‘Growth first’, BEE – 4 questions answered on DA’s draft economic justice policy

“A policy which would address the legacy of economic exclusion while simultaneously freeing South Africans from apartheid race classification.” This is the ambitious goal of the DA’s draft policy on economic justice.

DA policy head Gwen Ngwenya on Friday unveiled the draft policy document to the media in Cape Town. This was to allow the draft policy to be discussed ahead of the DA’s policy conference on April, 4 and 5.

How does the DA define economic justice?

“An economically just society is one in which economic opportunities are available to all, and people have the capabilities to make use of those opportunities,” reads the draft policy document.

However, it puts economic growth first.

“It cannot be stressed enough that we must pursue inclusion through growth. A growing economy is the front line of the fight for inclusion. Without improving South Africa’s economic prospects there can only be shared misery instead of shared prosperity,” reads the draft policy document.

“Ours is a growth first agenda, meaning that measures to promote inclusion cannot come at the expense of a healthy economy. To this end, our approach to economic justice is careful not to detract from economic growth. Where evidence shows that an intervention is acting as a brake on growth, we would either suspend or remove it from our programme of action.”

Why is SA an economically unjust society?

The party has been perceived as being ahistorical, particularly with regard to the effects of apartheid, in terms of its economic policy.

This draft policy document now states: “South Africa is still an economically unjust society. Due to a history of apartheid as well as governance failures and corruption in the democratic era, there are skewed and shrinking opportunities.

“South Africa desperately needs a radically different approach for redress and inclusion. Over two decades of political freedom have not resulted in adequate improvement in the socio-economic prospects of the majority of South Africans.

“If we wish to create an economically inclusive and non-racial South Africa, we must address inequalities of opportunity to complement our hard-won political freedoms.”

Why does the DA reject the ANC government’s BEE policy?

At Friday’s press briefing, Ngwenya said: “BEE focuses on the wealthy, politically connected or tenderpreneurs. BEE embodies trickle-down redress. The idea that transferring assets, positions and contracts from one elite to another, would result in broad-based prosperity. This system clearly does not work.”

The DA’s draft policy document states that South Africa is currently failing to overcome its past due to poor governance, corruption and race-based policies which have enabled elite enrichment and the disintegration of the state at the expense of broad-based prosperity.

“Since people do not move from one racial category to another once empowered, current policies enable them to benefit in perpetuity.

“For many people there is a recognition that race classification was an apartheid evil. But some also believe that it remains a necessary evil to address the economic legacy of apartheid.

“No political party has ever put before the public a policy which would address the legacy of economic exclusion while simultaneously freeing South Africans from apartheid race classification. If there is a possibility that we can achieve both these noble goals, we must do so.

“The draft policy document also states: “Ultimately, redress at the top has failed as a strategy to drive redress at the lowest rungs of the economy. BEE when introduced was considered ‘a necessary government intervention to address the systematic exclusion of the majority of South Africans from full participation in the economy’. It has failed at achieving broad economic inclusion.

“The change from BEE to BBBEE did not result in a meaningful shift from elitist interventions to broad-based interventions. Focus on ownership and management control of large companies has received greater policy attention than the contributions the private sector can make to broader society.

“Similarly, changing the demographics of senior executive leaders has been met with more political urgency than improving education which would allow more people to access high-skilled jobs.”The party does, however, support affirmative action to “promote equality of opportunity”, but rejects racial quotas.

“This principle of addressing the underlying causes of inequality as opposed to papering over the symptoms, underpins all our proposed interventions.”

What is the DA’s alternative to BEE?

The DA’s draft policy focuses on the initial endowments which set people up for a better life.

“By focusing on eradicating inequality of opportunity at various stages of life, we will build a ladder of opportunity for every South African, from cradle to retirement.

“People can never be entirely equal, our biological endowments are different and the environment we are born into, and live in, which includes our friends, family, community and many other environmental factors, ensure that we remain unique. But there are drivers of inequality and success which are influenced by public policy which can be designed to give as many people as possible a fair shot at living the life they wish.

“If it were to become policy, the draft policy would require the DA, where it is in government, to put in “place positive measures to enhance equality of opportunity. We can, and should, provide everyone with a solid foundation on which to use their own talents and innate abilities to take themselves as far as they wish to go.

“The party says it is committed to levelling the playing field so that every citizen has a fair start.

“In practical terms, this means a focus on improving standards in basic education, ensuring that every child has adequate nutrition and is able to meet early developmental milestones and an emphasis on making our communities safer. There should also be increased opportunities for extracurricular development so that youth do not fall prey to gangsterism and other anti-social behaviour, policies to support the sharing of childcare responsibilities and increased financial literacy, among other interventions. All these interventions will do more to affirm and empower the vast majority of South Africans than present elite-based approaches.”

A new scorecard

Furthermore, the DA proposes a bottom-up approach which would focus on the drivers of inequality of opportunity that affected the majority of South Africans, with the private sector playing an important role in helping to move toward a more economically just society.

The DA also proposes to use the UN’s sustainable development goals (SDGs) as the objectives for the corporate sector, instead of the current BEE scorecard.

The 17 SDGs are:

– No poverty.
– Zero hunger.
– Good health and well-being.
– Quality education.
– Gender equality.
– Clean water and sanitation.
– Affordable and clean energy.
– Decent work and economic growth.
– Industry, innovation and infrastructure.
– Reduced inequalities.
– Sustainable cities and communities.
– Responsible consumption and production.
– Climate action.
– Conservation and the sustainable use of the ocean.
– Protect, restore and promote sustainable use of terrestrial ecosystems.
– Peace, justice and strong institutions.
– Partnerships for sustainable development.

According to Ngwenya, the SDGs have several advantages to the BEE scorecard, including:

– Targeting the vulnerable and excluded as opposed to the elites.
– Companies can identify the goals which they are best fit to contribute towards.
– The SDGs are a global framework enjoying wide stakeholder support as opposed to BEE, which has been criticised by the EU Chamber of Commerce in South Africa as the top legislative challenge to doing business in South Africa.
– This approach has the potential to drive company profitability, as a growing number of international investors are looking for SDG commitments.

She said this policy was fundamentally based on need and not race.

“One’s race does not change regardless of how empowered you become. BEE has enabled people to benefit on the basis of their race for those who do not need assistance at the expense of those who do.

“This policy will ensure that the disadvantaged benefit from redress.”

The draft policy document can be found here and members of the public can comment on the DA’s policies here.

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