Wednesday, June 28, 2006

Affirmative Action: the South African model

The latest issue of Outlook takes a look (there's also an accompanying interview of Mathews Phosa, a black businessman):

... Outlook studied South Africa's experience of reversing the debilitating impact of apartheid. In South Africa, though, AA means more than job reservation and seats in universities. As government spokesperson Joel Netshitenzhe explains, "In trying to restore the dignity of the Black majority, which includes Africans, Coloured people and Indians in South Africa, AA took on a much broader meaning."

At the heart of AA in South Africa is the government's endeavour to apply the principle of equality embodied in the Constitution. This has been done by introducing a slew of legislations to ensure that all sectors of the society reflect, over time, the country's racial demographics, and, consequently, rectify the skewed structures of employment and business ownership inherited from the apartheid era. Today, according to the South African Institute of Race Relations (SAIRR), Africans make up 79.3 per cent of the population, Whites 9.3 per cent, Coloured people 8.8 per cent and Indians 2.5 per cent. Ideally, in an equitable South Africa, these numbers should be reflected in all aspects of South Africa's socio-economic life.

Laws, such as the Employment Equity Act (No 55 of 1998), have been passed to realise the avowed objective. But the cornerstone of AA in South Africa is the broad-based Black Economic Empowerment (BEE) Act. It intends to increase Black ownership and control of businesses and ensure that the workforce, including senior management in each entity, reflects the country's racial make-up. The government can issue codes of good practice and set specific AA targets for various economic sectors.

For example, in the healthcare sector, about 25 per cent of businesses should be in Black hands by 2014, and 30 per cent of senior managers have to be Black by 2010, rising to 60 per cent by 2014, with half of them being women. The mining sector's objective is to achieve 26 per cent Black ownership of mining firms in 10 years. The agriculture sector's 2014 target is to pass 30 per cent of agricultural land to Blacks, as well as provide a further 20 per cent to them through leaseholds.

I have said this before, and I will say it again: from the point of view of non-beneficiaries, affirmative action is no different from quotas. If diversity is the goal of AA, for example, just how would you assess its outcome? By monitoring the number of beneficiaries from the disadvantaged groups, and comparing that number against some target to see if the progress is satisfactory. The South African example is illustrative.