Moeletsi Mbeki on South Africa: “Black Economic Empowerment is Legalised Corruption.” – By Magnus Taylor

Moeletsi Mbeki is unstinting in his criticisms of the state of South Africa's current economic and political condition.

Listening to Moeletsi Mbeki on the morning of 13th Sept one question kept springing to mind: How often does he talk to Thabo? The younger Mbeki has been a thorn in the side of South Africa’s ANC for many years now and a constant critic of the post-apartheid settlement, with all the instincts and flair of a former journalist able to communicate his points with clarity (if a little less precision). His brother may have stamped his marked on the country as President, but Moeletsi appears keen to expose a land “frozen” in time, where economic power remains in the hands of a white elite and a few black businessmen elevated through Black Economic Empowerment (BEE).

On Lonmin-Marikana

Moeletsi began his speech with reference to the recent massacre of miners at the Lonmin-Marikana mine. This, he said, has “made it clear that the government is prepared to use all necessary force in pursuit of profits.” According to Mbeki, the South African mining industry is 150 years old, and has operated largely unchanged since the 19th century.

Mbeki’s speech was centred on an attack on BEE, of which he claims to have been one of the earliest critics. South Africa may have “a mushrooming middle class” but this is not an entrepreneurial body of people. It is a group that has relied upon inflated public sector salaries and a transfer of existing industrial wealth (rather than the creation of more.)

Very little is now being invested in the economy – particularly in infrastructure such as power generation and transport. The productive sector is also shrinking – footwear, clothing and textiles cannot compete with cheaper Asian imports. Unemployment stands at a rising 33 percent and whilst the life of the poor is getting ever more precarious, the political elite just gets richer. South Africa has become an unstable society, where the government – in the guise of the re-militarised police – has been forced to use violence in order to maintain its control.

The post-Apartheid settlement

Mbeki went on to explain how key external players which facilitated the end of apartheid. The key point being that both the UK and US, in particular, had economic interests vested in the protection of their own investments in the country. In the case of the UK, this included the 800,000 English-speaking white South Africans, whose lives the British government wanted to see free from serious disruption following the change of political system. For the US government, of central importance was the protection of the Cape Sea Route (a major transit route for world trade, especially oil) and the continued availability of key minerals critical to the US economy.

The maintenance of the above interests meant that the South African economy became frozen in the state it existed in 1990, which was essentially what it was in 1870. An economy frozen in time cannot, however, stand competition with more entrepreneurial rising powers (particularly those in Asia.)

Black Economic Empowerment

BEE has functioned as an attempt to co-opt and bribe the controllers of political power, with the elite using taxation and corruption to enrich itself. In Mbeki’s words: “BEE is legalised corruption.”

South African corporations are no longer really investing in the country, and capital flight is vast and on the increase. The public sector has become a cash-cow for a political elite rather than a provider of good public services. For these reasons, the economy is growing at an anaemic 2 – 3 percent per year, which explains the growing instability and emergence of demagogic populist figures like Julius Malema.

Mbeki finished on a gloomy note: “The ANC, like the South African economy, is frozen…and its political power is unsustainable.”

Magnus Taylor is managing editor, African Arguments Online.

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5 thoughts on “Moeletsi Mbeki on South Africa: “Black Economic Empowerment is Legalised Corruption.” – By Magnus Taylor

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  2. A troubling article but one one that rings true. It would be of value for us to move beond the anecdotal to gather evidence and statistics that starts to build a compelling case for change.

  3. The issue that seems to be left out of why a solution is hard is that

    (1) The ANC seems meshed in a solution that requires that it provide a free market solution to a problem in which the masses are not inclined to believe in such
    (2) Namely a drastic fall in thier wages so that they at least equal those of Chinese and Indian workers. At a minimum that would mean that the returns to the ANC elite also fall in order to convince the workers of the same
    (3) How would that work if the result is that returns to owners of capital (who in the main are white if we were to take away BEE) then see their returns remain the same or more probably rise

    So while resolution is required maybe even 1-3 but discussions seem to proceed as if there were a solution that would make both white capital and black workers happy and only leave the ANC leaders unhappy which is not quite true.

    The only sustainable solution would be one that also saw owners of capital accept a lower return in order for massive investment in infrastructure capital and honestly I do not see them going for that. They would argue that all that is required would be for the BEE guys to give up their share into infrastructure investment while they keep their “rightful” returns. But that is fantasy but for some reason the international observors, most of white south africa and most government critics seem to implicitly buy into that “free market” solution

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