Black empowerment bill fails Constitutional muster, says FW De Klerk Foundation
The Foundation strongly endorsed efforts to promote equality, including measures in terms of section 9(2) of the Constitution. It supported most of the goals of B-BBEE - but questioned whether the B-BBEE Act and the Amendment Bill were the best means to achieve them.
The Foundation opposed the B-BBEE Act (Broad Based Black Economic Empowerment Act) and the Amendment Bill because
- they are unconstitutional in as far as they conflict with the foundational value of non-racialism. They also conflict with sections 9(3) and 9(5) which prohibit unfair discrimination by the state and proclaim that discrimination is unfair unless it is established that it is fair;
- B-BBEE has demonstrably failed to promote equality;
- there are other more appropriate measures to promote equality; and because
- the Act and the Amendment Bill are open-ended in terms of their duration and their scope - and as such breach South Africa’s obligations in terms of the International Convention on the Elimination of All Forms of Racial Discrimination (CERD).
The very name of Broad-Based Black Economic Empowerment indicates that its objective is to advance black South Africans in an undifferentiated manner as a racial group - whereas section 9(2) does not refer to race at all but to "persons, or categories of persons, disadvantaged by unfair discrimination".
Section 9(3) prohibits the state from unfairly discriminating against anyone on the basis, inter alia of race. The right to non-discrimination is non-derogable (international conventions also class the right to life, the right to be free from slavery, the right to be free from torture and the right to be free from retroactive application of penal laws as non-derogable, ie. cannot be waived or reduced) and cannot be suspended even by a state of emergency. B-BBEE’s limitation of non-discrimination also fails to pass muster in terms of the criteria laid down in section 36 relating to the limitation of rights.
The Foundation pointed out that it is impossible to assess the fairness or unfairness of discrimination - as required in section 9(5) - without taking into account the actual circumstances of the individuals involved in any situation. CERD also requires "a realistic appraisal of the current situation of the individuals and communities concerned".
For example, a substantial proportion of white South Africans now have lower education qualifications and incomes than a substantial proportion of black South Africans. By 2009 there were 2.5 million black, coloured and Indian South Africans who earned more than 2 million whites and 2.9 million who had higher education qualifications than 1.7 million whites. The Foundation asked how the achievement of equality could possibly be promoted in a situation where an advantaged black person was favoured over a disadvantaged white person.
The fact that South Africa is an even more unequal society now than it was in 1994 proves that B-BBEE has not worked in practice. South Africa’s Gini index has deteriorated from 66 in 1996, to 70 in 2008 - making it the second most unequal country in the world after Namibia. Inequality has also increased within all our population groups - from 54 to 62 among black South Africans, and from 43 to 50 among whites. These high levels of inequality point to the unfairness and impossibility of treating all blacks and whites in an undifferentiated manner when dealing with questions of equality.
B-BEEE has, in general, benefited only a relatively small and advantaged minority of the black population - often through deals that have massively enriched a very small elite group. It has done little or nothing to advance equality among the poorest quintiles of the black population. In fact, it has diminished their prospects for equality by interfering with normal market forces that require that tenders should be allocated in an open and competitive process based on price, quality and delivery time. As a result, goods (such as houses) and services allocated to disadvantaged communities are too often over-priced, of poor quality and behind schedule.
B-BBEE has also undermined prospects for economic growth and employment which are essential to combat inequality. It has discouraged local and foreign investment by adding to South Africa’s cumbersome regulatory burden. It interferes with the priorities of running any business - including the appointment of personnel; the ownership of shareholding; the free choice of business partners and procurement decisions. The interference of B-BBEE processes in tender procedures has often opened the way to "tenderpreneurs" and rampant corruption.
There are other measures that can promote equality far more effectively without resorting to unfair racial discrimination. They include the disproportionate allocation of resources and funding to empower disadvantaged communities through the provision of good education; employment and effective services.
The allocation of disproportionately greater resources to disadvantaged communities has already helped to combat inequality. The provision of 3.3 million homes, of electricity, sanitation and water to more than 75% of households and the extension of pensions, children’s allowances and disability allowances to more than 16 million South Africans has significantly reduced absolute poverty and the most severe levels of inequality.
Measures should also be taken to dismantle any conscious or unconscious obstacles to the appointment and promotion of people with equal merit, regardless of their race, and to provide incentives to companies to meet equity targets - including the provision of shareholder schemes for employees.
Finally, the Foundation objected to B-BBEE because it contravenes the requirements of CERD that affirmative action measures should be "appropriate to the situation to be remedied, be legitimate, necessary in a democratic society, respect the principles of fairness and proportionality, and be temporary". Such measures "should not lead to the maintenance of separate rights for different racial groups" and they should not be "continued after the objectives for which they have been taken have been achieved". B-BBEE fails on all counts because it creates de facto separate rights for black and white South Africans and - because it provides no cut-off dates or final goals - does so on an apparently permanent basis.
Even more seriously, B-BBEE negates the foundational value of non-racialism on which the other foundational values of human dignity and equality depend - and upon which our entire constitutional order has been constructed.
Solidarity says it's time to talk affirmative action and race
Constitution of the Republic of South Africa 1996
Broad-Based Black Economic Empowerment Act 2003
B-BBEE Amendment Bill