Herman Mashaba’s Curious Turn Against the Free Market

Once a Capitalist Crusader, now a champion of expediency—Mashaba’s U-turn on BEE is as revealing as it is disappointing.

Source: Wikipedia

It has now been several weeks since the Free Market Foundation (FMF), in collaboration with the Solidarity Research Institute (SRI), released a report on the costs of Black Economic Empowerment (BEE) compliance.

Since then, it has been encouraging to observe how widely the report has been picked up and discussed in the media. From radio segments to online publications, its findings have received the kind of attention that policy research in South Africa rarely commands – especially when it challenges the dominant assumptions around economic policy.

Quantifying the true costs of BEE compliance

As an intern at the FMF, it was an honour to have made a modest contribution to the research component of a project that has brought something new to our public discourse. The principal authors of the report were Dr Morné Malan (with Zakhele Mthembu, Martin van Staden, and myself providing assistance) of the FMF and Theuns du Buisson (with Myrtle Endley providing assistance) of the SRI.

For the first time, the costs of BEE compliance have not only been assessed qualitatively, but also calculated in concrete terms. The report has placed the (conservatively estimated) annual cost to the economy between R145 billion and R290 billion – a burden that has accumulated to over R5 trillion in lost GDP over the past two decades.

It has also estimated that BEE compliance has led to the loss of between 96 000 and 192 000 jobs each year. In total, this amounts to several million jobs forgone since the policy's introduction in 2003.

Beyond these figures, the report has confirmed a growing recognition that BEE is an intrusive and discriminatory policy that has disproportionately benefitted a small group of elite black individuals rather than the broader population.

Mashaba’s political U-turn

Unsurprisingly, such damning evidence against BEE has unsettled ActionSA President and former entrepreneur, a man who once chaired the FMF (between 2012 and 2014) and fiercely opposed the policy for its negative impact on the economy.

In yet another broadside directed at the organisation, he took to X on the 27th of June 2025 in response to a visual infographic of the report's findings and tweeted:

"It is unfortunate that the Free Market Foundation is no longer an independent organization as envisaged by its founder, the legendary Leon Louw, but a mouthpiece of the right-wing elements. Note that when dealing with the Free Market Foundation of today, you are dealing with a biased and propaganda machine of the far right-wing."

Mashaba's tweet was clearly aimed at casting aspersions on the FMF's independence and integrity by falsely portraying it as a partisan organisation that is aligned with forces opposed to genuine economic reform in the country.

And yet, it was not received as he might have anticipated.

Instead of rallying support, the tweet invited a wave of criticism from many users who rightly reminded him of a time when he was a "Capitalist Crusader" who championed the free market as the solution to the country's most pressing socio-economic issues.

The best response, perhaps, came a few days later from a user who simply quoted Mashaba's own words on BEE from an interview he did with Forbes Africa in December 2015, in which he said:

"If South Africa wants to be a model and a prosperous nation, we need a free market system. You cannot prosper by the government being the driver of the economy. Just create the environment that will allow the 50-odd-million South Africans to be the players. And the sooner we abolish all race-based legislations, the better for the future of this country. It is very dangerous to run the country on the basis of race and tribalism."

To be sure, this was not an isolated remark. On multiple occasions over the years, he would go on to criticise BEE and argue that it has failed to deliver meaningful upliftment for most black South Africans.

What this record demonstrates beyond doubt is that the FMF has not changed its stance on BEE as Mashaba implied in his tweet.

Since its inception in 1975, the organisation has maintained a clear and consistent opposition to all forms of race-based legislation for reasons that are clearly articulated in the report. The real shift here has come from Mashaba himself, whose principles have been compromised by political expediency.

When conviction gives way to strategy

Ever since he collapsed the multiparty coalition in Tshwane in September 2024, an act that led to the ousting of Cilliers Brink as Executive Mayor and the handing of the capital back to the African National Congress (ANC), Mashaba’s political posture has shifted dramatically. In an attempt to justify what was clearly a betrayal of his voters – given his repeated vow never to work with the ANC – he has set out to redefine his public image as a “progressive” leader.

This redefinition of his image has rested on portraying his past membership of the Democratic Alliance (DA) and association with the FMF as naïve or misguided. In this new narrative, these organisations are being cast as entities that are – or since his departure have become – indifferent to racial inequality, opposed to "transformation", or too wedded to abstract principles to confront the lived realities of black South Africans.

A familiar playbook: race-baiting

It is within this broader political context that his recent attack on the FMF must be understood.

Having already contributed to the perception of the DA as a "white party" serving "white interests", Mashaba has now reached for the same playbook to delegitimise the FMF. By casting it as a "mouthpiece" of (undefined) "right-wing" forces, he is adding to the by now tired radical leftist mischaracterisations of these organisations as being opposed to meaningful change.

The truth he won’t admit

Of course, none of what Mashaba has said about the FMF is true, and the real tragedy is that he knows this.

He knows that the FMF’s opposition to race-based legislation is not driven by bigotry or indifference, but by a principled belief in individual dignity, equality before the law, a recognition of long-term dangers of racial engineering by the state, and the universally experienced benefits of free-market capitalism around the world.

Mashaba also knows that the findings of the BEE report are sound.

However, the image he is now cultivating cannot allow him to acknowledge this. Having aligned himself with the very forces he once vowed to oppose, he has backed himself into a position where posturing is necessary and where the truth has become inconvenient.

It is sad to watch. But this is the path he has chosen, and he will have to face the consequences in the local government elections next year, where a loss in electoral support appears inevitable.

Why the FMF’s work still matters

What matters most, however, is that the FMF has remained steadfast in its commitment to principle. It has not flinched in the face of political attacks or bowed to pressure to support policies that have failed the very people they claim to empower.

By quantifying the economic costs of BEE compliance that have long remained unknown, the FMF along with the SRI has done what few institutions in the country are willing to do: speak plainly and truthfully.

This is what makes it worth defending, and why its work will continue to matter long after the political noise has passed.

Ayanda Sakhile Zulu holds a BSocSci in Political Studies from the University of Pretoria and is an intern at the Free Market Foundation.