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BEE has failed, introduce voucher-based EED

| Economic factors

Whether President Jacob Zuma stays or goes is of little consequence to the economic wellbeing of the poor. This according to the South African Institute of Race Relations (IRR)‚ which launched a report on Tuesday, making its case for the introduction of a new system to replace black economic empowerment (BEE).

This follows‚ among other research‚ a 2016 field survey that showed that just 13% of black people benefited from employment equity‚ 14% from BEE ownership deals and 9% from BEE tenders.

The survey also found that 15% of black people benefited from land reform‚ many of whom opted for cash payments rather than land.

"Overall‚ some 14% of black South Africans have benefited from BEE‚ whereas 86% have not‚" said researcher Anthea Jeffery.

Jeffrey has recommended an overhaul of BEE‚ criticised for curbing investment and fuelling corruption‚ in favour of economic empowerment for the disadvantaged (EED).

The system would focus on rapid economic growth and job creation by increasing access to education‚ housing and health-care through tax-funded vouchers.

Under EED, businesses would earn points for their economic contributions to investment‚ employment‚ innovation and tax revenues.

Jeffrey said that when it came to SA’s budget of about R680bn to be spent on education‚ public healthcare and housing in the current financial year‚ the country would get little bang for the taxpayers’ buck.

"Some 80% of public schools are dysfunctional‚ while between 84% and 94% of public hospitals and clinics are unable to comply with basic healthcare standards on such key essentials as infection controls and the availability of medicines.

"In the housing sphere ordinary people have long been urging the state to transfer its housing subsidy directly to households‚ saying they could build better homes for themselves if they had access to this money."

This is precisely what EED’s voucher system‚ funded out of tax revenues and redeemable solely for the purpose they were given for‚ would do.

Jeffrey recommended that housing vouchers go to 10-million South Africans between the ages of 25 and 35 years who earned less than R15,000 per month.

The voucher would be worth about R800 per month or R9,600 yearly. Individuals should receive this for a period of 10 years‚ during which they would have accumulated R100,000.

The system would encourage more businesses to build houses or apartment buildings and accelerate job creation‚ with more South Africans with the means to rent or buy.

Education vouchers‚ which are in use in Denmark‚ Chile‚ Colombia‚ Guatemala and some US cities‚ would empower parents to send their children to the schools of their choice‚ including low-fee private schools‚ and should be available to all parents in the country.

Jeffrey also recommended that the government abandon its plan for National Health Insurance and provide healthcare vouchers instead.

"State-funded vouchers for education‚ housing and healthcare would increase individual choice‚ promote competition and drive up quality."

In the IRR’s 2016 survey, 74% of the black participants said vouchers would help them more than BEE.

"At present‚ 16-million people in our country are dependent on the welfare of the state‚ and a further nine million are without a job. That’s 25-million South Africans who are left out. Empowering those individuals economically is true radical transformation.

"Until we create an economic environment whereby those 25-million South Africans have access to the economy‚ transformation remains cosmetic and ineffectual‚" the IRR said in the report.

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