Report notes no significant changes in levels of transformation

Thursday, July 4, 2019

There has been no significant change in the levels of transformation in the South African economy with black ownership declining to 25.2% in 2018, says the Broad Based Black Economic Empowerment (BBBEE) Commission.

“This year’s report shows no significant change in the levels of transformation with black ownership reflecting a decline to 25.2% black ownership from 27% in 2017 and management control still sitting at 38% for black people,” said the Commission on Wednesday.

This as the Commission recently released its National Status and Trends on Broad Based Black Economic Empowerment Report for 2018 as required by the B-BBEE Act.

Section 13G of the B-BBEE Act makes it compulsory for all JSE listed entities, organs of state, public entities and SETAs to submit compliance reports on B-BBEE to the B-BBEE Commission, which the B-BBEE Commission must analyse in terms of section 13F (1) (g) of the B-BBEE Act.

The findings of the analysis for the 2018 calendar year compared to 2017 indicated no significant improvement as only 43% (51% in 2017) of JSE listed companies and 10% (1% in 2017) organs of state complied with the reporting requirement.

The requirement may be followed by referral for prosecution as the trend of non-compliance is “clearly undermining” the objectives of the B-BBEE Act.

The report is based on information that was submitted to the Commission for the period 1 January 2018 to 31 December 2018 by Johannesburg Stock Exchange (JSE) listed entities, organs of state, public entities and SETAs as well as 1674 B-BBEE certificates captured on the B-BBEE Portal for 2018. 

In addition to black ownership sitting at 25.2% in 2018, black women ownership in 2018 was sitting at 10.1% from the 9% in 2017.

As in 2017, only 38% (male 21.63% and female 16.76%) of JSE listed entities board control was held by black people and the majority at 61.61% was held by white people and foreign nationals.

The 2016 report indicated 30% black South Africans held directorship on listed entities.

JSE listed entities achieving at least B-BBEE contribution level 4, have increased by 10.9% compared to 2017. The analysis indicates that 50.93% (40% - 2017) of entities are level 4 and higher, while 44.48% (60% - 2017) entities are between level 5 and non-compliant B-BBEE status.

State organs that reported show that 59% rated between level 2 and level 7, while 41% were level 8 to non-compliant B-BBEE status.

Concern at low levels of reporting

“The low level of reporting and the slow pace of improvement in B-BBEE elements is a concern, but the B-BBEE Commission welcomes that B-BBEE compliance is now part of the audit scope of the Auditor General and also that annual B-BBEE reporting is a listing requirement on the JSE.”

“Therefore, with these interventions and the enforcement action of the B-BBEE Commission, reporting and the extent of B-BBEE implementation is expected to improve,” said the Commission. 

The Commission -- which monitors compliance and adherence with the B-BBEE Act -- has started conducting site visits on the reports submitted as this is part of verification of the accuracy of the reports submitted as well as identifying best practices to share with other measured entities.

The report is released in the first quarter of the financial year each year and is now available on the Commission’s website using the following link:  http://bit.ly/2RMGO9A.

The Commission is an entity of the Department of Trade and Industry. – SAnews.gov.za

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