Just 25% of state organs submitted broad-based black economic empowerment (B-BBEE) compliance reports in 2021, leading the B-BBEE Commission to conclude that government is failing to comply with its own empowerment policies.
The commission reveals in its National Status and Trends on B-BBEE Transformation Report for 2021 that of approximately 326 organs of state, 244 failed to submit compliance reports.
Of those that did meet the submission deadline, 37% were found to be non-compliant with the empowerment policies.
The commission says it is logical to conclude that there is no gate-keeping by organs of state to drive entities to be B-BBEE-compliant.
It adds that the lack of policy enforcement by government entities is negatively impacting its ability to track the effectiveness of existing black economic empowerment policies.
The private sector’s poor reporting patterns during the period are just as worrying for the commission, which notes that only 140 – about 40% – of 324 JSE-listed companies submitted their annual reports to the commission, which allow it to conduct B-BBEE compliance checks.
Analysis of the data the commission did receive reveals that overall black ownership across all entities dropped to 29.5% in 2021 (2020: 31%), despite average black ownership within JSE-listed companies increasing by 11% (to 39%).
While 3% of listed companies were fully black-owned in 2019, this was found to no longer be the case in 2020 or 2021 – when none qualified as fully black-owned.
“This report continues to depict a bleak picture of the state of economic transformation in South Africa, crystallises the effects of severe limitations in the legislative framework, and lays bare the blatant disregard for B-BBEE by the majority of public and private sector entities.”
Black women ownership
According to the commission the ownership numbers for black women in the country are “growing at a dismal rate” – with the finance; marketing, advertising and communication (MAC); and agriculture sectors registering significantly slower growth for black ownership but even more so for black women.
Ownership figures for black women slid to 12.4%, a 2.6 percentage point drop from 2020.
To address the slow growth, one of the commission’s recommendations is that the black women ownership scorecard be revised.
“The Black Women ownership scorecard targets are historically less than Black ownership targets and this should be the same over time to avoid current disparities. The B-BBEE Commission will engage relevant stakeholders with a view to propose revision to Black Women ownership targets,” it says.
In order to revive a seemingly dying policy, the commission recommends that Minister of Trade, Industry and Competition Ebrahim Patel introduce administrative penalties for entities failing to comply with the policy or, more seriously, criminal sanctions.
The commission went further, recommending that government entities be compelled to only do business with certified B-BBEE-compliant contractors, saying this will also protect government from approaching B-BBEE compliance as a mere “tick-box” exercise which often effects no real change.
Additionally, the commission believes the establishment of a specialised tribunal will assist in not only managing compliance with the policy but in tracking its impact as well.
Read: Black ownership of SA businesses falls below 30%
Listen: Busa CEO Cas Coovadia on the 2021 National Status and Trends on B-BBEE Transformation Report (read transcript)