Sharp decline in black ownership rankles the dti
IOL - ECONOMY / 18 FEBRUARY 2019 - 11:30 / LUYOLO MKENTANE
JOHANNESBURG – The Department of Trade and Industry (dti) has criticised the sharp decline in black ownership in the country’s major economic sectors, charging that slow transformation had instead increased.
The dti said during a round-table discussion on Friday that average black ownership in large sectors eased while fronting in construction and information communication technology (ICT) sectors rose.
The chairperson of the dti’s Broad-Based Black Economic Empowerment (B-BBEE) Commission, Busisiwe Ngwenya, said black ownership in the construction sector code fell to 4.04 percent, while the financial and ICT industries declined to 42.82 and 29.60 percent respectively.
Integrated transport fell to 33.86 percent, while marketing, advertising and communication declined 32.51 percent and tourism 41.35 percent.
She said agriculture recorded the highest decline, to 4 percent.
“This decline might be attributable to fewer entities submitting their annual compliance reports in 2017, whereas the 2016 state of transformation relied on researchers' data sources to establish sectoral black ownership,” Ngwenya said. “More than 40 percent of the sectors under analysis saw increases in average management control points between 2016 and 2017, with the exception of the agri-BEE sector, which slightly declined from 44 to 22.60 percent.”
The commission said black ownership in commercial farming was closely linked to the challenge of black agricultural land ownership. It said one of the bottlenecks was that historically land was not held in a commercial business, but in a trust, which would generally not be rated and thus not reported to the B-BEE Commission.
“It is recommended that the B-BEE Commission engages with the Department of Agriculture, Forestry and Fisheries and the Agri-BEE Sector Council to better understand the impact of these different land ownership models, and the implications of these structures on transformation imperatives.”
Business executive and BEE Advisory Council member Chantyl Mulder slammed those who viewed B-BBEE as a tick-box exercise, saying: “I think trusts should not be allowed in any form. We’ve lost the true meaning of ownership. All these trusts and deals, that’s not how you are going to create true empowerment,” said Mulder.
The B-BBEE Commission said very few industries exceeded the 30 percent black women ownership threshold currently set in the amended B-BBEE Codes of Good Practice.
“The B-BBEE Commission should work with the dti to enhance support to women-owned businesses through existing and new programmes and initiatives, and closely monitor progress on the 30 percent black women-owned category.”
Black Business Council chief executive Kganki Matabane said government policies needed to be aligned to allow for township economies to thrive. Over-reliance on consultants needed to end and the government needed to verify proper ownership of companies in order to curb fronting.
“Consultants don’t have the interest of seeing black ownership (thrive). It’s time that we all started to support black businesses and ownership,” said Matabane.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER