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.

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