EED – South Africa’s Path To 21st Century Glory

Reworked empowerment scorecard will unlock South Africa

Photo by Eric Prouzet on Unsplash

On a long, 12-hour flight to Johannesburg, The Economist’s essay “How to get Rich in the 21^st Century” got me thinking.

Most others had nodded off to sleep whilst I was in a state of enthralment reading that countries around the world are thinking deeply about their economic futures.

Qatar is building entire new universities and research outfits in the desert; Indonesia wants to be the world’s leader in nickel production and refinement, whilst creating national savings and investment funds.

This has become a fascination of mine: Colombia is slowly lifting 50m people out of poverty through a diversified economy. World-beating, well-run companies in East Asia and Europe invest relentlessly in overseas expansion.

Wherever they are on the spectrum, groups of people in these countries are thinking seriously about development.

SA’s economy needs to be liberalised and de-racialised. I would add that a programme of poverty-means-tested vouchers for schools, health and housing is necessary accelerator.

A system like that of the Economic Empowerment for the Disadvantaged (EED), I believe, holds the key to political success and widespread upliftment.

This has been promulgated by Anthea Jeffrey of the Institute of Race Relations (IRR).

It would not be obligatory, and the credits could be traded like carbon credits are.

Professor William Gumede details, how in China, the government has backed many start-ups, and, in some cases, business take over entire schools and pay teachers’ salaries.

There drivers and benefits of this system are manifold.

1. It can bring down BEE

The same Gumede asserts that fewer than 100 people have received USD 56bn (ZAR 1trn) through BEE. That could have provided USD 10,000 (ZAR 180,000) in seed capital to over 5m businesses.

If Elon Musk’s proposal to enter SA via an equity equivalent were to materialise, cracks in the antiquated BEE system may appear. That could take the form of Starlink funding wifi to schools in rural areas. Forms of this already exist for IT companies.

2. Investment would pile in

Such a programme would go a long way to lifting SA’s rate of fixed investment as a percentage of GDP, closer to emerging market averages of around 30%.

European railway operators, for example, always seeking opportunities overseas – could agree to invest and upgrade railways – and 5% of their profits go on a locomotive engineering course for young people. A generation of new locomotive engineers could emerge, widely known as ‘recipients of the EED’.

These entities would have no hesitation in telling a positive development story on social media.

EED contributors would all be published on a scoreboard, refreshed annually.

Forms of this already happen – 36ONE’s Cy Jacobs details how a 22% stake of 360ONE funds free tertiary education through the Maharishi Institute.

Indeed, there exist a myriad of locally based investors, knowledgeable of these things, that are well placed to expand such programmes.

Investment is often taken to mean, ‘foreign investment, predatory, and rent-seeking’. All the above rebukes that.

3. Impact

South Arica faces a mammoth task ahead of reducing poverty. Taking the brakes off the economy and opening markets will go most of the way to fix that. But SA’s problems are varied and many and a social impact programme that works could be the country’s flagship programme an entire generation benefit from.

The IRR’s CEO John Endres detailed how it would work practically: A young man in Khayelitsha cannot find work because of poor skills. A construction company sets up a training centre under its EED project. He qualifies as an electrical engineer, finds a job, and starts earning.

An elderly couple in the Free State live in a shack without secure tenure. They receive a housing voucher, which they use as a deposit to buy a small RDP house. They gain stability, and an asset to pass to their children.

An SA turning a corner economically will pull streams of SA’s wealthy diaspora stream back to SA. Their skills and funds would dwarf those who never left, exacerbating already out of control housing crisis in certain areas.

I do not know if startup grants for small business form a part of the IRR’s current plan. But I would advocate adding it. A national start up incubator in a country like SA could be among the world’s most exciting.

Harnessing SA’s entrepreneurial spirit, it could in fact create a class of entrepreneurs grow business in the country and abroad.

4. It satisfies a broad voter base

Hermann Pretorius at the IRR made the point that it should please socialists as it involves state spending.

It should please the pro-growth crowd as entrepreneurs will emerge to create low-cost schools, for example. (As someone who spent a year working in a low-cost private school in a developing, I can attest to their popularity.)

It should please libertarians because it gives maximal choice and does not distort markets.

Consistent polling has proven the popularity of such a scheme.

Moeletsi Mbeki asserted in late 2025 that for as long as the Democratic Alliance (DA) does not espouse developmentalist policies, it will struggle to make serious electoral inroads in a population that yearns for it.

Indeed, it offers a path to victory for a pro-market party.

5. Redress

Analyst Prince Mashele states that the ANC has not left a positive legacy for the African, black population. This is not entirely accurate as the party’s service delivery record was good in its early years in power.

Recipients of the EED would be means tested on a poverty basis and most beneficiaries would be black South Africans.

Some say addressing Apartheid era injustices is modern SA’s biggest question. Executed well, it could create a new generation of EED-recipient engineers, tradesmen/women, EED-funded businesses, and so on.

Given SA’s brutal, recent history, there is a strong argument that there should be something built into the system that favours the black population.

Yet the scale of BEE strangles and distorts business. No new large-scale mining projects have entered SA in years partly due to having to hand over large equity stakes. BEE can cost companies up to 5% of their profits.

SA communities and minorities have thrived when given the right to build their own businesses at scale. Nothing would be more empowering than assistance, financial and logistical, for poorer communities to create their own pathways.

Proceed

The party does not have to elucidate how it would do it, because it would be blocked by obstructionist forces in government. But even saying its intention to do it, or mentioning the word ‘vouchers’, I am confident it could win the party the 2029 national election.

I argued before the DA should steam ahead and do it with western cape or CT discretionary funds

Forward

South Africa does not lack economic diversity.

One senses the emerging world’s most successful player is about to be unleashed.

SA has the agriculture of France, manufacturing of India, financial sector of the UK, tourism of Italy, mineral wealth of Argentina, youthful population of Kenya, entrepreneurial spirit of Nigeria, and landscape of California, all rolled into one.

The EED represents a realistic way to move towards this 5^th industrial age Nirvana, for those who wish to even say the basic words of the policy.

All of this is easy to achieve for what lies ahead.

Seán McLaughlin is an independent Political Scientist and Data Analyst and an Associate of the Free Market Foundation. He can be reached on X and LinkedIn and Substack.