South Africa has failed its Black majority. Nelson Mandela’s political heirs may pay the price

Alexandra township in Johannesburg, South Africa, seen in March 2022. Millions of South Africans still live in such informal settlements. 

Leon Sadiki/Bloomberg/Getty Images

In 1994, South Africa's ruling African National Congress (ANC) rose to power with a promise to "build a better life for all," securing nearly 63% of the vote in the nation's first democratic election.

However, 30 years later, the legacy of Nelson Mandela's liberation movement, which overcame the oppressive apartheid regime, faces the threat of losing its parliamentary majority for the first time, according to opinion polls and analysts.

As South Africans prepare to vote on Wednesday, they are confronted with rampant corruption, soaring unemployment, crippling power cuts, and stagnant economic growth.

The economy has regressed significantly over the past decade, with living standards plummeting. The World Bank reports that gross domestic product per capita has fallen from its peak in 2011, leaving the average South African 23% poorer.

Unemployment is at a staggering one-third of the labor force, surpassing even war-torn Sudan and marking the highest rate tracked by the World Bank. Income inequality in South Africa is also the worst globally. According to Oxford Economics, 18.4 million people receive welfare benefits compared to just 7 million taxpayers.

Black South Africans, who comprise 81% of the population, are disproportionately affected by unemployment and poverty, largely due to the failure of the public education system. In contrast, most White South Africans have jobs and earn significantly higher wages.

The government's key policy for promoting economic inclusion and racial equality, Broad-Based Black Economic Empowerment (BEE), has fallen short. Wealth remains concentrated among a few, benefiting an elite at the expense of the many.

"Three decades after the end of apartheid, the economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice," Harvard University's Growth Lab stated in a November report following two years of research.

Elite Enrichment**

Under apartheid and colonial rule, Black South Africans faced violent oppression and were denied basic human rights. They were systematically excluded from land ownership, certain residential areas, education, and jobs.

The end of White minority rule alone could not rectify such prolonged injustice. Restitution was necessary, and BEE aimed to address this.

Yet, it is widely acknowledged that BEE has failed to transform the economic reality for the majority of historically disadvantaged South Africans, including Black individuals, Indians, and Coloureds (a term for South Africans of mixed heritage with a distinct cultural identity).

President Cyril Ramaphosa, who has described BEE as essential for economic growth, pledged on Saturday that the ANC would "do better" if re-elected, focusing on job creation. The Democratic Alliance, the main opposition party, has proposed replacing BEE with an "Economic Justice policy" aimed at benefiting the poor Black majority rather than a small, well-connected elite.

Critics of Broad-Based Black Economic Empowerment (BEE) argue that the policy has overly focused on increasing Black ownership of established businesses through large deals, enriching only a small group of politically connected individuals.

Moeletsi Mbeki, brother of former President Thabo Mbeki and chairman of the South African Institute of International Affairs, shares this view. According to Mbeki, BEE “creates a class of rich politicians who are then beholden to the people who are making them rich, but it disincentivizes people from becoming entrepreneurs.” He told CNN, “If I became president, the first thing I would do would be to scrap BEE.”

Mbeki contends that White executives initially designed BEE to "co-opt ANC leaders" during the early years of democracy by granting them shares in companies. This strategy aimed to dissuade these leaders from pursuing nationalization, a policy favored by many within the ANC.

Despite tens of billions of dollars in BEE deals, Black ownership of companies averages just 34%, according to the latest report by the B-BBEE Commission, which monitors compliance with the policy.

“Inroads are being made on the participation of Black people in the economy, although there is much further to go to realize the objectives of BEE,” Commission head Tshediso Matona told CNN.

ANC supporters wait for President Cyril Ramaphosa to arrive during an election rally on May 19, 2024, in Isipingo, KwaZulu-Natal, South Africa. 

Per-Anders Pettersson/Getty Images

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Black individuals are also underrepresented in top management positions, another key focus of the BEE policy. A recent PwC report indicates that only 19% of the 200 most valuable companies listed in Johannesburg are led by Black, Coloured, Indian, or Asian CEOs.

Many private sector companies are “not implementing the spirit of the [BEE] legislation… they’re [only] ticking boxes,” said Kganki Matabane, CEO of the Black Business Council, a lobby group for Black business. He warned, “Businesses cannot continue to exclude the majority; they’ll render the country ungovernable one day.”

Matthew Parks, the parliamentary coordinator for the Congress of South African Trade Unions, a labor union umbrella body and ANC partner, acknowledges that BEE has helped grow South Africa’s Black middle class but insists more must be done for workers, especially those on minimum wages. He argues that the policy needs more time to yield results, stating, “Three decades given to overcome the impact of three centuries [of White oppression] is not enough.”

According to Tshediso Matona of the B-BBEE Commission, BEE is “only one part of a suite of policy tools to achieve transformation,” which also includes laws on public procurement, competition, employment equity, and skills development. “The overall outcome of economic transformation requires an assessment of all of these policies,” he explained.

The sharpest criticism of BEE is its corruption by private interests, leading to severe maladministration in the public sector. “It’s a huge driver of corruption in the country,” said Mbeki. He and other experts explained to CNN that under the guise of advancing empowerment, politically connected Black individuals have sometimes been placed in senior positions in state-owned companies without the necessary qualifications or experience.

Additionally, some officials have exploited public procurement rules favoring Black-owned businesses, awarding government contracts at inflated prices to underperforming companies in exchange for bribes—a practice locally known as “tenderpreneurship.”

**Infrastructure Collapse**

“Tenderpreneurship” has devastated state-owned companies and local governments nationwide, said Ricardo Hausmann, director of Harvard’s Growth Lab. “Poor implementation of affirmative action in the public sector” has contributed to “collapsing state capacity,” he told CNN. “The poster child of this is the electricity sector.”

For much of last year, South Africans experienced power outages daily. “Loadshedding”—as it is known locally—hit a record high, with power cuts on 335 days, according to state-owned power utility Eskom. Although the electricity crisis has eased in recent months, it is not yet over.

Widespread graft at Eskom and other government institutions, particularly under former President Jacob Zuma, has been a core reason for the collapse of South Africa’s electricity, transport, and more recently, water infrastructure, according to Haroon Bhorat, an economics professor at the University of Cape Town.

A shop pictured during a period of loadshedding in June 2023, in the township of Namahadi outside Frankfort in South Africa’s Free State province. 

Michele Spatari/Bloomberg/Getty Images

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