Monday, 22 August 2011

Is SA mining ready to move beyond BEE targets?

South Africa has a well-know history of racially-divided wealth and development. Post 1994 (post-apartheid), a strong focus has been placed on race-specific empowerment policies, such as affirmative action, intended to act as some sort of restitution for past inequalities. One of these policies has been Black Economic Empowerment (BEE) with black-ownership targets in key economic sectors, such as mining. The mining target was 26 per cent black ownership by 2014. Now Mines Minister Susan Shabangu is saying that the target is likely to be met and that empowerment targets may no longer be necessary.

This goes to the heart of the logic that justifies race-based restitution policies. In South Africa the targets were set in an attempt to balance the need to expedite the entry into business ownership by formerly disadvantaged groups and the need to ensure that industries were still profitable when they got there. Targets were a compromise and 'developmental' rather than purely redistributive. The aim wasn't to take all wealth out of the hands of white people but rather to make it possible for black business-people and entrepreneurs to get a piece of the pie.

As with affirmative action, the argument is that previously excluded groups need a hand up because the system exists in such a way, whether in the form of interviewer bias or more structural factors, that they will find it difficult to get ahead. By this logic, once a certain percentage or number of previously disadvantaged individuals have reached the top, this group is now adequately represented (basically, they run things) that they probably don't need any more help to break the invisible barriers. There is a threshold beyond which targets and affirmative action should not be necessary.

Given the immense capital requirements of mining and the years it takes for mining operations to become profitable, 26 per cent of the industry to be owned by new entrants into the sector within 20 years is fairly dramatic. 26 per cent black ownership in South Africa suggests fairly strongly that the policy had an effect. It suggests the policy worked.

Whether the effect was sufficient may be another question. If the policy worked well, then the industry would see not only 26 per cent black ownership but also black owners being serious players in their own right - over and above strict industry-charter BEE requirements. This may well be the case - I don't know the industry well enough to comment. If so, is there any need for further targets or, as Shabangu suggests, is it time to focus on other things (like mine safety)?

Perhaps there also needs to be some debate about whether the target that was set is a sufficient threshold in a country where the previously disadvantaged group (ie anyone not white) is the majority. It is a case that could be made but one that would require delicate debate and serious consideration of the precedent.

On the other hand, if everyone can agree or at least accept in 2014 that the target has been reached, perhaps it will be time to drop targeting for this particular sector and prepare for the start of a very serious national conversation about what South Africa should look like when the driving motivation is no longer redressing the injustices of the past.

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