Black Ownership of South African Businesses Falls Below 30%

(Bloomberg) --

Black ownership of businesses in South Africa dropped 1.5 percentage point to below 30% last year, as Africa’s most industrialized nation struggles to economically empower a larger portion of its population.

Black management control also dropped 5.4% percentage points to 51.6%, the B-BBEE Commission said in an annual report. The commission’s mandate is to supervise and encourage adherence to the Broad-Based Black Economic Empowerment Act passed almost two decades ago to address inequities stemming from apartheid in South Africa, where four in five people are Black.

The downward trend has persisted despite the more than 500 B-BBEE ownership deals worth over 600 billion rand ($36.1 billion) reported to the commission since 2017 that aimed to facilitate the transfer of ownership to Black people.

“There is a need for less-expensive and unencumbered funding for Black people to make acquisitions that can give real value in the hands of Black people, especially from government funding institutions,” the commission said. Compliance also remains sluggish, as the number of certificates uploaded by verification agencies dropped 76% from the 2019 level.

The report is based on annual compliance reports submitted from 130 listed companies, 82 state entities and data gathered from 1,373 entities whose B-BBEE certificates were uploaded to the commission’s certificate portal.

Other findings from the report include:

Board control of companies listed on the Johannesburg Stock Exchange by black people was at 39% (21% male, 18% female), compared to 28% in 2020.
0% of entities listed are 100% black-owned, same as in 2020. This is down from 3% in 2019 and 1% in 2018.
The transportation and tourism sectors have the highest average Black ownership at 78% and 52%, respectively, while the agriculture and financial sectors recorded the lowest Black ownership at 17%.

The commission has called on Parliament to strengthen the B-BBEE Act to incorporate administrative sanctions for non-compliance.

In June, President Cyril Ramaphosa appointed 14 people to a Black economic-empowerment council to address inadequate progress with improving some measures of Black involvement in the economy almost three decades after the end of apartheid. The president highlighted Black management control, broadening procurement and skills development as areas needing attention.

More stories like this are available on bloomberg.com

Author: Adelaide Changole