Why BEE benefits blacks the least

2015-05-14 11:08

According to the latest data from New World Wealth, BEE and affirmative action policies are working to uplift the previously disadvantaged – but black Africans aren’t the ones reaping the most benefit.

The data showed that, while the country has seen its black African millionaire population increase by 277% over the past 15 years, the Indian population actually had the largest increase in wealth. South Africa is home to approximately 46,800 millionaires (HNWIs with net assets over US$1 million) as of December 2014-the report showed, with combined wealth holdings of US$184 billion.

Looking closely at the numbers- Indian millionaires in SA increased by over 400% since 2000 to reach approximately 6,500 at the end of 2014, whilst the number of African millionaires in SA has gone up by a lower 280% during the same period to reach only 4,900 millionaires.

The report concluded that “while BEE and AA policies are working, they are abnormally benefiting the Indian community”. Looking at the demographics, despite the fact that the Indian population is only 3 percent of the SA national population-it now constitute 14 percent of South African Millionaires.

Contrary to popular believes that white wealth is being transferred to blacks- white South Africans still account for the most millionaires in the country – almost 70% of the total millionaire population. The percentage of White millionaires also showed a 69 percent increase over the 10 year period considered in the report. Since the year 2000, white Millionaire population has effectively doubled

SA Millionaires, 2014

GroupMillionaires, 2014%
Whites32 10069%
Indian6 50014%
African4 90010%
Other3 3007%
Total46 800100%

SA Millionaire Growth

GroupMillionaires, 2000Millionaires, 2014Growth
White16 30032 10097%
Indian1 2006 500442%
African1 3004 900277%
Other1 1003 300200%
Total19 90046 800135%

looking at the report, the question is: " Why has BEE benefited blacks the least?" I would not attempt to answer this question in full as it is more complex than what the figures can show. However, mindful of the fact that the outcomes that we see in any economy are as a result of the policies implemented by governments, one may dare to say that BEE policies in their current form despite their good intention have not resulted in intended outcomes. The evil triplets inequality, poverty and unemployment continue to impact  the country.

Since the transition to democracy in 1994, the government has set out to redress the inequalities of the past through AA and BEE laws. The government has continued to amend the laws in a bit to realise the desired outcomes of real empowerment of blacks. However, a majority of backs are yet to benefit from these policies. While governments have the power to legislate, the outcomes on the population are a matter of economics. Business and individuals will always act in line with incentives or disincentives created in the business environment by government. Everything being equal, business and individuals will act to maximise their own good. Governments can legislate BEE and affirmative action. However, governments cannot legislate who actually takes advantage of business opportunities and create wealth.

In closing, i think government need to rethinking BEE to shift away from enrichment to real broad based empowerment. Empowering blacks in skills that matter in the job market would be key to significantly empowering blacks economically.

The current patterns of wealth accumulation in South Africa, in my view is not a chance event, we can make conscious choices to promote growth and employment and empowering the majority of the people.

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