Shell’s potential exit from SA exposes BEE’s economic fallout

Martin van Staden / Midjourney
Martin van Staden / Midjourney

This article was first published by BizNews on 4 June 2024

Shell’s possible disinvestment and exit from South Africa could cost the country thousands of jobs and billions in investment. This is just another casualty of the economic scourge that is Black Economic Empowerment (BEE).

While popularly envisioned as a method to uplift black South Africans into great economic positions after Apartheid, BEE has proven to rather be a method to allow politically connected individuals to force their way into businesses’ coffers, exploit the tendering system, and prevent the employment or promotion of deserving individuals throughout the economy.

BEE, in simple terms, requires businesses to grant a huge proportion of the ownership of their business to black partners. Something that shouldn’t even be tolerated at this level, as why should any business owner be required to give away a portion of their business on the basis of race?

But it gets worse. In practice, it is not good enough to find a black partner for one’s business. To get the all-clear from the regulatory boards, one must often make a politically connected cadre one’s business partner. And very often, this partner is only motivated by short-term profit, and not the well-being of the business.

Many individuals in the government have made a fortune forcing themselves onto the boards of companies, using BEE legislation, and then exploiting the companies for easy money. Often running them into the ground.

BEE has been linked to stifling investment locally and from abroad, as well as heavily discouraging the growth and founding of businesses. What is the point of starting a business if you will need to give a chunk of it away?

BEE, and race-based legislation in general, has led to unemployment, capital flight, and the continued stifling of South Africa’s economy. Claims that it is a necessary piece of legislation to right the wrongs of the past are ignorant at best, and blatant lies at worst.

BEE has done nothing to help the deserving poor, and rather continues the legacy of race-based hate and discrimination that defined Apartheid. It needs to end.

But it is unlikely that an ANC dominated South Africa will end BEE. It is their signature law, after all. It enables their corruption and their racialised socialist agenda. But that doesn’t mean that provincial governments should standby while their people are oppressed and stifled by insane laws.

Provincial governments, notably the Western Cape’s, need to evoke the federalist spirit of the constitution and embrace autonomy and home rule. This doesn’t mean independence. This means recognising that provincial governments have a right and responsibility to care for their residents – even if that means disobeying the dictates of the central government.

The Western Cape government, in particular, should actively not enforce BEE legislation, and arrest central government officials who attempt to do so on Western Cape soil. BEE doesn’t reflect the needs of the province, and is imposed upon the province by the national government. A power dynamic incredibly reminiscent of colonialism.

One may argue that this violates the law of the land. Firstly, it may not. The constitution defends the right for provinces to rule themselves. The limitations of federalism come more from the ANC’s political rhetoric and hatred for efficiency than any genuine legal backing. BEE itself is far more unconstitutional than provinces enforcing their right to home rule, in fact, as it clearly violates the multiple principle of racial equality, fairness and freedom enshrined in the constitution.

The ANC maintains centralised control not through legal rights, but through its control of the treasury. For this reason, Western Cape SAPS has been underfunded, and disaster funds needed to recover from droughts and fires have been denied. But ignoring BEE does not require funding. The Western Cape government, and other provincial governments that would want to follow suit, only need to ignore this disastrous piece of legislation.

And if the central government has a problem with this, what are they going to do? Depose the democratically elected provincial government? Arrest the entire opposition?

With what capacity? The ANC can’t arrest two-bit gangsters. Much less an efficiently run and legitimate local government. If the Western Cape government was deposed, the people wouldn’t stand for it. And the ANC may not be foolish enough to kick that hornet’s nest.

Ask forgiveness, not permission. And when it comes to eliminating something as catastrophic as BEE, we cannot delay any longer. It must be abolished wherever it can.


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The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation. This article may be republished without prior consent but with acknowledgement to the author.




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