DEMOGRAPHIC REPRESENTIVITY - OR RACIAL DOMINATION?

When he introduced the revised Broad-Based Black Economic Empowerment Codes of Good Practice on 2 October, Minister Rob Davies made the following statement:

"Black economic empowerment is not just a social and political imperative. We need to make sure that in the country's economy, control, ownership and leadership are reflective of the demographics of the society in the same way the political space does. That's why we are saying BEE remains an economic imperative. We cannot expect to grow and develop as a country if the leadership of the economy is still in the hands of only a small minority of the society..."

But is this so - or is this simply just another attempt by the ANC to impose its racial ideology of demographic representivity on society and the economy?

All reasonable South Africans should accept the urgent necessity of promoting equality; of empowering all our people and of opposing unfair racial discrimination of any kind. We should all look forward to a naturally evolved situation where the economy will be as representative of our diverse population as possible.    

It is, however, untrue that the leadership of the economy is still in the hands of a small minority (i.e. whites). Black South Africans control the 30% of the economy represented by the state as well as parastatals that account for 8% of GDP. They own 17% of the shares on the JSE and control the informal sector. They also control economic and fiscal policy. A considerable slice of the remainder, including 33% of the shares on the JSE, is owned by foreign companies.

The leadership of the economy - or of any other facet of society - will by definition be in the hands of a small minority. If we want economic success, leaders must be competent, experienced, qualified and honest. Their race should ideally be irrelevant - but in our complex society, we also need to ensure the greatest possible diversity.   

However, it is neither feasible, fair nor constitutional to expect that the "control, ownership and leadership" of private companies should be subject to racial percentages. Market forces and performance should determine questions of control, ownership and leadership in the private sector - as they do in virtually all free economies.

In the ANC's "non-racial society" - which is the goal of its National Democratic Revolution - race would once again be the main determinant of virtually all outcomes. Ultimately, 80% of the shares of all companies would be owned by black South Africans; 9.2% by whites, 8.8% by coloureds and 2% by Indians. Directors, senior managers, middle managers and workers would be appointed and promoted in the same proportions.  

This might sound absurd, but it is exactly what the government is already doing in the "public space". This is why coloured employees of the Department of Correctional Services in the Western Cape have been informed that, regardless of merit, none of them will be promoted because they have exceeded their 8.8% national quota for the province. They have been toId that if they are unhappy about this they should move to other parts of the country.   

There is, quite rightly, a constitutional requirement that "public administration must be broadly representative of the South African people." There is also recognition of "the need to redress the imbalances of the past to achieve broad representation." However, there is a counter-balancing acknowledgement of the need for "employment and personnel management practices based on ability, objectivity and fairness."

The Constitution requires that "efficient, economic and effective use of resources must be promoted" and that "good human resource management and career-development practices, to maximise human potential, must be cultivated." The goal of public administration is that "people's needs must be responded to..." As mounting service delivery protests throughout the country illustrate, this is exactly what has not been happening. One of the main culprits is the wholesale application of demographic representivity in the public space - without taking into account the counter-balancing requirements set out in the Constitution.

Now Minister Davies wants to apply this failed approach to the private sector as well. Why? The only references to demographic representivity in the Constitution relate to the public sector. There is, quite rightly, a general prohibition of unfair discrimination on a number of grounds - but nowhere is there a requirement for demographic representivity in the composition of management and the determination of ownership.

There are a number of very practical reasons why demographic representivity is a bad idea:  

• It is neither possible nor desirable for governments to try to force complex and organic economic activities and processes to conform to artificial ideological constraints.
• Why should entrepreneurs make the effort, and take the financial risks involved in setting up successful enterprises, if they will ultimately be required to divest a significant portion of their assets to other interests on the basis of race?  
• How are companies supposed to run their businesses effectively if they cannot appoint and promote key personnel on merit?  
• What about companies that have a specific cultural character? How would Die Burger or Beeld be able to function if they were required to appoint 80% of their staff from communities that do not speak Afrikaans or share in the cultural milieu of their readers?

The best way to promote diversity in the economy is by vastly increasing the number of skilled and experienced black South Africans by improving our education system, and by removing any barriers to appointment and promotion on the basis of race. Black ownership and control of the economy can best be promoted by developing black entrepreneurs and by encouraging companies to give workers a stake in ownership through share schemes. Overall, we can assure greater diversity in the economy by implementing policies that will ensure sustained economic growth. 

Imposition of demographic representivity in the control, ownership and leadership of the economy would be as catastrophic for the private sector as it has been for the public sector.

What is worse, Minister Davies' notion of demographic representivity would lead to the re-racialisation of the economy and of our society, down to the second decimal place. It would disempower minorities by confining them to shrinking demographic pens in virtually every facet of their lives.    

Dave Steward is Executive Director of the FW de Klerk Foundation

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