Starlink or BEE: Government of National Unity must choose – IRR

Government and business have a difficult decision to make, one that places the concept of Black Economic Empowerment (BEE) in grave danger.

Twenty-one years after the introduction of BEE, South Africa’s premier empowerment policy faces questions that only government can answer.

Starlink, the well-known satellite broadband service provider, has been put off by the Independent Communication Authority of South Africa (ICASA) regulatory requirement for 30% equity ownership by historically disadvantaged groups.

The Institute of Race Relations (IRR) notes that the Minister of Communications, Solly Malatsi, is looking for policy alternatives. The IRR proposes a non-racial empowerment alternative, Economic Empowerment for the Disadvantaged (EED).

Years of IRR polling shows that BEE has failed 85% of South Africans by harming the public service, inflating prices and increasing the opportunities for fraud. Top members of the Tripartite Alliance have remarked on the failures of BEE too.

Says IRR researcher Chris Patterson: “If the Government of National Unity grants Starlink an alternative to the current equity requirements, this would undermine the principal flaw of race-based empowerment policy, which would be a welcome turn of events.”

It is time to take BEE off its pedestal and start looking at genuine non-racial empowerment alternatives.

Patterson adds that, as the IRR’s Breaking the BEE Barrier to Growth paper from earlier this year points out, BEE has eroded state efficiency, promoted corruption, deterred direct investment, increased unemployment, restricted growth, and worsened poverty.

The report states: “These outcomes contradict the government’s stated goal of using BEE to help provide redress for apartheid wrongs. Since BEE is clearly not succeeding in meeting this objective, alternative policies are needed to stimulate growth and help empower the poor in meaningful ways.”

In contrast, an EED strategy would have three core features:

• a non-racial focus in keeping with the Constitution;
• a scorecard that recognises and rewards key business contributions to growth, employment, and upward mobility, and
• a tax-funded voucher element that empowers the poor and helps them meet their core needs for sound education, housing, and health care.

Read Breaking the BEE Barrier to Growth here.

Media contacts: Hermann Pretorius IRR Head of Strategic Communications Tel: 079 875 4290 Email: hermann@irr.org.za

Chris Patterson, IRR Researcher Tel: 063 682 5035 Email: chrisp@irr.org.za

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