Call for faster BEE transformation in South Africa

The Broad-Based Black Economic Empowerment (B-BBEE) Commission has published its report on transformation in South Africa for the 2019 calendar year.

The report is based on compliance reports from 150 JSE listed entities, 43 organs of state and 5,818 entities whose B-BBEE certificates were uploaded to the commission’s certificate portal for the year under review.

The data shows a slight change in the levels of transformation with the overall black ownership reflecting a 4% increase from 25% black ownership in 2018 to 29%. Management control is sitting at 39% overall and JSE listed entities board control is at 43.6 %.

Only 3.3% of entities listed on the JSE are 100% black-owned, which was 1.2% in 2018 and 1% in 2017, the commission found.

The three least performing sectors on ownership in 2018 were AgriBEE (11.19%), media, advertising and communication (19.55%) and financial (21.64%).

By comparison, construction (48.03%), transport (40.53%) and forestry (33.66%) showing relatively good progress.

“The B-BBEE Commission reiterates its concern about the low level of reporting and the overall slow pace of economic transformation.

“To address this, the B-BBEE Commission has started conducting site visits on the reports submitted verify the accuracy of the reports submitted and to identify best practices to share with other measured entities.

“Also, preparation to refer measured entities that failed to submit reports are underway as their conduct is not only a violation of the B-BBEE Act, but enables the harbouring of fronting arrangements.”

Worrying trends

The commission said that there are also worrying trends observed over the three-year period between 2017-2019.

“Though black ownership indicates slight change, the black ownership percentage does not always correspond with the management control scores,” it said.

“For instance, an entity is able to score full points for ownership and very low on management control, which gives the impression that despite black ownership recorded, black people are not involved in the control and core operations of the measured entity.

“Also, the saturation of management control points is still between junior and middle management, also noting the rotation of black executive from one measured entity to another, without utilising the skills development element to create a pipeline of new black executives.”

The group said that for real and accelerated broad-based black economic empowerment to be achieved, the B-BBEE Act must be applied consistently by both the private and public sector, particularly in regard to section 10 and section 13G of the B-BBEE Act, which are mandatory.

“Also, ownership, skills development and enterprise and supplier development are priority elements, however, performance overall is not satisfactory.”

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