic challenges. According to Philip Mohr,the country faced a daunting set of challenges, including sluggish economic growth, large fiscal deficits, high inflation and extreme inequality.
At the time, South Africa embraced neoliberalist thinking andstreamlined GEAR as its main economic framework. It acceded to the World Trade Organisation (WTO) as a developed country and introduced interesting interventions to create a ‘business-friendly environment’. The business sector gained further traction when the state implemented substantial tax cuts (a reduction from 48% to 30% in primary corporate tax rates, partially offset by a secondary and capital gains tax). Patrick Bond decried the fact that these measures primarily benefitted “the very corporations and wealthy beneficiaries who benefited most from apartheid”.
However, this was not a mistake or incidental but was a well-thought-out strategy to place the private sector as a ‘central and decisive force’ in driving economic growth and infrastructure development. In his address at the HJ Heinz Company Foundation Distinguished Lecture in Pennsylvania (US), Nelson Mandela assured his audience that the ANC was “not an enemy of private enterprise or the market system”. On this platform, he alsounequivocally stated that the ANC had “no ideological commitment to nationalisation”.
Mandela’s words confirmed that companies were now seen as critical in addressing many of the social and economic problems that faced the country at the time. Therefore, their past transgressions were seemingly absolved in exchange for supporting the post-apartheid policy framework, which aimed to achieve economic growth through redistribution. The assumption was that increased growth would result in a trickle-down effect, ultimately benefiting all South Africans, including the most marginalised.
It was at this point that things got extremely interesting. Firstly, significant concessions were made on the macroeconomic front to facilitate the unrestricted movement of capital in and out of the country. Many companies emerged from apartheid with savings and unspent money worth trillions of US dollars that they were keen to invest offshore. Secondly, the ANC was desperate to ‘transform’ the economic structure by allowing more blacks to ascend to higher levels of economic power. It also discarded nationalisation and committed to free markets.
The culmination of these interests led to the relaxation of exchange controls, the floating of the Rand, and the introduction of Black Economic Empowerment (BEE). It was said these were all intended to promote economic growth and transformation.However, two critical things happened: corporations gained unprecedented influence in shaping public policy, while amaqabane became deeply enmeshed in the intoxicating appealof capitalism and its grandeur. A combination of corporatisation and the allure of free money produced what Blade Nzimande termed ‘tenderpreneurs’, who are quickly eroding the country’s state administration system at everyone’s expense.
With the country destined to celebrate three decades following the end of apartheid, it is only fair to assess how corporations and BEE moguls have betrayed Mbeki’s vision, however flawed it may have been.
Thabo Mbeki had envisioned creating a ‘patriotic bourgeoisie’ class, created mainly through what author Deborah James terms ‘money from nothing’. In acknowledgement, some of his comrades exclaimed that they “didn’t join the struggle to be poor” to denote that they were ready to queue to receive corporate gifts in the form of BEE and affirmative action. The outcome was a new class of nouveau riche blacks and a consumer-driven middle class, which have served essential purposes for Corporate South Africa.
The ultra-rich black class was a bridge that linked corporations and amaqabane and was born from BEE deals and high-level appointments, whereas the latter came out of affirmative action jobs. Together, they are recognised as the black middle class that now commands a vast buying power. But the disturbing question has been whether there is anything ‘patriotic’ about this class besides addiction to conspicuous consumption and controversies. While those that have eight to five jobs are important, the BEE beneficiaries supposedly fall in a higher category of wealth and asset ownership.
While addressing the annual national conference of the 2000 Black Management Forum, Mbeki emphasised the significance of the emergence of a black bourgeoisie as a “crucial step in the process of deracialising the ownership of productive property in our country”. Mbeki envisioned a black bourgeoisie that would not only own and manage businesses but also actively participate in shaping economic policy and advocating for the interests of the broader black community.
Arguably, Mbeki’s idea was not entirely new but was a revision of the Urban Foundation policy and Leo Kuper’s 1967 book, ‘An African Bourgeoisie’. Founded in 1973 by Harry Oppenheimer, the chairman of Anglo-American Corporation, Urban Foundation also sought to broaden the black capitalist class to legitimise the power of capital and protect its interests in South Africa. As with BEE, white capital saw the emergence of a black middle class as a necessary step to reduce pressure for broader redistribution of ownership in the economy and ensure the uninterrupted flow of corporate capital.
On the other hand, Kuper’s ‘African Bourgeoisie’ shed light on the intricate dynamics of this rising middle class and its multifaceted roles within the broader societal fabric. He envisaged that this class would contribute to the expansion of the private sector and the diversification of the economy. At the same time, he acknowledged the uneven distribution of economic power within the bourgeoisie, with a small elite accumulating wealth while the majority struggled to secure their livelihoods.
It appears that Mbeki was aware of the shortcomings of his black bourgeoisie, which relied almost exclusively on market-based solutions against the backdrop of a rapidly de-industrialising economy with a low manufacturing and innovation base. While he advocated for the support of black entrepreneurs, he warned against supporting those who “rent themselves out to white business people to win government tenders” or for their own personal enrichment.
Despite lofty intentions, it must be admitted that BEE has largely failed to achieve its objectives and has left a trail of unfulfilled promises and betrayed expectations. Surely, Thabo Mbeki wonders if his trust was not abused.
One of its biggest criticisms is its focus on redistribution rather than transformation. A small number of wealthy black elites, rather than using their resources to uplift the broader black community, have often engaged in self-serving practices that have exacerbated inequality. As a result, Moeletsi Mbeki, the author of ‘Architects of Poverty: Why African Capitalism Needs Changing’, has labelled BEE “a disservice to South Africa’s economy”.
Companies have used BEE as a mere tick-box exercise, seeking to obtain preferential treatment without making genuine commitments to black empowerment. They also are involved in all types of activities that are in contradiction to the ‘concession’, as late Sampie Terreblanche calls it, that gained them amnesty for apartheid transgressions. Internally, companies have engaged in tokenistic initiatives, such as hiring a few black executives or purchasing a token number of shares from black-owned businesses, without addressing the root causes of economic inequality. Additionally, companies participate in criminal acts like tax avoidance and wealth hoarding, leaving the country’s millions desperate for jobs and change.
Moeletsi Mbeki always believed that Africa’s ruling political elites, in conjunction with Western powers, have massivelymismanaged Africa’s economic surplus. Furthermore, multinational corporations, including powerful Western oil companies, partly fuel political elite corruption and consumption through bribes and substantial payments into offshore private bank accounts. Therefore, the failure of companies and BEEparvenus to deliver on their promises has profoundly impactedSouth Africa’s socio-economic landscape.
Economic inequality has persisted, with black South Africans continuing to face significant challenges in accessing education, employment and opportunities for upward mobility. The unfulfilled promises of the black capitalist class project have contributed to disillusionment and frustration among many black South Africans, who feel that the new democratic order has failed to deliver on its promises of a more equitable society.