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ANC’s BEE Policy Yet to Transform Job, Business Stake Forecast for Blacks in South Africa

ANC’s BEE Policy Yet to Transform Job, Business Stake Forecast for Blacks in South Africa

From The Economist

Few people are more aware of the horrors of apartheid than Mamphela Ramphele. Her boyfriend, Steve Biko, the founder of the Black Consciousness movement, was beaten to death in police custody in 1977. Like South Africa’s ruling party, the African National Congress (ANC), Dr Ramphele, now an opposition politician, believes that the government should try to heal the wounds of half a century of white supremacist rule. But she does not like the way it is going about it.

In March Dr Ramphele claimed that the government had forced Gold Fields, a mining firm of which she used to be chairwoman, to sell a stake in its business to a consortium with ties to the ANC. The 73 people in the consortium included the chairperson of the ANC and a member of the legal team that defended President Jacob Zuma during his rape trial in 2006. Gold Fields denies the claim, but says it has instigated an independent investigation into the 2010 transaction.

The controversy is one of many to dog the ANC’s policy of “black economic empowerment” (BEE). When apartheid ended in 1994, the ANC promised to make black South Africans richer. To this end, it has promoted the transfer of stakes in white-owned businesses to a new class of black investors. Change at the top, it was claimed, would foster change further down by removing blockages to the hiring and promotion of blacks.

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The first BEE transaction was in 1993, before the country’s first multiracial elections. Metropolitan Life, an insurer, sold a 10% stake to Methold, a holding company owned by well-connected blacks such as Nelson Mandela’s former personal doctor. In 1998, the year that the BEE business really took off, there were 111 transactions worth a total of 21 billion rand (then worth $3.8 billion).

Read more at economist.com