IESU The Institute for Economic and Social Upliftment

Economic Inequality in South Africa

A Plan of Action to achieve Economic

Freedom in SA

By Dr. M. Adam 27 Feb 2015

Economic Inequality in South AfricaExecutive Summary

• Poverty, Economic Inequality (“Ei”), and Unemployment ( “PIU” ) are regarded as the 3 evils in South Africa

• It is an indictment on all role players in South Africa that this matter has not received the attention it deserves. In particular the following should be noted:o The Gini Co-efficient which is a measure of the Gap between the

rich and poor is at its worst level in South Africa when compared to all countries of the world.

o What is of concern is that in the past 20 years of the “New South Africa” the Gini Co-efficient has become progressively worse.

o There are many signs that our democracy is not sustainable in its current form where we are still suffering from the inequities caused by the Legacy of Apartheid. We are still suffering from economic apartheid.

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Literature Review

• See Bibliography and references.• Apartheid was referred to as “separate development” by the

apartheid regime. They tried to convince us that it would be “separate and equal development” But we all knew that it was meant to be separate and unequal development.

• Today 20 years into the “New South Africa” we are still faced with separate and unequal development manifest in vivid terms by the Gini Coefficient which demonstrates clearly that the problem is getting worse year by year and will continue getting worse unless there is a fundamental reform in economic policies to address this serious issue. Minor fine tuning will not achieve the desired result.

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The percentage of wealth held by a few is increasing showing that economic inequality is getting worse. There is also a marked increase in unemployment from 23% to 48% the

majority of whom are Black. Poverty is at a very high level when compared to the wealth of the country. There increasing signs of discontent and for good cause. It is amazing the patience shown

by our people while unemployment continues to rise.

There is worldwide recognition of the problem of the concentration of wealth in an elite few. In South Africa the

root cause is the Legacy of Apartheid.

“Our mission is to ensure that we investigate the root causes of poverty,

unemployment and economic inequality and that we scientifically and rigorously

evaluate various policy options and solutions to address these challenges

on a sustainable and urgent basis”

Our Vision

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Our objective as PEAC and IESU is to evaluate the success or failure of existing Policies to address the problem of Poverty,

Economic Inequality and Unemployment with specific focus on BEE or BBBEE in this presentation.

A proposal for mass mobilisation is also presented to stimulate debate and discussion and to accelerate the search for and

implementation of a sustainable solution. We cannot afford to fail. The sustainability of our democracy is at

stake. We cannot enjoy the fruits of our hard earned Freedom when almost half of the population is unemployed and ravaged by

the hardship inflicted on them daily by the hunger pangs and discomfort and pain of poverty. A poor man in a New South Africa suffers no less than the same poor man in Apartheid South Africa.

In fact it is worse when the expectation and promise of change has failed to materialise. The distribution of poverty along racial lines justifies the use of the term Economic Apartheid in South

Africa on the grounds that it is rooted in the Legacy of Apartheid.

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• At an individual level BEE and BBBEE ( referred collectively as simply “BEE” ) has been successful in certain instances in creating wealth for those who have been the beneficiaries of these transactions. However there has been much abuse of the BEE policy which is in urgent need of reform. BEE is unable to reduce economic unequality.

• At a national level and at a Societal level it is clear that BEE has increased actually economic inequality. In fact it is a great injustice to society.

The success and failure of BEE and BBBEE

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• CEE = “Community Economic Empowerment”

• CEE differs from BEE in many key respects and is structured to address the 3 problems of PIU in a much more meaningful and just way than could be done by BEE. The key differences are tabulated in the next slide.

CEE is much better than BEE

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CEE

• Benefits all members of society more equitably than BEE and is based on objective criteria to compensate people based on need and degree of compensation.

• CEE is fair and just while BEE is arbitrary and unjust in the main to society as a whole.

BEE

• Benefits some people with no objective criteria and based on self interest of the companies white shareholders

• In practice the beneficiaries are chosen based on the Black shareholders political connections or other advantage.

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20 years of CEE

• 20 years of CEE will lead to a substantial reduction in the level of Poverty and Inequality. CEE will also reduce unemployment due to the positive impact that a reduction in inequality will have on increasing the sustainability of our democracy

20 Years of BEE

• The past 20 years of BEE have created more economic wealth for White shareholders of companies by a multiple of at least 4 to one compared to the Black shareholders thus exacerbating inequality and disenchantment in the populace.

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• A CEE Company will be structured as a hybrid co-operative. Thus each member is entitled to one share.

• However additional Shares will be allocated on the basis of inter alia various criteria to ensure more equitable distribution of wealth. The following is just an illustrative case in point. The actual criteria and the weighting of the criteria will be informed by a detailed economic analysis which will take into account the economic objective to be attained by the criteria to be used in the allocation of economic units in the CEE Cooperative ( “CEEC” )

The structure of a CEE Cooperative.

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• In a typical BEE deal there may be 10 or 20 Black shareholders who will share in the 25% BEE stake in say a R 250 million company.

• Recently with the push towards more broad based deals one will find that there are still 10 or 20 individual members who will take up 50% of the BEE stake and they will then allocate the balance of the 50% stake to a “Community grouping” which will then increase the total number of Black participants from 10 or 20 to several hundred or even several thousand.

A typical BEE Deal.

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• In a typical CEEC deal the number of participants will always be the 55 Million beneficiaries who represent all the citizens of South Africa. Each citizen will get the number of EU’s in South Africa Inc based on the criteria to be agreed upon through national debate and discussion. An example is as follows:

• Every citizen will get 1 EU for being a citizen.

