According to JSE published information, there were 371 entities that are listed on the stock exchange, as at September 1, 2018. Photo: Simphiwe Mbokazi/African News Agency (ANA)

CAPE TOWN – The outcome of a compliance analysis by the B-BBEE Commission for 2018, highlighted the sluggish pace at which, transformation among JSE-listed companies, is being achieved (or not).

These findings scorn the country’s efforts and the government’s mandate, to have more black ownership and management in the mainstream economy.

The National Status and Trends on Broad-Based Black Economic Empowerment (B-BBEE) Report released on Wednesday, stated that interventions were required to increase compliance levels in priority elements to stimulate economic growth.

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The analysis of submissions for the period January 1 to December 31, 2018, showed a slow pace in the transformation and achievement of the B-BBEE codes for ownership, skills development and enterprise and supplier development - the priority elements.

The B-BBEE Commission stated: “These priority elements are the key drivers for economic growth, which is needed to address the high levels of unemployment in South Africa. The organs of state should be leading in complying with the B-BBEE legislation, as the custodians thereof.

“The increase in the number of black women representations in ownership and management control can only be realised better when more women are granted entry opportunities to be members of the listed entities boards.” 

The executive manager for compliance at the B-BBEE Commission, Busisiwe Ngwenya, said one of the factors contributing to the slow pace of economic transformation, was fronting. 

“We are aware that fronting occurs in various ways and has become even more sophisticated and looks genuine. Many black people sit in executive positions but fail to reap the benefits or take strategic decisions in line with their positions, because they are not aware that they are used for fronting,” she said.

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B-BBEE Provincial Advisory Council member, Ikaneng Pilane, said the Johannesburg Stock Exchange (JSE) was sitting at 27 percent B-BBEE ownership and that number was likely to be significantly less if the fronting and non-adherence with the other B-BBEE elements is taken into account.

Pilane pointed out that fronting was now rife and black people were used as agents to get work for white-owned companies. 

“They are the one’s tendering for work only to transfer everything to white companies. As businesses, we are not saying we don’t want to work with our white counterparts, we are saying we don't want to be fronted, we want economic emancipation and everyone must, therefore, play their part,” said Pilane.

According to JSE published information, there were 371 entities that are listed on the stock exchange, as at September 1, 2018.

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Reports received by the B-BBEE Commission indicated that only 161 JSE-listed entities submitted data in response to the mandatory reporting requirements.  This is only a 43 percent representation of listed entities that complied with the mandatory reporting requirement. 

The B-BBEE Commission found that 18.1 percent of all B-BBEE certificates submitted, were rated as non-compliant to B-BBEE and, of the 161 listed entities that reported, 4.97 percent had no data for analysis.

For the period under review, financial information was analysed from reporting entities, however, there was no observable correlation between the state of transformation and financial performance or financial position, especially for JSE-listed entities.

The B-BBEE Commission said the low level of reporting and the slow pace of improvement in B-BBEE elements was a concern, but it welcomed the fact that B-BBEE compliance was now part of the audit scope of the Auditor General and also, that annual B-BBEE reporting was a listing requirement on the JSE.