There are still too few Black Executives occupying management positions in South African businesses, thwarting the realisation of impactful economic transformation in the country. This is despite investment in skills development and the growing Black ownership of companies, as highlighted in the findings of the inaugural Sanlam Gauge report on sectoral B-BBEE performance that was launched during the Sanlam Gauge Digital Conference on 6 May 2021.
The Sanlam Gauge – presented in partnership with the Sunday Times Business Times – is the first report of its kind to deliver insights on how industries within South Africa are transforming.
“Doing research of this nature is revolutionary because transformation is something that is much needed for our society and our economy,“ says Karl Socikwa, Group Executive: Market Development at Sanlam on the role of the Sanlam Gauge. “It is a major step we have taken to ascertain whether South Africa has moved forward in a meaningful way.”
The Intellidex-led research for the Sanlam Gauge relied on B-BBEE scorecards of more than 3,100 companies, grouped into 11 sectors using the international Standard Industrial Classification (SIC) Codes. The sectors include: Agriculture; Construction; Financial; Forestry; Information Communications Technology (ICT); Integrated Transport; Marketing, Advertising & Communications; Property; Tourism; Mining and Generic.
Combined, the sectors have achieved an average of 85,6% of B-BBEE contribution targets.
“The fact that South Africa has still not reached the transformation targets for all scorecard elements – other than for socio-economic development – talks a lot to how they have been set over time,” says Andile Khumalo, co-founder of the Sanlam Gauge. “Whilst most achievement percentages are high, we need to question whether the targets agreed are still appropriate 27 years into democracy. Given that the poorest performance across all sectors came in Management Control speaks volumes about the work that is still to be done. We need to ask whether the Government’s policy is having the desired impact on our society. Is our transformation actually being transformative? When all is said and done, that is the fundamental question.”
Lerato Ratsoma, Managing Director of Empowerdex, delivered the research findings which showed that of all five B-BBEE scorecard elements, Management Control receives the lowest score. Sectors secured on average only 54.7% of their B-BBEE points for this critical element.
As a highly regulated industry, the Tourism sector is hitting 99.5% of its B-BBEE contribution targets. The Financial (97.1%), Construction (93.7%) and Integrated Transport (92.4%) sectors follow close behind with scores in the 90s.
Only five sectors are achieving Level 1 recognition: Tourism; Financial; Property; Marketing, Advertising & Communications; and Agriculture.
The ICT sector, with a Level 4 recognition, is one of the poorest performing sectors although it is exceeding Black Ownership targets.
Across the board, all sectors are going above-and-beyond in terms of Socio-Economic Development, surpassing the B-BBEE requirements with an average score of 101.2%.
Most sectors are on their way to achieving their transformation targets for Black Ownership (average: 85.4% of contribution target) and Skills Development (average: 76.1% of contribution target). However, Ratsoma noted that Skills Development scores currently do not reflect the effect of the Covid-19 lockdown on learnerships and other skills programmes during 2020. In the 2022 Sanlam Gauge report it may be possible to see how many companies remain above the 40% target, despite the challenges of the pandemic.
Yet despite these commendable investments in Skills Development and increased Black Ownership, the challenge is that such investment is not translating into Black Executive management.
“We shouldn’t be fooled into thinking that hitting numerical targets will make the meaningful change we need in society. A lot of money is spent in Socio-economic Development and Skills Development, but it doesn’t trickle through when it comes to Management Control. At least now we have taken a step that inspires dialogue in the areas on which we need to focus going forward,” says Socikwa.
Andile Khumalo also hosted a panel discussion with Donald Khumalo (Human Resources Director at the JSE), Lindiwe Madonsela (Head of Compliance at the BEE Commission), Lerato Ratsoma, and Karl Socikwa on the key research outcomes.
Whether B-BBEE as the Government’s chosen policy for driving economic transformation is adequate or whether more can and should be done was a key discussion point in a second panel led by Gugulethu Mfuphi, who was joined by Mary Bomela (CEO, Mineworkers Investment Company), Sandile Zungu (President, Black Business Council), John Dludlu (CEO, Small Business institute), and Nompumelelo Mokou (MD, Dimension Data South Africa).
“B-BBEE is a very important policy and no matter how we may feel about it on a personal level, it’s a big part of our business and socio-economic lives. We have to keep the dialogue going – it’s the only way to build a South Africa we all want to live in and thrive in,” concludes Khumalo.