The commission that monitors compliance with empowerment legislation says it is concerned by the overall slow pace of economic transformation in the country.
On Tuesday, the Broad-Based BEE (BBBEE) Commission released its report on the national status and trends on broad-based economic empowerment for 2019 which showed a decrease in the number of submitted compliance reports by JSE-listed entities, from 43% in 2018 to 42% the year after.
The findings of the report suggest that black eBEE meant to address the injustices of apartheid and colonialism — are failing.
BBBEE is a contentious issue in SA. The DA, the country's main opposition party, has rejected it in its current form, saying it is being used by the ruling ANC to enrich only a few of the politically connected elite at the cost of job creation.
Organs of state complying with BBBEE legislation increased from 10% in 2018 to 15% in 2019.
In total, the report is based on compliance reports from 150 JSE-listed entities, 43 organs of state and 5,818 companies whose BBBEE certificates were uploaded to the commission’s certificate portal for the year under review.
The commission pointed out that the majority of measured entities are still failing to comply with BBBEE laws. The BBBEE Act makes it compulsory for all JSE-listed entities, organs of state and public entities to submit compliance reports on transformation and empowerment.
The latest report shows a slight change in the levels of transformation with the overall black ownership reflecting an increase from 25% in 2018 to 29%; management control is sitting at 39% overall, and JSE-listed entities board control is at 43.6%(male — 23.08%; female — 20.55%). Only 3.3% of entities listed on the JSE are 100% black owned, which was 1.2% in 2018 and 1% in 2017.
The commission said to address low levels of compliance with empowerment laws it has started conducting site visits on the reports submitted to verify their accuracy and to identify best practices to share with other entities. It was also preparing to take further legal action against entities that failed to submit reports, saying their conduct was not only a violation of the BBBEE Act, but enabled the harbouring of fronting arrangements.
“The BBBEE Commission will take legal action allowed under the act, and will refer those tthose to have violated the act for possible prosecution,” said Zodwa Ntuli, head of the BBBEE Commission.
The commission said there were also other worrying trends observed over the three-year period between 2017 to 2019.
For example, though black ownership indicates slight change, the black ownership percentage does not always correspond with the management control scores.
In this case an entity is able to score full points for ownership and low on management control, which gives the impression that despite black ownership, black people are not involved in the control and core operations of the entity.
Also, the saturation of management control points is still between junior and middle management, pointing to the possible rotation of black executives from one measured entity to another, without utilisiusingills development element to create a pipeline of new black executives, the commission said.
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