Wednesday, April 14, 2010

Black Empowerment - or - Crony Capitalism

The Economist carries an article on South Africa's Post-Apartheid policy of “black economic empowerment” (BEE).

Instead of redistributing wealth and positions to the black majority, it has resulted mainly in “a few individuals benefiting a lot,” President Jacob Zuma says.The richest 4% of South Africans — a quarter of whom are black — now earn more than $80,000 a year, 100 times what most of their compatriots live on.

The idea of legislating for black economic empowerment was originally promoted by big white businessmen to ward off post-apartheid calls for nationalisation. If a few well-connected black people were given chunks of the action, big business would, they hoped, be left alone. In that sense, BEE has been a roaring success, as whites still own the bulk of the country’s wealth. Whites still hold three-quarters of senior jobs in private business whereas blacks have 12%, the exact reverse of their share in the working population. Among the 295 companies listed on the Johannesburg Stock Exchange (JSE), blacks account for just 4% of chief executive officers, 2% of chief financial officers and 15% of other senior posts. In non-executive ones, they do a bit better, accounting for just over a quarter of board chairmen and 36% of directors.

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