We, the people
of South Africa,
Recognise the
injustices of our past;
Honour those who
suffered for justice and freedom in our land;
Respect those
who have worked to build and develop our country; and
Believe that
South Africa belongs to all who live in it, united in our diversity.
We therefore,
through our freely elected representatives, adopt this Constitution as the
supreme law of the Republic so as to-
Heal the
divisions of
the
past and establish a society based on democratic values, social justice and
fundamental human rights;
Lay the
foundations for a democratic and open society in which government is based on the
will of the people and every citizen is equally protected by law;
Improve the
quality of life of all citizens and free the potential of each person; and
Build a united
and democratic South Africa able to take its rightful place as a sovereign state
in the family of nations.
The relevant sections are the
following:
3. Equality.
(1) Everyone is
equal before the law and has the right to equal protection and benefit of the
law.
(2)
(3) The state
may not unfairly discriminate directly or indirectly against anyone on one or
more grounds, including race, gender, sex, pregnancy, marital status, ethnic or
social origin, colour, sexual orientation, age, disability, religion,
conscience, belief, culture, language and birth.
*(4) No person
may unfairly discriminate directly or indirectly against anyone on one or more
grounds in terms of subsection (3). National legislation must be enacted to
prevent or prohibit unfair discrimination.
(5)
Discrimination on one or more of the grounds listed in subsection (3) is unfair
unless it is established that the discrimination is fair.
217. Procurement.-(1) When an organ of
state in the national, provincial or local sphere of government, or any other
institution identified in
national
legislation, contracts for goods or services, it must do so in
accordance with a system ( 1 ) which is equitable, transparent.
( 2 ) competitive
and cost-effective.
( 2 ) Subsection ( 1 ) does not prevent
the organs of state or institutions referred to in that subsection from implementing
a procurement
policy providing for-
( i ) categories of preference in the
allocation of contracts; and
( ii ) the protection or advancement of
persons, or
categories
of persons,
disadvantaged by unfair discrimination. j'(3) National legislation must
prescribe a framework within which the policy referred to in subsection (3) must
be implemented.
While there may be an argument
that preference should be given in allocating contracts to members of the
previously disadvantaged groups, it is clear that a policy of a SOE that
ensures that large contracts at grossly inflated prices be given only to
companies owned 50%+1 by Blacks is both unduly discriminatory against all other
groups of previously disadvantaged, and also economic insanity.
The granting of large contracts
to Black-owned companies that already have net assets in excess of
R10 000 000 cannot by any stretch of the imagination be described as ‘leveling
the playing field’, or ‘providing restitution to people who were disadvantaged
by Apartheid’. That argument could apply to a contract valued at R100 000,
where one could see it as a means of enabling a previously disadvantaged person
to get a foot in the door, but when the recipient of this State largesse is a
substantial business, that argument falls away, and the concession can only be
seen as retribution against the Whites, or as a means of corruption, in which
the favoured few are handed lucrative contracts at public expense. There is no
shortage of examples of flagrant abuse of this good intention in SOEs like Eskom
and SAA.
Even worse, the giving of huge
benefits in relation to pricing is economically depraved. A pricing advantage
of, say, 10% might be acceptable, if the beneficiary group were seen to be the
ones intended under the Constitution, but a pricing advantage of up to 90%
above the White or other non-Black competition is both economically and
socially unsound. It is unsound in economic terms, because it disrupts severely
the operation of the economy in promoting efficiency, ensuring that the least
efficient supplier (not to mention the one with the best political connections)
provides services to the Government in all its manifestations. It is well known
that Governments do not rank high on the efficiency index, and this example of
snouting exacerbates that. Under the BBEEE regulations, a price advantage of up
to 90% is acceptable, even where the tender is fairly awarded under the law.
That, of course, cannot be guaranteed in South Africa. The ANC Government is
presently aiming to ensure that the greatest possible share of its R500 billion
procurement is misspent under these provisions, implying that the cost of
Government will increase in this aspect alone by R450 billion per year! That
waste represents 34% of the annual Budget! It is not surprising that the GDP of
the country is in negative growth territory. The rapid growth in the number of
unemployed, now nearly 28% (probably over 50% of the work-able population), is
a clear testament to the effect of this economic insanity. The policy does not
seem to have created any substantial number of jobs amongst the poor,
presumably those entitled to benefit from the purpose of the exception to the
Constitutional right of equal treatment, regardless of race, while it has
certainly contributed to the ability of the son of a goat-herder to purchase a
palace in Dubai and of his (Indian) friends to reach the top of the list of
wealthy persons in South Africa, after having started work as a shoe-seller at
a flea market. Meanwhile, the taxpayer subsidises the unprofitable SOEs by
transfers or guarantees in the hundreds of billions, while the State heads for
insolvency, and the households, mines and industries subsidise the electricity
monopoly via an electricity tariff that has increased 400% during the currency
of the policy, and tens of thousands of jobs have been lost due to the very
high cost of power.
These arguments, of course,
ignore the equally disastrous effects of the State driving away thousands of
well-wishing investors by imposing impossible conditions for the establishment
of their businesses, by stealing huge shares in their business to hand to the
connected few, and by demanding bribes to provide even the basic services, such
as rail transport.
Any sane person wishing to invest
funds in a country where they can expect fair treatment would do well to strike
South Africa off their list of investment destinations to consider.
