'Black empowerment' in South Africa: democratic advance or creation of an elite?

By William Pomeroy, in People's Weekly World, 21 December, 1996

Since August two transactions involving the transfer of control over important sectors of the economy have taken place in South Africa. Two large groups of industrial, mining and media interests have been acquired from white owners by a consortia of Black businesses and trade unions.

Both groups have been spun off from its vast holdings by the Anglo-American Corporation, the giant conglomerate, as part of an "unbundling" process of these monopoly interests insisted upon by the ANC-headed government. Anglo-American announced shortly after the ANC's overwhelming electoral victory in 1994 that it was offering the two portions of its corporate assets to representative Black interests provided they could raise the funds to make the purchases.

Anglo-American offered its 49 percent share in Johnnies Industrial Corporation (known as "Johnnic"), a diversified industrial and media group, valued at $1.8 billion and JCI, with billion dollar assets in coal, gold, uranium, chrome and base metals.

The Black-owned National Empowerment Consortium (NEC) initially comprised of 53 business and trade union entities raised the funds for the purchase of Johnnic. That number had diminished to 25 by the time the purchase agreement was formally completed at the end of October: $400 million for an initial 20 percent share of Johnnic to be followed by a further 15 percent share early next year, giving the NEC effective control. That the additional funds will be raised is certain; the first payment was oversubscribed by 20 percent.

Union pension funds contributed the bulk of the purchase sum and five of the ten new members being of the 20-member Johnnic board of directors, are to be from trade unions.

The Johnnic transaction drew much public attention because of the role played by Cyril Ramaphosa, the prominent Black leader who headed the NEC negotiating team. Formerly the head of the National Union of Mineworkers, South Africa's biggest trade union, Ramaphosa became secretary-general of the African National Congress as well as a member of parliament. Early this year he announced his intention to leave both of those posts to lead a drive for "Black Empowerment" in the economy. In May Ramaphosa assumed the executive deputy chairmanship of New Africa Investments, the biggest Black business, which then joined the NEC, thus giving Ramaphosa the role of NEC's negotiator.

As he signed the Johnnic deal with Anglo-American Ramaphosa said, "Those who have previously been disadvantaged are now brought to the enter stage of our country's economy. This begins the process of realizing our national objective of empowering our people." Ramaphosa now chairs the Johnnic board.

In November the second transfer of assets to Black ownership occurred, when from Anglo-American sold JCI, with holdings spread across South African mineral resources to a newly-formed Black business consortium, the African Mining Group.

The African Mining Group is headed by another member of the African National Congress, Mzi Khumalo. Khumalo was jailed for 12 years for ANC activity, and spent his confinement preparing for a business career, acquiring a bachelor of commerce degree. Within three years after release he had established Capital Alliance, a financial services group which now manages assets of nearly half a billion dollars.

Khumalo asserts that his role as a new mining tycoon is quite divorced from his ANC connection and that politics played no part in the JCI deal. Cyril Ramaphosa, however, was also prominent in the negotiations to acquire JCI. While Khumalo has said that "Profit is the big word for me," the JCI transfer is generally viewed as a stage in economic "Black empowerment" that will mold South Africa's future political direction.

However, it is a process that is arousing questions of concern from the two powerful allies of the ANC which have provided the mass base of the tripartite alliance that overthrew the apartheid system: the South African Communist Party (SACP) and the Congress of South African Trade Unions (COSATU). On Dec. 2 leading members of the SACP and COSATU met to assess the steps to Black empowerment that have been developed and their implications.

The joint statement issued from the meeting proclaimed that both were committed to the achievement of socialism for South Africa and issued a warning about an empowerment that would merely mean the enrichment of a "small elite."

"Both SACP and COSATU are convinced," the statement said, "that a socialist perspective is essential for the advancing and deepening of democracy in our country. Our class opponents are attempting to hijack the process of change in our country by encouraging a culture of self-enrichment in the form of Black empowerment for a small elite."

The statement said that acquiring stakes for Black investors in the still white-dominated economy does not help to create jobs for the huge number of unemployed which some analysts claim to be one-third of the Black labor force. The Reconstruction and Development Program which was put forward at the outset of the ANC-led government, which included job creation, remains largely on paper.

A critical assessment of developments in South Africa in the post-apartheid period needs to be directed not merely at the policies of the ANC in government, but at the behavior of the dominant white sectors in the economy. The tactics of the Anglo-American Corporation and other conglomerates in offering a stake to Black consortia and investors cleverly aims at several benefits to white interests.

It reduces struggle against white control of the economy; it brings budding Black business into partnership rather than competition with white interests; it enables the tapping of Black capital accumulation by the established white corporate groups; and, most pertinent, it serves to divert the ANC from the relatively socialist orientation of much of the Freedom Charter under which it fought to abolish apartheid and build a new, democratic society.

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