The Johannesburg Stock Exchange experienced a 5.75% decline in black ownership, a development that will be seized by hardliners who’ve been calling for an overhaul of South Africa’s economic redistribution trajectory and pursuit of radical options.
The decline is captured in the 2017 Broad-Based Black Economic Empowerment (B-BBEE) Commission report on the national status and economic transformation. Released yesterday, the report suggests that black ownership on the JSE has declined by 5.75% from 32.75% to 27%. And it also suggests that black female ownership declined by 1.9% from 10.32% to 9%.
The report suggests that the general B-BBEE level of JSE listed companies is declining. In 2016, 60% of measured entities achieved Level 4 and above B-BBEE status. That percentage declined to 40% in 2017 which adds up to a 33% slide.
To make things worse, the report suggests that JSE listed companies aren’t taking B-BBEE seriously as they are not complying to the requirement of submitting their annual B-BBEE reports to the Commission. Only 101 or 30% of the more than 400 companies listed on the JSE submitted reports to the B-BBEE Commission.
B-BBEE Commissioner Zodwa Ntuli says there is clear need for improvement in the pace of economic transformation.
Like the land question, the JSE B-BBEE feature will certainly become another monkey on the back of South Africa’s new President Cyril Ramaphosa. He is seen by a considerable portion in his own party as a lackey of the so-called ‘white monopoly capital’. The fact that he himself rose out of the cracks of the economic redistribution system, the prevailing B-BBEE regime, to become a super rich individual, does not help the situation.
And there is also the fact that numbers quoted by the B-BBEE Commission are themselves highly questionable. While these numbers -27% black ownership- are still far below what they should be when using the demographic guide, they seem to be fictitiously high.
While the Commission’s report say the numbers refer to black ownership, these numbers actually speak of B-BBEE ownership and not black ownership. The two can be chalk and cheese. This is because there is a lot of technicalities that informs B-BBEE ownership levels which can make it devoid of day to day realities. It is partly this reason which saw the National Empowerment Fund (NEF) challenge the quotation of such figures as an indication of economic transformation. The NEF quotes a 5% figure.
The B-BBB Commission report also measured black representation on boards of JSE listed companies. It says black representation on boards of JSE listed companies stands at 38%, with black males accounting for 20% and females for 18%.
The report shows that certain sectors of the economy lag behind in economic transformation trend. These include property, tourism, agriculture and financial services. These sectors did not achieve 25% on ownership. And there is the fact that on average entities failed to reach 50% of targets on Skills Development, Management Control and Enterprise & Supplier Development across all sectors.
The B-BBEE Commission report was compiled by DNA Economics in collaboration with Alternative Prosperity. The JSE findings do come with large holes in methodology. They are based on the 101 JSE listed companies that submitted their reports to the Commission’s B-BBEE Certificates Portal.
The broader report was fetched from 1139 EMEs, 851 QSEs and 871 large entities. And only four State Owned Enterprises (SOE’s) submitted their reports.
Other key highlights from the 2017 B-BBEE Commission report are sated as follows:
- B-BBEE levels of large and QSE entities seemed to be under pressure with the amended generic and sector codes coming into effect in 2017.
- Management Control, Skills Development and Enterprise and Supplier Development are the elements where entities were on average not achieving 50% of the available B-BBEE points. This trend is expected to continue as the rest of the amended sector codes come into effect, after which entities are likely to start adapting.