South Africa’s transformation drive under scrutiny as JSE black ownership remains low

Despite a post-apartheid political economy spanning more than three decades, South Africa is lagging behind in its transformation crusade, given that Standard Bank and Nedbank have less than 1% black ownership and neither have concluded black economic empowerment (BEE) transactions for a decade. In significant findings laying bare the slow pace of transformation, respected economist Duma Gqubule has released the latest Black Ownership on the JSE Research Report, in partnership with the Black Management Forum and the Transformation Lens. The research, examining black ownership on the JSE during the first three decades of democracy, has provided valuable insights into economic transformation, ownership trends and inclusive participation in South Africa’s capital markets. Released on Monday at the JSE, the report has found that there were “significant policy design failures that have contributed to the wide gap between actual ownership — as reported by companies in their annual reports — and what is on the BEE certificates”. That was because of policy design failures and political compromises, made during the drafting of the BEE Codes and sector charters. “Recognition of indirect ownership means that companies get free points and full compliance in many cases, even if they do nothing to transform their ownership structures — a major contributor towards inflated scores of JSE-listed companies. “A back-door route towards compliance rewards companies for doing nothing. “Allowing passive indirect ownership to count is a betrayal of the spirit of true empowerment, which is to encourage direct ownership by active black shareholders who can influence company strategies. “There are weak incentives for companies to get into replacement BEE transactions.” Scathing in his findings, Gqubule has argued: “For the empowerment process to continue, companies should eventually conclude replacement BEE transactions after the exit of black shareholders. “In this way, there can be li