Banks and government behind South Africa’s failure to transform its economy

Thanti-MthantiSouth Africa suffers from high levels of poverty, racism and inequality. This can be entirely attributed to centuries of conflict between white settlers and indigenous Africans. This is according to Senior Lecturer at the Wits University’s Graduate School of Business Administration, Dr Thanti Mthanti, in The Conversation.

Dr Mthanti believes the current government’s attempts to right the wrongs of the past have largely failed. These include the introduction of the Employment Equity Act and the Broad-Based Black Economic Empowerment (B-BBEE) Act. Years after the implimentation, these policies largely remain failures. “For instance, in 2016 whites still constituted 68.9% of top management in all sectors, yet they are only  9.9% of the economically active population,” said Dr Mthanti.

The academic believes Empowerment Legislation has been largely ignored and that’s the reason why as of February 2016 – 22 years after the fall of apartheid – black South Africans still directly owned only 3% of shares on the Johannesburg Stock Exchange (JSE). Dr Mthanti also believes highly qualified black people are overlooked by white owned companies. “They stifle black advancement by appointing friends or family members without the required qualifications or experience as senior executives, black entrepreneurs are then subjected to competing in the informal sector,” he said.

Dr Mthanti believes white oligopoly power is so effective in marginalising blacks because it has one or two friends in the ANC government. “The governing party does not enforce its own transformation or land distribution laws. Instead, it may use state power to protect white oligarchs,” he said.

“Corporate governance and empowerment reforms may not be enough to foster transformation and fundamental reforms addressing the institutional context in which racist oligarchs operate need to be put in place.”

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