Address by Dr Anthea Jeffery, Head of Special Research and Gawith Fellow, South African Institute of Race Relations, to the FW de Klerk Foundation Conference on Uniting Behind the Constitution, Protea President Hotel, Cape Town, February 2 2013

The Constitution and the Equality Clause

What the Constitution says

Most parts of the equality clause (Section 9) of the Constitution are unambiguous, clearly stating that ‘everyone is equal before the law' and that neither the state, nor any private person, may ‘unfairly discriminate against anyone' on racial (or other) grounds. In addition, discrimination on racial grounds is automatically unfair unless the contrary is shown.

The devil lies in the detail of Section 9(2), which says: ‘To promote the achievement of equality, legislative and other measures designed to...advance persons disadvantaged by past discrimination may be taken.'

During the constitutional negotiations, all parties to the talks - including the African National Congress (ANC) - accepted that Section 9(2) requires a soft' form of affirmative action, with a focus on training and ‘inputs' rather than quotas or ‘outputs'. Says former state president F W de Klerk, ‘There was never any talk about imposing demographic representivity.' Nor was it intended that ‘people without the appropriate qualifications would be appointed to posts merely on racial grounds'. Instead, it was widely agreed that ‘the most important and effective form of affirmative action was through the provision of excellent education...and the creation of employment'.

Contrary to this understanding, Section 9(2) has become the fountainhead for employment equity (EE) and black economic empowerment (BEE) rules which aim at demographic representivity in many spheres and often require the fulfilment of unrealistic racial quotas.

Costs and consequences of EE

The Employment Equity Act (EE Act) of 1998 has been energetically implemented in the public sector, where it has brought about a crippling loss of skills and institutional memory. This is evident in the collapse of municipal services in many small towns; the inability of most state agencies to keep sound financial records and achieve clean audits; and the persistent use of costly external consultants to do the work that (well-paid) public servants should themselves be able to carry out.

Most private firms have yet to reach the Government's goal of 75% African representation at all levels of management. Hence, under the EE Amendment Bill of 2012, they could soon face massive fines, of up to 10% of annual turnover, for failing to achieve this quota. Yet fines of this magnitude could force firms into bankruptcy and cost the country still more jobs, as the Government is well aware. In addition, a quota of this kind is clearly very difficult to meet when only 3% of Africans have the tertiary qualifications often needed in management posts and only 25% fall within the 35-64 age cohort from which managers are usually drawn.

Costs and consequences of BEE

As for BEE, the value of declared ownership deals from 1998 to 2008 has been estimated at between R550bn and R600bn. This is an enormous sum to allocate not to productive investment, but rather to the racial reshuffling of share ownership for the benefit, in general, of a small and politically well-connected elite.

Preferential procurement has also contributed to waste and corruption. ANC secretary general Gwede Mantashe admitted to the waste last year when he said that BEE companies must ‘stop using the State as their cash cow by providing poor quality goods at inflated prices'. Mr Mantashe also said: ‘This thing of having a bottle of water that you can get for R7 procured by the Government for R27 because you want to create a middle-class person who must have a business is not on... It must stop.'

Preferential procurement also gives impetus to corruption, as one BEE businessman implicitly acknowledged last year when he said: ‘You pay to be introduced to the political principals, you pay to get a tender, you pay to be paid [for completed work], and you must also...make donations to...the ANC,...the youth league, the women's league, and the SACP [South African Communist Party].'  Understandably, few other businessmen have admitted to making such payments, but the comment seems to provide insight into a wider pattern of conduct. It is also consistent with the high level of corruption (roughly R30bn a year) uncovered by the Special Investigating Unit and the auditor general

At the same time, BEE has done little to help small black businesses, says Lawrence Mavundla, president of the National African Federated Chamber of Commerce and Industry (Nafcoc). According to Mr Mavundla, BEE has ‘marginalised' small businesses by promoting ‘tenderpreneurs who are tender thieves because they get their tenders through [political] connections'.