• Every Black person will get say 2 extra EU’s to compensate for apartheid

• Every citizen who is poor will get 1 or more EUs for poverty depending on the degree of poverty.

A typical CEEC Deal.

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• Every disabled person will get 1 or more Eus to compensate for a disability

• In addition EU’s can be awarded for e.g. for every year spent on Robbin Island etc.

• People who have made a contribution to society can get an EU for outstanding contribution towards the liberation of South Africa or for being a “Mother Theresa” type role model during their lifetime.

• Parents who lost a child in the Soweto uprising will also be compensated.

Criteria for allocation of EU’s in the CEEC

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• Fact: BEE has created more wealth for White shareholders than Black shareholders.

• This is proved by the statistics and is the reason for the ongoing worsening of the Gini Coefficient in South Africa. Post apartheid South Africa is the most unequal society in the world and the unjust policy of BEE is contributing to this.

• It is clear that BEE will not lead to a reduction in EI but an ongoing increase in EI

Conclusions about BEE and CEE and WEE

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• CEE in the form of a co-operative in which all citizens irrespective of race participate as shareholders has the potential to allocate substantial economic benefits to the entire population on a weighted basis on various criteria which need to be determined based on a detailed economic analysis of the weighting of the criteria. In summary CEE has the best potential of the various alternatives to reduce EI. CEE cannot not eliminate Ei. No policy can eliminate Ei altogether but there can be substantial improvement and we can certainly progress towards a less unequal society. CEE has the potential to eliminate poverty and to substantially reduce unemployment. South Africa has enough wealth for each of its citizens to attain per capita wealth of at least R 1 million over a period of 2 decades using CEE.

Conclusions about BEE and CEE and WEE

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• Step 1 – The adoption of an Economic Manifesto ( “EM” ) based on the Freedom Charter to achieve the socio economic benefits promised in the Freedom Charter

• Step 2 – Mobilise the people of South Africa based on the aims and objectives and time frames of the EM. This will take the form of people joining a mass based organisation ( PEAC ) which has as its primary objective the implementation of the EM.

• Step 3 – Aim to Collect 10 million petitions in support of the EM of PEAC and IESU.

Seven Steps towards “Economic Freedom”

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• Step 4 – Present the first 1 million signatures to government and business and labour ( the “stakeholders” )

• Step 5 – Present the next 4 million signatures. By now the stakeholders and especially government and the business community will take us more seriously

• Step 6 – Present the next 5 million signatures to the stakeholders.

Seven Steps towards “Economic Freedom”

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• Step 7 – Implement the Economic Manifesto.

Seven Steps towards “Economic Freedom”

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• Step 1 – Complete the membership form to join P.E.A.C.

• Step 2 - Get your friends and family to join P.E.A.C.

• Step 3 - Share our eNewsletters on Facebook and Twitter and other social media.

• Step 4 – Participate in events of P.E.A.C

• Step 5 – Pledge towards P.E.A.C

• Step 6 – Discuss the plans of P.E.A.C

• Step 7 – Tell the ANC to adopt the EM or else they will not get your vote to retain the status quo.

Seven easy steps to achieve True Freedom

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• The steps taken by the South African Medical Association to reverse transformation and to eliminate their Black Partner Organisations who gave birth to the unified Medical Association in 1997 demonstrates the degree to which the White Supremist mentality of the Apartheid era is still deeply engrained in many ( but not all ) White doctors. Doctors are expected to have shed their apartheid and racist mentality which gave the racist MASA such a bad name. SAMA is now nothing more than MASA without its Black Partners.

SAMA’s Reversal of Transformation

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The reversal of transformation which has occurred in SAMA demonstrates that the Apartheid era mentality is deeply engrained in the psyche of a significant section of the White community. This was clearly demonstrated in the laager mentality style of voting to reverse transformation and also the lack of discussion and debate which gave effective control of SAMA back to the apartheid supporting MASA ( Medical Association of South Africa ). These actions of SAMA are an indictment on the entire White Medical profession who participated and “voted” for this transformation. Also to blame are their subservient Black colleagues who eagerly participated in this travesty of justice to gain the nod of approval from their White masters. There is no need to mention any names as they know who they are. You may hear load protests of denial from the perpetrators or silence as they bury their heads in shame ( if they are even capable of such emotion ). History and time will judge them.

Apartheid era MASA resurfaces in SAMA

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The reversal of transformation which has occurred in SAMA wherein the White dominated SAMA reneged on the Unification Agreement with its Black Partner Organisations teaches us some valuable lessons about Apartheid and Transformation

Firstly. It is that the Apartheid mentality of control and dominance has not disappeared. The conduct of the Medical Profession in resisting transformation for 10 years and finally reluctantly agreeing to it only in the new South Africa in 1997 clearly shows that the pill of “Transformation” was a very bitter pill for the White Medical Profession to swallow. At the first opportunity they decided to get rid of their Black partners who helped form SAMA and restructured SAMA under the guise of giving back control to its servile Black collaborators. Read next issue for more info on this case study which exposes the Apartheid Mentality which led to this sad state of affairs. SAMA acted worse than the apartheid era government by refusing to even meet to resolve the problem which it created.

Lessons to be learned from SAMA

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The Institute for Economic and Social Upliftment

• http://www.iesu.com

• Email economicfreedom@iesu.com

People engaged in Action for Change

• http://www.peac.com

• Email economicfreedom@peac.com

Contact Details for more information:

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