Is BEE a South African Growth
Catalyst?
• BEE calls for changes to the way economic players interact
– How firms engage owners, directors, suppliers across industries,
workers, potential managers within
– These change the relational fabric of industry
• When will such change catalyze growth?
• Are we seeing this kind of change?
Matt Andrews, IGAP, June 2008
When will change catalyze growth?
• Relational structures influence economies
– Shape opportunities for firms, individuals
– Determine insiders and outsiders
• People, Firms, Ideas and growth opportunities
• South Africa’s structures have been very limiting
– Concentrated ownership, integrated and controlled industries,
tight networks
– Limited new entry opportunities for
• People, Firms and Ideas
– Constraints on competition, creativity
– Created many outsiders-especially at ‘bottom’
• Opening the relational structures of South Africa’s
industry could catalyze growth
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Allowing new entrants, of people, firms and ideas
Leads to opportunities
Facilitates dynamic export-led growth
Especially shared growth
• BEE could be the vehicle for doing this
– But note that BEE can only effect change if it changes the
macro-culture behind relational structures
Macroculture /
social organizing
logics
“widely shared
assumptions and
values”
Relational
structures between
entities
Networks, other
structural
arrangements
between firms,
people
Economic,
social patterns
Insiders and
outsiders,
empowered and
disempowered
Economic, social
opportunities,
results
Access to jobs,
supplier contracts,
economic growth
trajectories
Are we seeing this kind of change?
• Firms are responding to BEE, but beneath scorecard:
– Looking for new people in old places
• Black owners, directors, managers come from old
‘catchment groups’
– Many CAs, MBAs, lawyers, political players
– So limited BEE beneficiary pool, few new people
– Exacerbating skills constraints as well
• Even ‘new suppliers’ generally old suppliers that look
different
– Few new entrants
– Few connections to ‘second economy’
Bottom line
• BEE is causing change
– But there are some costs associated
• Exacerbating constraints at top of economy
• Creating disincentive for new entrants
– And BEE could be so much more
• Fostering relational structures that bring new entrants into economy
– And new ideas, competition
• Creating relational mechanisms that bring people in from the
‘bottom’
– Jobs, training, new opportunities
Ideas
• Need strategy with better balance, focus, implementation
• Rebalancing and refocus:
– Add BEE elements focused at bottom (Now 60 - 95 points at top)
– Focus more on new entry
• Exempt new firms from ownership requirements
• Give MANY points for new entrant relationships
– Less pressure on high skills areas (rethink quotas)
• Implementation
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–
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Less a quota system, more about value-based targets
Choice, creativity encouraged (a 140 point scorecard, Charters)
Clarity on evaluation (who, when, how)
A sunset clause (when will firms meet the objectives?)
• All of these require clear thinking about what exactly
BEE is meant to achieve: Its value orientation
– That connects transformation to growth