In addition, Moeletsi Mbeki, brother to former president Thabo Mbeki, has long criticised BEE for ‘striking a fatal blow against black entrepreneurship by creating a small class of unproductive but wealthy black crony capitalists made up of ANC politicians'. BEE, he says, thus robs South Africa of the key to economic and industrial development: ‘an entrepreneurial bourgeoisie'.

In 2010 the finance minister, Pravin Gordhan, accurately summed up the situation when he said: ‘BEE policies have not worked and have not made South Africa a fairer or more prosperous country.'  Yet the Department of Trade and Industry (DTI) is now intent on tightening up BEE requirements and making them much harder to fulfill. Its proposals put still more emphasis on costly ownership deals, and threaten directors with prison terms of up to ten years for ‘fronting', as very broadly defined. If these changes are adopted in their present form, it will be the first time since 1994 that jail sentences will be available for failing to comply with racial laws.

Costly EE and BEE rules are justified by reference to Section 9(2) of the equality clause, on the assumption that this is what the Constitution requires. However, there is nothing in wording of Section 9(2) to require a focus on outputs rather than inputs. In addition, these racial laws are premised on two false assumptions: that they will benefit the poor, and that they are essential to narrow racial inequality.

EE and BEE hurt rather than help the poor

Like other affirmative action measures all around the world, EE and BEE measures are largely irrelevant to the poor. The demand they create is for the best qualified and most experienced among the African population, many of whom have indeed drawn significant advantage from racial set-asides.  However, for the 19m South Africans still living in relative poverty (on less than R5 000 a month for a household of eight or more), EE and BEE will never bring benefits in the form of ownership deals, management posts, preferential contracts, or new small businesses to run.

As Mr de Klerk recently summed it up, affirmative action might help the top 15% but it brings no benefits to the remaining 85%. Worse still, it harms that 85% by deterring investment, growth, and jobs: by hobbling the economy and preventing it from reaching its potential.

In the mining industry, for instance, vague BEE rules and their often arbitrary interpretation by bureaucrats have cast doubt on the certainty of mining titles and restricted growth and investment. Despite a major commodities boom from 2001 to 2008, the value added to GDP by South Africa's mining industry thus remained flat. Yet in the same period, the mining sector in Chile, a key mining jurisdiction in the developing world, experienced a 12% growth in value added to GDP. Moreover, in the 2000s, investment in the mining industry in Australia advanced by 24%, whereas average investment growth in South Africa was a relatively pedestrian 7%.

BEE is not, of course, the only constraint on investment in the mining industry, which also confronts soaring electricity and other input costs, poor skills and productivity, inadequate infrastructure, and persistent strikes and labour unrest. However, in this already difficult business environment, the imposition in addition of unrealistic racial quotas simply gives investors yet more reason to avoid or reduce exposure to South Africa. No one knows how much investment has been lost this way - but the diminution in mining jobs is clear, the number of people employed in mining having fallen from 488 000 in 2001 to 357 000 in 2012, a decrease of 27%.

Racial inequality has been declining for decades

EE and BEE rules are also said to be essential to the reduction of racial inequality. However, such inequality has been declining steadily since 1970, via a process which began under National Party rule and long before the advent of affirmative action.

Over the past 40 years, many factors have contributed to the narrowing of racial inequality, among them rising skills, unionisation, and better paid jobs for Africans. Redistribution via the budget has also played a vital part and has, of course, accelerated since 1994. As a result, 16m people are now on social grants,  while the Government also provides free RDP houses, free schooling in 60% of schools, free health care to many, and free basic water and electricity to the indigent.  In addition, public sector employment has been steadily expanding, while average wages in the public sector (where Africans predominate) outstrip those in the private sector by around 40%. 

Cash grants and other benefits, along with rising real wages for those with jobs, have helped reduce the number of people living in absolute poverty (on less than $2 a day) from 8.4m in 1999 to 1.4m in 2011. The State's interventions have also helped to raise the living standards of the poorest, as measured by the South African Advertising Research Foundation. People on the lowest living standard measure (LSM1) have only a radio and minimal access to services, but those in LSM6 also have stoves, water, electricity, TVs, DVDs, flush toilets, fridges, and cell phones. Between 2001 and 2011, the proportion of adults in LSM1 dropped from 11% to 1% in 2011, while the proportion in LSM6 nearly doubled from 13% to 22%.  Millions of Africans have thus seen their living standards move much closer to those long enjoyed by whites.

