Louis P. Krüger

Since the introduction of black economic empowerment (BEE) in South Africa by the African National Congress (ANC) in 2003, the impact of the legislation and its accompanying policies on the six major “PESTIS” (political, economic, social, technological, institutional and structural-physical) macro-environments in which businesses in the private sector and government in the public sector operate, has largely gone unnoticed or has been ignored. In an exploratory study using the “5 Star” research methodology, and with the aid of specially developed qualitative research adjudication matrix (QRAM), the impact of the ANC’s BEE policies on these macro-environments was investigated. Unfortunately, it appears that these policies have negatively affected South Africa’s political, economic, social/cultural and institutional macro-environments. Allegations of state capture and nefarious influences on government and ministerial appointments, poor economic performance and possible further credit downgrade to “junk” status by the international ratings agencies, increased prevalence of racism, hate speech and discrimination, and violation of the Constitution of South Africa and international treaties by the ANC government, paint a dismal picture. In addition, the coun¬try is facing unseen high levels of corruption, graft, fraud, looting, bribery, nepotism and self-enrichment in government, state-owned enterprises (SOEs) and businesses. BEE can be regarded as the ANC’s “Achilles heel” in South Africa, and the political party should rather abandon this policy in order to stop the rot, and further deterioration, distrust and decay in the country’s most important macro-environments.

After more than 21 years under the leadership of the African National Congress (ANC), post-1994 South Africa finds itself yet again embroiled in race-related politics. Government policies such as black economic empowerment (BEE) and employment equity (EE) have not brought about the economic growth, social development and political democracy that the late former President Nelson Mandela had envisaged and what the ANC had promised to all the people of South Africa. South Africa is currently disengaging itself from the West including the Unites States of America (USA) and certain European Union (EU) countries and appears to rather embrace and align itself with countries such as Russia and China that pursue socialist and communist ideologies. Both these two issues may have a profound impact on how businesses will be managed in the future. In an exploratory, qualitative study using a “5 Star” research methodology, the direct and indirect impacts of BEE policies were investigated and the possible movement in South Africa’s ideological stance was explored. BEE does not appear to have helped to bring about high economic growth to help to reduce unemployment and eradicate the high levels of poverty and inequality, and government graft and corruption have increased at all levels of government, including local municipalities. BEE appears to have become the ANC’s curse to economic, social and political progress and should be scrapped. A national debate should follow on whether the ANC’s current covenant with pro-socialism and pro-communism rather than Western free-market capitalism is the appropriate ideology for South Africa to pursue.

Keywords: black economic empowerment (BEE), employment equity (EE), African National Congress (ANC), capitalism, socialism, communism.
JEL Classification: M14, M21

Education is considered an important pillar of economic development and a vital factor for nation building in post-1994 South Africa. Higher education (HE) is offered by government-subsidized universities and colleges, while there has been an increase in the number of private higher education institutions (PHEIs), which offer more expensive, unsubsidized tertiary education. While all state bodies and public entities are required to apply the provisions of the Broad-Based Black Economic Empowerment (B-BBEE) Act, this is not (yet) seemingly a requirement for PHEIs. This study used an adapted version of the “5 Star” research methodology to explore the potential financial impact and influence of the African National Congress’s (ANC’s) black economic empowerment (BEE) policy on PHEIs. The research shows that the BEE policy has the potential to financially impact and influence most of the components of the total quality service (TQS) framework for PHEIs in terms of preferential procurement from suppliers, company ownership, appointment of executive, middle and junior managers, employment of academic and administrative staff, and throughput of black student graduates. Management at PHEIs should be alerted to the fact that it is probably not merely a matter of IF, but rather WHEN the policy will start impacting on the financial stability and viability of PHEIs as BEE compliance becomes mandatory.