Keeping their heads down and operating behind the scenes, South Africa’s white business elite have managed to maintain their economic position.
When the curtain finally came down on South Africa’s apartheid in 1994, it happened in a way that none of the key players had predicted. Both the African National Congress (ANC) and its opponents in the white supremacist National Party were surprised that they could reach an accommodation through dialogue and negotiation rather than armed force.
In the negotiations that had followed the release of Nelson Mandela and unbanning of the ANC, the parties sealed an unspoken deal. This handed political power to the black majority and left economic power in the hands of whites. There was to be no seizure of white assets, although there were, of course, plans to gradually achieve a more equitable balance of wealth.
Black economic empowerment?
Indeed, there were already plans afoot to bring the leadership of the ANC into the fold. White business magnates had begun to transfer assets into black hands in order to incorporate those at the top of the new political order. The new policy was ‘Black Economic Empowerment’ (BEE). As the commentator Moeletsi Mbeki put it: “BEE was, in fact, invented by South Africa’s economic oligarchs, that handful of white businessmen and their families who control the commanding heights of the country’s economy, that is mining and its associated chemical and engineering industries and finance”.
He pointed out that the policy was adopted well before the ANC came to power. In 1992, Sanlam Limited, a cornerstone of Afrikaner capital, helped create the flagship black empowerment company New African Investments Limited – led by Nthato Motlana, Nelson Mandela’s former doctor. Further deals followed and soon the new BEE elite were well-entrenched.
On the face of it, the policy was a success. A more equitable sharing out of the spoils of economic development came about, creating a new black bourgeoisie. At the same time the ANC abandoned its more radical economic policies allowing rich whites to continue enjoying a very pleasant lifestyle. A considerable proportion of South African assets were transferred to the BEE elite, but even at their height, these transfers were smaller than they appeared. As my colleague Paul Holden points out, the total value of BEE deals were around R250 billion ($30 billion), still a drop in the ocean when compared with the total value of private sector resources of R6 trillion ($700 billion).
Worse still, the BEE transfers were loans, not gifts. The companies had to earn profits and from these profits the loans would be repaid. That was at least the theory. In reality, many of the new black elite had little or no experience of business…
Read more: All Africa