The Government has thus done well in improving housing, services, and overall living standards. However, despite its evident successes, many of the poor are far from being content - as rising social and labour unrest makes clear. Recent research by the Unilever Institute at the University of Cape Town helps show the reason why. According to The Majority Report 2012 recently released by the organisation, ‘the number one aspiration of adults living in relative poverty is to get a job'.

The report says that the poor want employment rather than more state aid. This makes sense, for people living in free RDP homes and enjoying free schooling and other services often lack something yet more fundamental: a monthly income from employment. Many of their key needs have indeed been met through state delivery - but their most vital requirement often remains unfulfilled.

Unemployment figures show the extent of the problem, for joblessness has risen significantly under the ANC's watch. In 1994 some 1.6m Africans were unemployed on the official definition, which excludes discouraged workers no longer seeking jobs. But in 2012 some 3.8m Africans were thus unemployed, an increase of 135%. On the expanded definition of unemployment, which includes discouraged workers, the picture is also bleak. In 1994, roughly 3.2m Africans were jobless on this definition, but by 2012 the number had risen to 6.8m - an increase of 112%.

Despite its delivery successes, the ANC has thus failed to achieve what the poor most want - the generation of more jobs. If anything, the ANC's policy interventions, from unrealistic EE and BEE laws to coercive labour regulation and a host of other dirigiste measures - have made it much more difficult for the unskilled to find employment.

Racial inequality persists

Though racial inequality has significantly diminished over the past four decades, it nevertheless persists. To cite but some examples:

• in 2010 Africans owned17% of shares on the JSE, whereas whites owned 45%;
• in 2011 annual income per capita among Africans was R21 400, whereas among whites it was R165 000; 
• in the same year, 3% of Africans had completed post-school education, compared to 21% of whites; and
• in 2012 the unemployment rate among Africans (on the expanded definition) was 42%, whereas among whites it was 7.5%.

South Africa's racial disparities thus remain stark. Can they realistically be overcome via racial quotas in employment at management level, by BEE ownership deals, or by preferential procurement for black businesses? Such interventions clearly do provide a leg-up to a relative elite within the wider African group. For the great majority of Africans, however, these racial set-asides are simply irrelevant. This is not surprising, for the march to equality in fact begins much earlier - with strong and supportive families, sound schooling, and a social environment that encourages hard work, integrity, and risk-taking entrepreneurship.

Dinesh D'Souza and The End of Racism

In the United States (US), where affirmative action has been in place for almost 50 years but has done little to assist the truly disadvantaged among African-Americans, there has long been a debate as to whether racial set-asides are an appropriate remedy for deep-rooted social problems.

An important contribution to this debate has come from Dinesh D'Souza in his book The End of Racism, published in 1995. Here, Professor D'Souza identifies the barriers to black advancement in the US as including:

• the collapse of family life, leading to single parenthood and absent fathers;
• high rates of crime;
• widespread alcohol and drug abuse;
• a ‘street' culture that celebrates violence and challenges authority;
• bad public schools and often uncaring teachers;
• a reliance on welfare and a more general dependence on government to provide;
• debilitating perceptions of victimhood and entitlement; and
• a mistaken reliance on affirmative action measures, which generally benefit a relative elite while bypassing the poor.

In his book, Professor D'Souza urges policy makers in the US to acknowledge the salience of these social factors, and start ‘boldly confronting' the problems of the black underclass at their roots.  

Professor D'Souza's list is highly relevant to South Africa as well, as the analysis below makes clear. But whereas in the US the debate about these issues is relatively vigorous and is beginning to result in some policy shifts, in South Africa there is far too little recognition of equivalent barriers to upward mobility - and far too much reliance on racial set-asides instead.

Absent fathers

A growing body of international research shows that fathers play a vital role not only in providing material support but also in contributing to the intellectual functioning and emotional balance of their children. Hence, children who grow up without fathers often do less well at school, while girls are more likely to have lower self-esteem and boys are more likely to display ‘hypermasculine' behaviour, including aggression.

In June 2012 these findings were reinforced by an international study covering more than 10 000 children in various countries. This research found that fathers often have even more influence on children than mothers do - and that a father's contribution (or the lack of it) has particular impact on whether a child later drinks to excess, takes drugs, or engages in other bad behaviour.

Research conducted in South Africa points in the same direction. In 2009, for instance, a study by the Human Sciences Research Council (HSRC) found that 73% of men who admitted to having raped a woman had grown up without a father or with one who was hardly home.

A recent World Bank study also stresses that inequality of opportunity is greatly affected by family circumstances. Critical factors include whether both parents live in the household, the number of children below the age of 16, the education level of the household head, the urban/rural location of the household, and whether children have access to early childhood development.

As Mr de Klerk has written, if these criteria are applied in South Africa, ‘white children have enormous advantages'.  Almost 80% of white children come from two-parent families and have only a limited number of siblings, while they mostly live in urban areas and have access to good education and early childhood development. By contrast, only about 30% of black children come from double-parent families, while many live in rural areas, have parents who are functionally illiterate, and lack access to decent schools.

Sound schooling

The importance of good schooling in this knowledge-based era is self-evident. The many failures of public basic education are also too well known to bear repetition here. In September 2011 Zwelinzima Vavi, general secretary of the Congress of South African Trade Unions (Cosatu), summed up the situation when he said: ‘South Africa's education system is a catastrophe and the children of working class parents are being condemned to a deep black hole with minimal chances of escape.'

A key factor contributing to the malaise is poor teacher performance, as a host of studies have now shown. In October 2011, for instance, the HSRC and the Department of Basic Education (DBE) found that ‘teachers commonly do not complete the curriculum, teach too slowly, do not develop concepts, set insufficient written work, and provide pupils with few opportunities to read. Many teachers come late to school, leave early, spend only 46% of their time teaching each week, and hardly teach at all on Fridays'. Yet the South African Democratic Teachers' Union (Sadtu) continues to resist attempts to reintroduce inspectors in schools or make teacher pay dependent on performance - while the ruling party is too supine to confront its trade union ally on these issues.

Many of the problems with schooling can be traced back to poor policy decisions, including the introduction of a flawed and badly implemented system of outcomes-based education (OBE). However, poor performance by the State is also sometimes compounded by negative social conduct, as Jonathan Jansen, vice chancellor and rector of the University of the Free State and president of the South African Institute of Race Relations, has pointed out.

In 2009 in the Western Cape, for instance, one man started stripping wood from a prefabricated school building to light a winter fire and was immediately joined by many others. Writes Professor Jansen: ‘Within hours the feeding frenzy leveled the school with the ground. There was nothing left. Their own children, who attended the school, now had no building in which to learn during the harsh Cape winter.'

In addition, as the minister of basic education, Angie Motshekga, has noted, schools are often stripped of computers, furniture, and other essentials by thieves who break in during school holidays. Misconduct by pupils also plays a part, it seems, for recent research shows that 57% of pupils have experienced bullying at school, while 68% are worried about being physically assaulted or threatened with weapons. 

Alcohol and drug abuse

Between half and two-thirds of South Africans are teetotalers, putting the country's overall consumption of alcohol per capita in the middle range on a global comparison. But if alcohol consumption is averaged out across the population, the ‘average' South African drinks a ‘bakkie-load of booze' or 20 litres of pure alcohol a year, said the Central Drug Authority of the Department of Social Development in November 2011. 

Among those who drink, roughly 37% imbibe from early Friday afternoon until Monday morning, staying drunk all weekend. Some 10% of drivers on a Monday morning are likely to be drunk, while about half of South Africa's 14 000 deaths a year in road accidents are caused either by drunken drivers or by the reckless conduct of drunk pedestrians. Alcohol abuse also exacerbates the murder rate, contributing to 75% of the killings committed with knives and the like, 50% of those carried out with blunt instruments, and 40% of those involving firearms. Drunkenness also plays a major part in rape and the spread of HIV/AIDS.

