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Economic Inclusion Policy

The 1994 democratic transition was a foundational step in creating an open political society. It was a time when the freedoms denied to the nation’s majority under apartheid were first brought to life and then confirmed in a globally admired Constitution.

Yet the goal of finding economic inclusion remains as elusive today as it was in 1994. The legacy of past discrimination and the reality of lost opportunities over the last 20 years continue to leave many South Africans excluded from economic opportunities.

The legislated denial of opportunities to the nation’s majority is reflected in high levels of poverty, persistent inequality and an economy unable to reach its potential because it excludes a large part of our population.

Along with most, the DA believes that measures to redress the injustices of the past are necessary. This is reflected in the core values underlying DA policy and our approach to government, in which we focus on Reconciliation, Redress, Diversity and Delivery.

We must consider how, in the light of our country’s history of discrimination and entrenched inequality, we can best achieve maximum economic inclusion within a reasonable time frame.

Some redress measures have universal support. Most people agree that sustained economic growth is essential to create job opportunities and that excellent education is needed to enable people to improve their lives. This is why, in government, our top empowerment priority must be to fix public education and create jobs through economic growth.

The question is whether the government has a role to play in economic inclusion beyond creating conditions for growth and improved education.

The controversy around this question often focuses on the tool that was chosen to encourage businesses to support economic inclusion, and specifically the process of Black Economic Empowerment (BEE), the preferential procurement framework that supports it and the way in which it has been implemented.

There is growing agreement that empowerment which focuses primarily on the transfer of ownership in businesses has done little to change the economic circumstances of the majority of people disadvantaged by apartheid. South Africans are becoming increasingly frustrated with empowerment efforts that have facilitated the transfer of lucrative shares to a small number of politically connected individuals who have become very rich without starting new enterprises, adding new value, or creating new jobs. The current approach to empowerment has not yet helped to overcome the real obstacles to black advancement in South Africa.

The groundswell of discontent at the enrichment of a small elite to the exclusion of others necessitated significant changes in the manner in which BEE is approached. The government sought to re-brand the programme as Broad-Based Black Economic Empowerment (B-BBEE), and introduced a scorecard to stimulate investment by the business community in a broad range of empowerment measures, including skills development, enterprise development and social investment.

The DA believes that the B-BBEE scorecard provides a framework of incentives that would facilitate economic inclusion and help to redress apartheid’s legacy.

Our approach hinges on one simple question: Does an empowerment initiative broaden opportunity for disadvantaged people? Or does it seek to manipulate outcomes for the politically connected? We support empowerment that broadens opportunity. We reject schemes for crony enrichment.

Our policy on economic inclusion is based on these principles:

  • Without the expansion of opportunities, inclusion is relegated to a zero-sum game in which the empowerment of some individuals or groups come at a cost to others. The DA believes that to have an inclusive society, government must focus its policy interventions on expanding economic opportunities and creating jobs through growth.
  • Economic growth requires policy certainty, clean government, excellent education, appropriate skills-training, effective health care, and the reliable and efficient delivery of other basic services. This means government has a central role to play in creating conditions to achieve rapid, sustained economic growth and laying the groundwork for redress.
  • To achieve meaningful redress, economic outsiders must be empowered to take up available economic opportunities. In addition to providing excellent education and access to basic services, this means that the government must work to ensure that entrepreneurs have access to the information they need to make informed economic decisions, that they are able to build up a capital base to leverage in economic activity and that they operate in a regulatory framework that protects and promotes their interests.
  • We recognise the need to promote economic inclusion with a specific focus on previously disadvantaged individuals who faced legislated and institutionally organized exclusion.
  • As outlined in the DA’s Plan for Growth and Jobs, targeted interventions can be used to overcome economic inequality, including direct support for job creation, broadening ownership by distributing shares in state-owned enterprises to ordinary South Africans, promoting charitable giving by reforming the tax system and promoting transparency in executive pay.
  • The business community can play a pivotal role in promoting economic inclusion and broad-based economic empowerment. We support the use of an appropriate empowerment scorecard linked to the procurement system as a tool to promote business practice that supports economic inclusion and broad-based economic empowerment.
  • We support an empowerment framework that rewards economically inclusive and true broad-based empowerment. To achieve this, we believe the scorecard must be amended to ensure that empowerment passes the test of broadening opportunity. The scorecard must bring about empowerment that: (i) is genuinely broad-based; (ii) promotes economic inclusion; (iii) recognises business contributions to education and skills-training; (iv) encourages the growth of new businesses; (v) supports job creation; and (vi) introduces what is known as ‘equity equivalents’ to encourage a range of positive contributions to economic growth and opportunities for all.

Our approach to empowerment will help to overcome the legacy of race-based exclusion without entrenching ‘race’ as the determining factor of our future, so that we can build an open opportunity society for all. In this, we retain our vision of a non-racial society whilst recognising the need for a transitional phase in which race-based redress is used to overcome the racial legacy of apartheid.

The success or failure of our redress programme will be measured by the opportunities that have been created for black advancement, such as equality of education, improved literacy and numeracy, decreased inequality, poverty reduction, youth employment, participation in the jobs market, and the expansion of ownership in the economy.

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