JSE’s black economic empowerment figures are not up to scratch, study shows
BUSINESS LIVE / 02 AUGUST 2018 - 20:26 / LINDA ENSOR
Companies listed on the JSE have only 38% representation by black people on their boards, a study by the Broad-Based Black Economic Empowerment (B-BBEE) Commission has found.
The study, however, was limited due to low levels of reporting by listed entities. Only 30% of the 401 listed JSE entities reported and only four state-owned entities (SOEs). There were also limitations in the reporting of B-BBEE certificates and in capturing of data used for the analysis.
According to the report, black males accounted for 20% of board representation of JSE-listed companies, and black females 18%. In 2016, there was only 30% (male, 18%; female, 12%) black representation on these boards, 15% of which were held by black foreign nationals, who do not meet the definition of black people under B-BBEE legislation.
The report on the national status and trends on B-BBEE for the 2017 calendar year shows a decline in black ownership of 5.75 percentage points. Black ownership stood at 27% in 2017, compared to 32.75% in 2016. Black female ownership declined 1.96%.
"Control of the boards of South African listed entities were still concentrated in the hands of white and foreign males (58%) with equal representation between black males (20%) and black females (18%), and white females lagging at 4% for those entities that reported," the executive summary of the report noted.
"The lack of 30% of black women-owned businesses places pressure on preferential procurement scorecards of large reporting entities given [this target is] required on the preferential procurement scorecard."
The 2017 report shows that only 40% of entities achieved B-BBEE Level 4 and above, which, it says, is a 20% decline from the 2016 report.
The property, tourism, Agri-BEE and financial services sectors on average did not achieve 25% ownership.
On average, entities across all sectors failed to reach 50% of the targets for skills development, management control and enterprise and supplier development set out in the codes, according to the report.
Commissioner Zodwa Ntuli called on the government and the private sector to increase procurement from businesses that are at least 30% black women-owned, and to provide financial assistance, including through incentive schemes, such as the Department of Trade and Industry’s black industrialist incentive programme.
"We expect the pace of transformation to improve going forward given the recorded 65% increase in the requests for advice from the B-BBEE Commission in the 2017-18 financial year, and also the improvement in the submission of compliance reports after the JSE made B-BBEE reporting a listing requirement, which has helped improve the reporting in 2018 already."
The study was conducted by DNA Economics in collaboration with Alternative Prosperity, which analysed data submitted by JSE-listed companies and B-BBEE certificate information captured by verification agencies. It aims to determine the achievements of black people owning, managing and controlling enterprises, and as productive assets of the economy.
The report acknowledges that the commission needs to implement measures to improve the quantity and quality of reporting.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER