Has black economic empowerment worked in South Africa ? Mike Schussler – Bonus Interview

Mike Schussler is a leading South African economist, and CEO of the consulting firm…

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http://www.euronews.com/2013/07/19/bonus-interview-mike-schussler
Mike Schussler is a leading South African economist, and CEO of the consulting firm Economists.co.za. In this interview, he evaluates the impact of Nelson Mandela’s peace-building legacy on the economy of South Africa, and also points out the shortcomings of the current government, which he says has failed to come to terms with persisting inequalities in south african society.

INTERVIEW TRANSCRIPT

“I think in the long run, the value that Nelson Mandela added to south Africa is beyond the immediate. It’s about his image, its about the peaceful nation that we’ve become, slowly. It’s about the tolerance that’s in south Africa, not always as fast as we want to, and the fact that we have peace.
Peace in itself in south Africa, has added hugely to the economic successes that we’ve had in this country. And it’s enabled us to do things. Like present the soccer world cup, present the cricket world cup, or the world conference on sustainability or racism.
It’s also helped us grow our normal factories and things like that. Unfortunaly some of that legacy is now under threat under the renewed labour strife, that came to an end during his presidency. But it certainly shows that Nelson Mandela has meant a lot for the south African economy.

In the last year or 2, politics have changed, the economy hasn’t grown as much as we wanted to. I think the big thing in south Africa is that growth has not translated into jobs. Part of that is the problem that we have is the inequality.
Only four out of ten south African adults have jobs. The other problem is that only one out of four adults is part of the formal sector. So let’s call that the rich part of South Africa. And the rest don’t feel that rich, they feel they haven’t had that economic success. So the minority of people, and not based on race, have had good success out of it , they don’t really believe it but they’ve had relative success out of our transition to democracy.
The problem is that democracy has created very few jobs, and population growth has been higher than job growth. And that means that evermore people are on the unemployment line. And so while we have 25 percent unemployment, that is a manipulative figure with definitions changing, the big issue is we’ve gone from 20 years ago 5 out of ten south African having a job, during the period of sanctions, to where we have 4 out of 10 south Africans having a job. Getting paid better for that job, but it’s not translating into jobs for other people at the moment

HAS BLACK ECOMIC EMPOWERMENT WORKED ?

“The problem with black economic empowerment is that it’s benefited very few. And actually some of the trusts where Nelson Mandela and some of the older A.N.C leaders are, have benefited more people probably than some of the newer ones which were supposed to benefit even more people, because those were considered to be too narrow. And now we find that with one or 2 exceptions, black economic empowerment is benefiting still fewer people. And that’s part of the problem of inequality then in South Africa.

So black economic empowerment has also hindered our performance as an investment destination, because companies have seen it as an extra tax. And that’s unfortunate but in a sense its true. And they don’t know if it does buy them that sort of peace. especially after the labour unrest that we’ve seen in the lat 18 months in South Africa. Where people say but, i bought this black economic empowerment, should it not have bought me a lot more workplace peace?

And again, going back to Nelson Mandela’s time, where there were fewer BEE transactions in the making, and then towards the end of his presidency, quite a lot. But they got ever narrower, and they included ever more the same people. So what you fount was that one person that was part of one transaction became part of another transaction and so forth over the next decade. And this is making government rethink, this is making business rethink. And on the other hand, what’s also making people rethink is ..let’s say a normal company, or so-called white owned company, will give away part of its shares to a black entrepreneur, who within 5 years later sells these shares , to another white person, and then the company has to start everything from scratch.

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