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South Africa’s Race-Based Socialism

Twenty-five years since the election of Nelson Mandela as president of South Africa, the country remains home to some of the most market-invasive, race-based economic policies in the world.

At the heart of this system are provisions for Affirmative Action (AA) and unique statutory measures for Black Economic Empowerment (BEE). These laws are suffocating the South African economy.

AA and BEE developed in the context of post-apartheid South Africa. Affirmative Action is mandated by the Employment Equity Act of 1998, which mandates companies to alter their workforces until they reflect the racial composition of the local economically active population.

BEE was introduced formally in 2003 as the Broad-Based Black Economic Empowerment Act (BBBEE Act). It goes much further than AA, requiring companies in South Africa to structure their corporate ownership, boards, management, staff, procurement, and charity based on racial classification.

The “whiter” a company’s shareholders, board, management, employees and suppliers, the lower its BEE score (yes, there is an actual scorecard). The “blacker” a company, the higher its BEE score. In the mining industry, the BEE Charter (an industry regulation in terms of the B-BBEE Act) requires a 30% BEE shareholding in companies applying for a new mining right.

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