Das Knowhow Kapital
In his recent State of the Nation Address, South African President Jacob Zuma seemed to be calling for a radical redistribution of assets in his country. But any effort along these lines could destroy the country's most important asset of all.
JOHANNESBURG – It has been a quarter-century since apartheid ended, and 23 since the African National Congress took power in South Africa. But, as President Jacob Zuma reported in his recent State of the Nation Address, the country’s whites remain in control.
“White households earn at least five times more than black households,” said Zuma, and “only 10% of the top 100 companies on the Johannesburg Stock Exchange are owned by black South Africans.” Whites still represent 72% of top management. The Gini coefficient, a widely-used measure of inequality, shows no sign of falling and remains one of the highest in the world.
These outcomes come after 14 years of a strong affirmative action program known as Black Economic Empowerment (BEE), which created all sorts of incentives and constraints to foster black participation in ownership, management, control, skills development, procurement and entrepreneurship. White equity owners were required to sell shares to blacks in equity deals that were often highly leveraged and publicly financed.