Only a third of JSE listed companies and 95 of SA’s hundreds of public entities submit reports on their broad-based black economic performance to the BBBEE commission as required, making it difficult to measure progress.
That’s according to BBBEE commissioner Tshediso Matona, who said on Wednesday that SA’s BBBEE policy suffered from the challenges of effective measurement. “Because we don’t read from the same evidentiary base we don’t have a shared view of progress or the lack thereof,” he said
Two decades after SA’s BEE legislation was enacted in 2003, the commission estimates that black people own about 30% of the economy, with black women owning 14%. But empowerment numbers tend to be contested, with a variety of different metrics and targets used in the public and private sectors to measure it.
Matona, who took over as commissioner 13 months ago, said 643 major BEE transactions worth nearly R700bn were concluded since the commission opened its doors seven years ago. But BEE was not only about ownership. He wants to see more black people set up enterprises that create value and employ people, and is excited about the emergence of black industrialists and their entry into new industries in the digital economy and renewable energy.
Matona was addressing a conference hosted by FirstRand Empowerment Trust and Kagiso Trust. Though he expressed concern about the persistence of fronting, he made it clear he supported counting well designed broad-based trusts as legitimate vehicles for black ownership in terms of the rules.
He was revisiting the different “ownership” definitions in the BEE legislation and the legislation governing trusts. The commission was doing “deep background work” to see how to address the stalemate on how to count BEE transactions that included trusts, he said on the sidelines of the conference.
His comments should help end uncertainty long weighing on BEE transactions that include broad-based trusts, such as those benefiting communities or education, which were put in question by Matona’s predecessor Zodwa Ntuli, who from 2016 launched a series of investigations and litigation on empowerment deals that were accused of “fronting” or of noncompliance with the rules.
At issue was that beneficiaries of the broad-based trusts often were not identifiable owners and did not have the economic ownership or voting rights that shareholders did, benefiting from in-kind payments (such as funding for community projects or school fees) rather than from dividends.
Trade, industry and competition minister Ebrahim Patel issued a practice note in 2021 that clarified the position and made it clear that broad-based trusts could qualify to meet ownership requirements of the BEE legislation, as could employee share ownership schemes, which had also been questioned by Ntuli.
But while that removed much of the question mark over long established BEE deals and opened the way for new transactions, the issue remains contested. Said Black Business Council CEO Kganki Matabane at the conference: “Getting boots is not the same as getting dividends.”
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