Class struggle: South Africa's new, and few, black rich

Fifteen years ago, during apartheid, Lemao Motaung was a medical technician in a research lab, testing blood samples for the state hospital and watching her white colleagues move past her up the career ladder.

Today, she's the owner of an up-and-coming distribution company, selling American-made electrical transmission cables to the nation's largest (and only) electrical utility – and the happy beneficiary of a new set of government policies that promote black-owned business.

But like everyone else in South Africa, Ms. Motaung admits that Black Economic Empowerment (BEE) – the state's policy of favoring black business after decades of white control – often seems more like a handout for the powerful few, rather than valuable assistance for the many.

"It is because of the new government that I am where I am today," says Motaung, sitting in the boardroom of her brand-new office in an industrial park near Johannesburg's airport. "But the way it's happening is that the big players – the key political people – are the ones who are getting everything. The [corporate types] are forgetting the total objective of black empowerment."

From sidewalk banter in black townships to the ferocious public spats between key members of the ruling party, the BEE programs have come to signify both the political progress and economic limits of South Africa's efforts to promote its black majority.

The palpable frustration aimed at BEE, which the ruling African National Congress (ANC) touts as a masterpiece of economic redistribution, is a sign that class is quickly replacing race as the defining social dynamic of postapartheid South Africa.

Despite its impressive economic record of the past 13 years – annual growth rates of 5 percent, low inflation, balanced budgets, 300,000 new jobs each year, and a small black middle class growing at 20 percent annually – South Africa's black-majority government has been something of a letdown to the millions of South African blacks who have yet to taste the economic fruits of postapartheid freedom.

"It's class tension coming into the black community," says Neva Makgetla, an economist who formerly worked for the Council of South African Trade Unions (Cosatu) and who now works in the presidential branch of the South African government. "What you had before, during apartheid, was substantial unity in the community. Now, when you see old comrades becoming billionaires, it's really strange. It's become a lottery."

Anthea Jeffery, head of special research at the South African Institute of Race Relations in Johannesburg, says she understands both the public frustration, and the government's motives for starting BEE. But affirmative action programs are, at best, a Band-Aid for South Africa's economic woes.

The number of people living in shacks has gone up since the fall of apartheid, Ms. Jeffery points out, from fewer than 1 million in 1995 to about 1.4 million today. Poverty figures are also on the rise, with 4 million South Africans living on less than a dollar a day, up from 2 million people in 1994.

Official unemployment figures of 4.5 million jobless people fail to mention the 3.5 million unemployed who have simply given up looking for jobs. "The most effective way to solve the problem is to increase the rate of growth and create incentives for creating more jobs," says Jeffery. This entails investment in education, so there are more skilled workers to hire. "Unfortunately, the quick fix that BEE offers is unlikely to do much good."

At its heart, BEE is about helping talented black businessmen and managers gain access to the hitherto white world of big business. Part affirmative action and part corporate diversification, BEE provides goals for private companies to hire more blacks and gives the government an incentive to do business with black-owned or managed firms.

But in its first few years, the bulk of BEE business deals have gone to the hands of a very few. According to government surveys in 2004, 68 percent of BEE deals went to just 6 black-owned businesses, all of which were owned by top members of the ANC party. However, in a 2005 survey, only 10 percent of deals were going to the top six companies, and 70 percent went to new entrants, particularly businesswomen and employee-owned businesses. The perception of favoritism has stuck despite the change.

Among the high-profile beneficiaries is Smuts Ngoyama, a former top member of the ANC who admitted to having received shares in a private company while serving as a government spokesman. When asked about his impropriety, Mr. Ngoyama told reporters that he didn't join the struggle to remain poor.

"There have been changes, but it needed a shove," says Lionel October, the deputy director for BEE policy in the ANC government. It is too soon to judge BEE, says Mr. October, since the policy has only been on the books since 2003.

Large firms such as the mining company Anglo American, the diamond company De Beers, and the massive services industry have mainly had to act on their own initiative to add a few prominent black faces to their otherwise white boards of directors, he says.

"It's not that business did this for ulterior motives, necessarily. It is hard to bring in new people who don't have a track record," says October. "But after a public outcry, when people were seeing the same names, you are starting to get more and more participation."

The program's critics should remember the dramatic circumstances before apartheid, October says, when whites owned 98 percent of South Africa's wealth.

"I think we need to take a step back here, though," he says. "For decades, there was no entrepreneurial class among blacks. It was decimated by the last 40 to 50 years of apartheid. You need to bring in lots of solutions, not just selling ownership of big companies, but also creating opportunities for small black entrepreneurs to be suppliers for big business and for government."

Such calls for patience fall on deaf ears in black-majority townships such as Soweto, where many blacks feel that political freedom has brought them little more than a few changes to the same old white-dominated economy.

Many blacks say they live in a "cappuccino" society, with a lot of black coffee at the bottom, a layer of white foam on top of that, and a sprinkling of cocoa on the very top, for show. Other blacks use BEE as an adjective – he drives a BEE car, wears a BEE suit, lives in a BEE house – almost equivalent to the American term "bling."

Bling is its own motivation, of course, and in the modest store-front consultancy of EmpowermentSA, Mputhi Mputhi gives black entrepreneurs a business plan for how to prepare themselves for the new world of BEE.

"BEE does exist, but unfortunately, it does not exist where it is needed the most," says Mr. Mputhi, a man who is quick to draw a pie-chart to make his point. On a whiteboard behind his desk, there are plans for a new brochure.

"What the private sector has done thus far, is unfortunately maybe a symptom of the free market system .... They only go to the people who have money, and those are people who may not live in the townships," he says. "But there is a lot of black talent out there, and if you see the private sector open up opportunities for them, you're going to see huge numbers of black people move into the middle class."

The discourse around the BEE programs also highlights another common postapartheid complaint: That for whites and other races like Asians, who do not qualify for BEE, black empowerment means their own disempowerment.

"Guys get jobs because they are in the right race group, but then they hire someone else like me to actually do the work," says Raj Singh, an ethnic Asian maintenance man at a local hospital in Soweto. "So where's the BEE in that? I'm sorry to sound racist, but that is wrong."

Balfour Makhetha, a shopkeeper in Soweto, says mounting dissatisfaction with ANC programs could foment violence. Mr. Makhetha expanded his small shop after apartheid fell in 1994, but will have to move to a smaller location now that a white-owned shopping mall is moving into his neighborhood. He has tried to take part in BEE programs as a supplier, but has found it impossible.

"It's a good recipe for revolution," he warns. "One day the people will rise. The next revolution is for food. Everywhere around us, the signs are there. The clouds are gathering. We are going to have rain."

Today, Motaung's company, Medupe Distributors, is an 8 million rand (about $1 million) business with six employees. Parked outside her office is a new silver BMW that she and her husband drive to work each day, from the new home they have built in Midrand, a mainly white suburb between Johannesburg and the capital of Pretoria.

She admits that most South Africans are likely to equate BEE with an undeserved handout, but noting the hard work she put into setting up her company, she hopes her fellow black South Africans will be patient.

"Look, [for] a lot of blacks, their lives haven't changed that much" since they gained freedom, says Motaung. But "everybody is reading this the wrong way, like it is reverse apartheid. Compared to other African countries, it is not bad. It may not be the ultimate, but the roots are right."