IRR investigates fake transformation holding SA’s companies hostage

The Institute of Race Relations (IRR) will this week be investigating the destructive effects of fake transformation policies like BEE, employment equity race and gender quotas, and property rights uncertainty on the ability of South African companies to invest and create jobs.

Fake transformation is made manifest when government enforces laws that only benefit the politically connected and a handful of privileged elites, while being fraudulently presented as serving the interests of ordinary hardworking people desperate for economic opportunities and a path out of poverty.

Says Makone Maja, IRR Strategic Engagements Manager: “Policies such as the Expropriation Act, the National Health Insurance Act and race-rigged ones like Black Economic Empowerment and employment equity, are some of the worst cases of fake transformation. They use the suffering of the poor as a smokescreen to advance elitist interests.

"One of the most toxic long-term effects on our economy has been the systematic weakening of the national investment case. Put simply, people with money to invest, start businesses, and create jobs are choosing to go to other countries, leaving SA behind. This means ordinary South Africans are deprived of employment opportunities and can’t escape poverty. True transformation is deferred and denied while fake transformation enriches those at the top even further.”

Recent media reporting about the cost of compliance for doing business in South Africa exposes the enormous burden holding local companies back. It was revealed that Standard Bank employs an astonishing 3,000 people to ensure compliance with race-rigged and complex laws. Instead of thousands of value-add jobs, South African companies are forced to squander precious resources on unnecessary and destructive compliance measures. This is not creating wealth, but draining it from the economy. The cost of compliance is directly linked to the ability of companies to deliver profitable goods and services.

Maja adds: “In a healthy economy, jobs add value that boost growth to create even more jobs. If you are forced to hire an army of staff just to remain compliant, how can you be competitive – locally and globally?

“Sadly, many South African companies are held hostage by the fake transformation policies that are inhibiting job-creating growth. The IRR is taking the lead in investigating the scale of this crisis. This week, we’ll be reaching out to several South African companies, and presenting them with the IRR’s award-winning Blueprint for Growth alternative policy agenda that could reverse the trend of this investment drought, and help grow the economy and place millions of economically excluded people into jobs.”

Media contact: Makone Maja, IRR Strategic Engagements Manager Tel: 079 418 6676 Email: makone@irr.org.za

Media enquiries: Michael Morris Tel: 066 302 1968 Email: michael@irr.org.za