November 23, 2012

Today I left to begin my journey around southern Africa and see what the country and continent hold beyond the affluent veil that is Cape Town. While Cape Town is saturated with international students and businessmen, travelers and entrepreneurs, a drive outside the city limits reflects a much more impoverished, rural and accurate depiction of the majority of the country.

The Knysna Heads

Informal jobs vastly outnumber formal businesses and poverty is rampant. Knysna is considered one of the nicest townships in the country and still the majority of those living there have yet to acquire a proper cement house. I found it striking the lengths people will go to receive free electricity. Wires are cut down from electric poles and connected to wooden house with the result often being fires and mortalities.  While visiting the township, I spoke with the owner of a bar and motel called The Shebeen as well as a mechanic’s office. Neither the owners nor employees had any idea what the concept of Broad Based Black Economic Empowerment was. The more I travel and the more I talk to those BBBEE should be helping the most, the more I see it as a failed remedy and more of a symbol than a solution used to secure votes by the ANC.

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, but still nowhere near their share of the workforce. The point is that BEE has effectively done next to nothing for the black population, left whites in command of almost all business while discouraging both blacks and white from entering the business world.

What is even worse is that even if Mkobi from The Shebeen has known anything about the legalities and aim of BEE, he would've found it no help to him as he is a small business owner with under 50 employees living off entrepreneurial spirit and a bit of good luck. Currently South Africa ranks 41 on the Doing Business rankings. While not terrible, especially considering its sub-Saharan neighbors, there is still room to grow in order to encourage small businesses and thus job creation and formal economy growth.  The question is whether effective reform can be made before hope is completely lost for the program which is sure to occur soon if it hasn’t already.