South Africa also has one of the highest rates of foetal alcohol syndrome (FAS) in the world. Preliminary studies in Johannesburg and the Northern Cape indicate that a million South Africans suffer from FAS, while between 4m and 5m suffer from a lesser form of the condition, known as foetal alcohol spectrum disorder. Either way, the condition is irreversible, resulting in permanent mental retardation and reduced capacity for impulse control.

Many high school pupils now also drink. During a recent study by the Bureau of Market Research (BMR) of Gauteng pupils in grades 8 to 12, some 67% said they had been drunk, 45% admitted to ‘binge drinking', and 80% said they ‘regularly consumed' alcohol. Rehabilitation centres for alcoholics comment that they ‘now see 13-year-olds with drinking problems, which never used to happen'.

The BMR survey also showed that 27% of Gauteng high-school pupils use illegal drugs, of which cannabis (dagga) is the most popular (95%). Addiction to crystal methamphetamine (‘tik') has reached pandemic proportions on the Cape Flats in Cape Town and is now spreading to the Northern Cape.  According to the Central Drug Authority, the use of dagga and cocaine in South Africa is twice the global norm.

Where to from here?

This brief overview suggests that D'Souza's list of the obstacles to the advancement of poor African-Americans is equally salient within South Africa. It also suggests that a flawed emphasis on affirmative action and racial set-asides is distracting our attention from these core issues.

The ANC nevertheless remains intent on enforcing demographic representivity in many spheres: not because this notion is required (or even mandated) by the Constitution, but rather because it helps the ruling party advance its national democratic revolution (NDR). Though the doctrine of demographic representivity has been endorsed by many countries for non-NDR reasons, in South Africa it clearly assists the ANC's revolution by:

• providing a cover for deploying loyal ANC cadres to all levers of state power;
• supplying a rationale for eroding the property rights of all South Africans;
• hobbling the economy and hindering job creation;
• undermining the existing autonomous middle class;
• increasing dependency upon the State; and
• giving the Government an excuse to intervene yet further as social instability worsens in response to its previous interventions.

Against this background, a recent warning by Yuri Maltsev, a Russian economist and former adviser to President Mikhail Gorbachev (who defected to the West in 1989 and visited South Africa last month), has particular salience. Said Dr Maltsev: "Governments which want to take freedom from people need a crisis to justify their taking away of liberty. The crisis can be real, or it can be imaginary, or it can be produced. Often there are elements of all three.'

To avoid the further crises likely to lie ahead, we need to scrap both EE and BEE, go back to the true meaning of Section 9(2), and start confronting the problems of the African underclass at their roots. This requires effective action to improve poor schooling and overcome other pressing social problems. This will not be easy, for it requires, among other things:

-          facing Sadtu down over poor teacher performance;

-          overcoming the negative effects of OBE, which has severely undermined the teaching of such basics as reading, writing, and arithmetic; and

-          finding effective ways to strengthen families, restore social values, and limit alcohol and drug abuse.

Even this challenging list is not enough, for we also need to deal effectively with violent crime, gangsterism, and a range of other crucial but thorny issues - among them, communal land tenure, the widespread abuse of women, and coercive labour legislation.

The ruling party also needs to jettison the failed ideology of the NDR and shift its ‘big idea' from redistribution to growth. For 18 years, the ANC has put its emphasis on redistribution rather than on promoting economic growth. But a different way of dividing up the existing economic pie - without expanding it as well - will never be enough to meet the needs of a growing population. By contrast, as Gill Marcus, governor of the South African Reserve Bank, said late last year: ‘With growth of 7% a year, you double your income every ten years.' A rising tide of this magnitude would lift all boats.  Coupled with effective steps to liberate the poor, it would succeed far better than any amount of social engineering in enhancing the prosperity of all.

Source: The FW de Klerk Foundation.

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