This article was first published by Times Live on 13 July 2025
After weeks of rhetorical flourishes, Dumisani Mpafa should be commended for producing the first genuine attempt to engage with the content (as opposed to merely its policy implications) of the joint report by the Free Market Foundation and Solidarity Research Institute, “The costs of B-BBEE compliance,” of which I was a co-author.
Nonetheless, Mpafa’s piece does betray the same myopic perspective on the report’s overarching argument. To be sure, in a country where economic growth has ground to a halt and unemployment is amongst the highest in the world, our research which found that BEE slows growth by up to 3% annually and destroys almost 300 000 jobs per year, should be seen as a guiding light for further debate rather than merely dismissed. However, this does require that we are able to see things clearly.
In regione caecorum
The first, and most obvious, form of critique, is to interrogate the findings of the BEE report itself. This is to be welcomed. In fact, we encourage a proliferation of attempts to quantify the costs (and benefits) of B-BBEE policies. We would like to think that proponents of the policies would feel the same.
Sadly, this has not yet happened.
The data on these outcomes are severely limited, which made our analysis far more complex than it needed to be. This lack of transparency, in our view, warrants some scepticism about BEE’s supposed benefits.
Our research represents – as far as we could tell – the only serious attempt in the three decades of this policy’s existence, to produce a reliable figure on what it has cost South Africa’s economy.
And, as the renaissance scholar, Desiderius Erasmus, who is credited with providing the earliest extant version of the phrase in regione caecorum rex est luscus explains, it is indeed the case that “in the land of the blind, the one-eyed man is king.”
Until more people – especially those who favour BEE – take the opportunity to wrestle with this important topic, the FMF-Solidarity report represents the best current research. The days of BEE being taken as being beneficial per se, and without evidence, are mercifully over.
If the blind lead the blind, both shall fall into the ditch
Another well-known expression derives from Matthew 15:14, where Jesus says, “Let them alone: they be blind leaders of the blind.”
It cannot be overemphasised that those who take their cue from past and present South African policymakers regarding economic policy, are being led by the very politicians who have presided, particularly in the past 15 years, over one of the worst-performing developing economies in the world.
Given the astonishingly poor outcomes of government (not FMF or Solidarity) policies, one wonders at what point this would begin to negatively impact their credibility. Prior to our final descent into the economic ditch, one hopes.
That which is seen, and that which is not seen
Frédéric Bastiat, a 19th century French economist, discussed the “seen” and “unseen” effects of economic policies in his essay That Which Is Seen, and That Which Is Not Seen (1850).
Bastiat highlights how policies often create visible benefits for specific groups (e.g., subsidies for producers) while spreading costs across society in less obvious ways (e.g., higher prices or taxes). His parable of the broken window illustrates how concentrated benefits (to the glazier) obscure diffuse costs (to the shopkeeper and society).
This notion of concentrated benefits accompanied by diffuse costs is generally attributed to economist Mancur Olson. He developed this concept in his 1965 book The Logic of Collective Action, where he analysed how small, organised groups with concentrated interests can dominate policy outcomes over larger, diffuse groups with less focused stakes.
This idea explains why special interest groups – like the lobbies, corporates, activists, and other commentators of which Mpafa is a representative – often wield disproportionate influence in political and economic systems. Perhaps, this can help us to clarify our view not only of the promulgators but also of the advocates of these policies?
Looking back with rose-tinted spectacles
This brings us to the primary cause of our inability to see matters clearly: the “rose-coloured spectacles” through which some have developed an overly optimistic or idealised view of the world – not since the dawn of democracy, but rather of Apartheid.
It comes as no surprise to us, but it may to some readers, that one of the crucial roots of contention surrounding B-BBEE today is that proponents have created a hopelessly positive image of Apartheid.
In fact, we see the main driving force behind B-BBEE as the fact that people have an unshakeable faith in the Apartheid economy. This is both sad and ironic.
Sadly, proponents refuse to believe that empowerment policies could be bad for the overall economy, because they are utterly convinced that millions (of mainly white Afrikaners) were empowered and enriched through Apartheid.
Ironically, it’s the unwavering confidence that an Apartheid economy is viable or was beneficial to millions, that is distorting the view of many.
Seen through this lens, we believe that the only report that would cause greater consternation than criticising B-BBEE policies, would be a similar report which attempts to show that other than a very small group of politically connected elites, everyone – black and white – lost under Apartheid, economically speaking.
Once it is (invariably) shown that Apartheid was a bad economic system, it be clear that politicised discrimination in the economy is always and everywhere a bad policy in which everybody except the political elite loses – particularly those who are already poor and underprivileged. Surely, such an injustice is plain for all to see, provided we’re willing to open our eyes and stare reality in the face.
