Democratic Alliance (DA) interim leader John Steenhuisen has written to the International Monetary Fund (IMF) to protest against South Africa’s use of broad-based black economic empowerment (BBBEE) principles in its COVID-19 economic relief measures.
In a letter to IMF’s managing director Kristalina Georgieva on Thursday, Steenhuisen urged the institution to impose anti-BBBEE conditionality on its potential loan to South Africa.
In a briefing to Parliament last week, Finance Minister Tito Mboweni indicated that South Africa was in discussions with the global lender and could access as much as $4.2 billion in funding.
‘Conditional on non-racial use’
Steenhuisen told Georgieva that at least two departments – Small Business Development and Tourism – have indicated the “race of the business owner” will be used to evaluate applications for business funding.
He added, “Given that this is emergency relief funding to assist stricken businesses to keep their doors open and keep their employees in jobs, it is unconscionable for a government to deny any citizens assistance based on their race. I therefore urge you to make any funding obtained from the IMF for this purpose conditional on its non-racial use.
“There is a big difference between a government redress programme and emergency relief during a pandemic. Furthermore, the race of a business owner has no bearing on the race of the employees.
“White-owned businesses have black employees who have families to support. Withholding emergency relief on the basis of the race of the owner will cause untold misery for these families.”
‘Direct SA government’
Steenhuisen said emergency relief should be availed to all those affected by the ongoing crisis and not just people of a certain race.
He wrote, “The South African economy is in a dire situation, with our National Treasury predicting job losses of between three and seven million people. We desperately need every possible business to remain viable because every single job is precious, regardless of the race of the business owner.
“And so I urge you to direct the South African government to use the funding obtained from your organisation accordingly.”
In a separate statement, Steenhuisen implored the IMF to “censure” the government and “instruct it to stop using IMF monies in a way that discriminates along racial lines and exacerbates racial tension in South Africa.”
The DA, advocacy group AfriForum and trade union Solidarity are already taking legal action against the Small Business Development Department over the matter.
Small Business Development Minister Khumbudzo Ntshavheni told Parliament recently that BBBEE is a “fundamental requirement for transforming the economy of this country.”
She added, “We cannot choose as and when we use it. BBBEE is a critical requirement. We need South Africans, all of us, to own and have a share in the economy of the country.
“So, when applications come through, we evaluate them on their needs, but we [also] consider the demographic representation, which does not only include race, [but also] gender, geographic location, age and people with disabilities.”
AfriForum and Solidarity have also approached the Constitutional Court after losing a similar case against the Department of Tourism at the Pretoria high court last week.