LETTER: Set business free

Tiisetso Motsoeneng justifiably applauds SA’s 4-million strong black middle class (“When redress fuels growth”, June 30). This crucial new sector of our society did indeed help provide the upward mobility that was essential for the successes of Capitec and Discovery.

However, we should be wary of extrapolating — let alone accelerating — enforced BEE. Yes, SA’s empowerment policy, as applied in the private sector, played an essential role in the rise of the black middle class. However, we should note that empowerment as applied in the public sector verged on disastrous, leading not to the emergence of an ethical, competent state but in considerable part to a wealthy, rentier class with few investable skills.

Today the ANC is pivoting towards ever more draconian inducements to accelerate empowerment. This should give us pause. Inducements such as threats of vast fines, allied with exclusions of recalcitrants from the marketplace, are pouring cold water on investment. Not only are these sanctions designedly punitive, but they confer discretionary power on officials, with obvious opportunities for rent-seeking.

Let us therefore retreat from ever harsher punishment and instead pivot to incentives such as tax relief. Let us set business free to grow the economy at an entirely possible treble or quadruple the paltry 1% rate. While empowerment has been essential for our survival as a nation, it nevertheless failed to raise per capital income above 70% of the global average, where it was in 1994.

We have stagnated in comparative global terms. Unless we abandon heavy-handed, antagonistic interference in business decision-making in favour of impersonal financial rewards and inducements, we risk income per capita falling to 50% of the world average.

Willem Cronje
Cape Town

JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 200 words may be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.​