NDP's racial thinking fits the definition of madness - Business Day, 5th August 2013.

John Kane-Berman says that the reaffirmation and reiteration of Broad Based Black Economic Empowerment (BBBEE) and Affirmative Action in the National Development Plan is nothing short of madness.

One of the best proposals in the National Development plan (NDP) is that school principals should be appointed purely on merit. The proposal sticks out like a sore thumb, however, for just about everywhere else the NDP favours continuation - indeed tougher enforcement - of the Government's racial policies.

The document says that "for at least the next decade, race should continue to be given the greatest weight in defining historical disadvantage". Individual businesses should double the size of their businesses and set employment targets that include employment equity targets.

Employment equity should focus on providing opportunities to young people from historically disadvantaged communities. More specifically, race and gender should continue to be the main determinants of selection. "It will be critical in this regard to put in place a more robust and efficient monitoring and enforcement system."

Whether prompted by the NDP or not, proposed amendments to employment equity legislation provide for fines of up to 10% of turnover for companies failing to meet stiffer employment equity targets.

Proposed amendments to the Broad-based Black Economic Empowerment Act are also in line with the NDP's desire for "more robust" enforcement of racial legislation. These amendments provide for fines of up to 10% of turnover for companies found guilty of "fronting". Directors could go to prison for up to 10 years. 

Fronting is defined so widely as to go beyond mere misrepresentation. It includes failure to ensure the success of small black enterprises selected as business partners to gain empowerment points. This type of "fronting" will also incur the penalties of 10% or 10 years.

The NDP argues that black economic empowerment (BEE) should continue, even though it "has not succeeded in broadening the scope of ownership and control of large firms". Broad-based BEE should be promoted, the document says, by more effective use of the State's procurement lever to advance socio-economic targets in certain geographies and industries. Licensing arrangements should also be used to change private ownership patterns.

The  NDP further proposes the introduction of a statutory body to regulate BEE verification. At the same time, the document says, the Department of Trade and Industry should be empowered to revoke the accreditation of verification agencies that deviate from officially defined processes of verification.

As far as the public service is concerned, the NDP points out that "many departments struggle to recruit appropriate people". Nevertheless, it says, "recruitment drives at universities should target people from disadvantaged backgrounds".

This despite the NDP's own admission that the country's infrastructure is "crumbling". The NDP also admits that "there is a real risk that South Africa's developmental agenda could fail because the State is incapable of implementing it". 

Somebody once defined madness as doing the same thing over and over again but expecting a different outcome. The NDP's proposals for "more robust" enforcement of racial preferencing policies fit this definition.   

Backing for the NDP in the business community entitles the Government to claim that these proposals for "more robust" enforcement of its racial laws enjoy business support - even though the magnitude of the fines proposed could bankrupt their companies. The Democratic Alliance has already voted for the 10%/10 years BEE penalties, further confirmation that that party is modelling itself on the old United Party rather than on Helen Suzman's liberal Progressive Party.

History is repeating itself. But for a few well-known exceptions, and despite what it now claims, South African business failed in any meaningful way to speak out against the National Party government's racial policies. 

The African National Congress (ANC) is routinely accused of lacking leadership. But it has successfully led business, the official opposition, and most of the Press up the garden path of racial preferencing. It is telling that so few of the country's professional economic commentators have provided much critique of the recycling of racial thinking on to the Statute Book. All the consequences of the distortions that racial legislation introduced into the labour market and other aspects of the economy pre-1994 seem to have been forgotten.

A version of this article appeared in Business Day on 5th August 2013.

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