"Government will set aside 30% of appropriate categories of state procurement for purchasing from SMMEs, cooperatives as well as township and rural enterprises" – Jacob Zuma, February 2015.
There are – as one would expect – many issues in South Africa today that take their origin from the announcements and pronouncements of previous presidents and ANC leaders. Given the ANC's role as the party in charge of government since 1994, it is common cause that their policy orientation has a profound impact on the state of the state.
Over the past 28 years, as the growing pains of being in government with a multitude of legacy issues to resolve became more evident, the ANC has learnt about difficult tradeoffs and conflicting concessions.
At the epicentre of its governance challenge, has been the question of how to spread the economic pie and the resultant socioeconomic dividend more equitably across society. The evidence in front of us indicates a persistent and widening cleavage between intentions and outcomes.
Rather than presiding over a growing economy commensurate with the country's stature as the most industrialised economy on the continent, South Africa finds itself punching below its economic potential. Its key socioeconomic fundamentals – unemployment, poverty and inequality – remain the most glaring exhibition of the failure to launch.
At the heart of solving the trinity of the problems should be an economy that is robust, inclusive and resilient. That mission has proved to be continuously elusive for the ANC.
In seeking to address it all, the ANC has stumbled upon a variety of economic policy models that had – at the core – the intention to achieve the complementary missions of growth and redistribution. Unfortunately, like most policies across governments, implementation and permanence are subject to the whims of those in charge.
As a result, long before RDP, GEAR, ASGISA and other models delivered the promised outcomes, they were jettisoned by successor plans. The problem for the ANC, however, is that the question of the economic disparities transcended its various administrations and remains the single most important question that it must tackle.
Had it been addressed adequately, the high levels of unemployment and high dependency on social grants would not be as acute as they are today. The obvious consequences of the status quo – the continued economic exclusion of a large part of the population – pose a threat to the nation at large.
Central to the problem is the need to balance the uncontrollable economic fundamentals of an open market economy in a rapidly globalising world and also addressing the most pressing local expectations.
So while tariff protection measures may make sense for the local poultry, steel and clothing industries, implementation comes with consequences. Even if such consequences were avoidable, the porous nature of the borders that allows dumping of cheap goods onto a local market defined by poor incomes and high levels of poverty, makes cheap imports attractive at the consumer level. The displacement of key industries has worsened the plight of the nation.
One of the ANC's more ambitious measures aimed at dealing with the economic question has been the implementation of the BEE regime across the economy. In its philosophical design, the BEE regime seeks to pass on a slice of the economic pie to those who would otherwise not access the markets and gain economic traction.
Over the years, deals of various iterations, scope and scale have been implemented across different industries. Crucially, the ownership aspect of transformation has remained a point of contention throughout.
Unlike other measures of transformation, ownership is one aspect that is straightforward to assess – it's either black people own a stake in a business or they do not. Other measures – enterprise development, socioeconomic impact and management control – are less linear to measure and, by extension, do not suffer from the same levels of scrutiny associated with ownership deals. Regrettably, even after many years of BEE, the ownership question remains contentious.
Part of the reason is that initial deals have expired and the beneficiaries have predictably moved on. In addition, the nature of the investment world is that those with enough capital to invest in large ownership deals are the type of people who wish to spread their exposure rather than centralise their eggs in a single box.
As a consequence, the profile of empowerment remains a source of permanent dissatisfaction – especially politically.
The announcement in 2015, that the state would seek to 'set aside' 30% of state procurement for designated groups', naturally resonated with many potential beneficiaries who felt that the tentacles of tangible economic empowerment were simply not reaching them. South African Airways (SAA) became one of the state companies that sought to capitalise on the Zuma announcement by seeking to enforce the 30% principle on its procurement model.
What was missed however, was the fact that the Zuma pronouncement at the State of the Nation address was not actually government policy. Rather, government's procurement regime still had to deliberate on how this wish could be translated into actual policy. Individuals at SAA in particular, who acknowledged the difference between a president's wish list and prevailing procurement rules – like Masimba Dahwa and Roelf Meyer – found themselves sidelined by proponents of aggressive transformation like Dudu Myeni and Yakhe Kwinana.
As it turned out, the 30% set-aside rule did not become the country's policy overnight. However, the seeds of the big idea had been planted.
Since then, a new phenomenon has emerged in the construction industry where in the absence of policy, various business forums have taken the decision to enforce the 30% idea. Companies that tender for contracts and win them now find themselves having to negotiate informally with business forums in the areas where contract work is being undertaken.
The model is relatively straightforward, in exchange for 30% of the economic value of the contract, companies are offered a sense of protection where they can undertake their work without interruptions. Alternatively – if one doesn't comply – the destruction of infrastructure and disruption of operations is the guaranteed outcome.
Faced with these choices, companies that wish to execute are increasingly acknowledging the 30% demand as an inevitable cost of doing business.
The problem with this turn of events is that so much of it materialises in the vacuum where principles are as negotiable as the profit margins. For those companies lucky enough to negotiate with the right business forum, the model will seem to be working out. For those unfortunate enough to discover after inking one informal agreement that another business forum regards itself as the more legitimate partner, the scale of commitments gradually escalates.
The problem faced by all the companies is that what ought to stop the practice altogether – proper law enforcement – is barely functional. As a consequence, companies either accept this new operational model, or hedge their bets with a law enforcement regime that simply won't help out. South Africa's universal problem is that such practices have become so endemic it is now difficult to imagine how anyone hopes to do business without complying with the unwritten rules.
Whether the state wishes to acknowledge it or not, this is the way business is now being conducted. The problem that the ANC must deal with – in addition to the fact that law enforcement is collapsing – is the fact that even after all the economic vigilante groups have had their slice, the windfalls – just like the benefits of mega-BEE deals – go to a few connected vigilante leaders that leave the majority of individuals from affected communities still feeling economically excluded. That persistence of exclusion is a matter that the country still needs to tackle – even if we decide that we are powerless to act against the vigilantes that are slowly taking over what little exists in the economy.
This opinion piece was written for News24 by Khaya Sithole an accountant, academic and activist who writes and tweets on finance, economics and politics. 
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