There are two things that this newspaper has very little doubt about. The first is that South Africa needs focused, state-driven empowerment policies that help move poor people into the middle classes. The second is that the old-style Black Economic Empowerment (BEE) policies are not succeeding at that.

The Congress of South African Trade Unions (COSATU) and the African National Congress (ANC) can argue that BEE has helped transform the state and parts of the private sector, and that black people have benefited from that. That’s fine and true.

But they also have to look more broadly and recognise that the rate of investment into South Africa’s economy is half of what it should be, the rate of economic growth is just a fifth of that of the country’s emerging-market peers, and the rate of unemployment is five times that of the rest of the world.

BEE is responsible for that weak performance in three respects. Firstly, it taxes capital on arrival in the economy. Having to surrender up to 30% of equity to earn the right to invest in South Africa vastly reduces South Africa’s attractiveness to capital and makes tens of thousands of possible projects and investments non-bankable.

Secondly, BEE does not reward the things that help to build an economy. You cannot, for example, earn BEE points for creating employment or contributing to exports.

Thirdly, BEE serves as a conduit for looting the state by stressing race above value in the awarding of tenders and other state contracts. The looting seen at Tembisa Hospital, for example, could not have occurred if value to taxpayers had been the central underpinning of procurement policy.

Not the intention

The proponents of BEE can argue that none of this was the intention behind the policy, but it has become the reality, just as the reality is that the economy is growing far too slowly to create the jobs needed to secure South Africa’s democracy.

The new proposals by the Democratic Alliance (DA) are not what the ANC and COSATU have alleged – an effort to stop transformation policies. Quite the opposite is true.

The DA has simply said that South Africa does not need to use race as a proxy for disadvantage when actual disadvantage can be measured through poverty. That is plainly true.

The DA has also said that societal transformation can only occur if people have access to good education and the resources to start businesses or find employment. Again, true.

Lastly, the DA has said that state procurement should prioritise value delivered above all other considerations.

In line with public opinion

The DA’s proposals are also in line with public opinion. As this newspaper has reported at length, South Africans themselves believe that empowerment policies should focus on job creation and investment above all other considerations. Even among ANC supporters, eight-out-of-ten hold the view that if a business creates jobs and pays tax, it should not have to meet any other BEE regulation to operate in South Africa.

It is good, therefore, that the ANC and Cyril Ramaphosa have at least left the door open to hearing the DA out on its proposals. Perhaps they privately read the data and know that the DA now has a lead on them in shaping how the public thinks about what remains South Africa’s single most important policy.

The ANC will also have seen that the press and business generally received the DA’s proposal positively. The ANC also needs little reminding that it is at 40% of the vote and headed for 30% because of low investment, low growth, high unemployment, and high levels of corruption.

The two parties, working together via a unity government, remain the best prospect for South Africa making it as a stable, prosperous, and unitary state. But for that to work, the ANC needs to understand that its coalition partner is right on the issue of empowerment and that it would do well to find a route to pass the DA proposals through Parliament.