There are still too few black executives in management positions in SA 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 broad-based BEE (BBBEE) performance launched during the Sanlam Gauge digital conference on May 6 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 in SA are transforming.
“Doing this research is revolutionary because transformation is needed for our society and our economy,” says Karl Socikwa, group executive: market development at Sanlam on the role of the Sanlam Gauge. “We have taken a huge step to ascertain whether SA has moved forward in a meaningful way.”
The Intellidex-led research for the Sanlam Gauge relied on BBBEE scorecards of more than 3,100 companies, grouped into 11 sectors using the international standard industrial classification codes. The sectors include agriculture, construction, financial, forestry, information communications technology (ICT), integrated transport, marketing, advertising and communications, property, tourism, mining and generic.
The sectors have achieved a combined average of 85.6% of BBBEE contribution targets.
“The fact that SA has still not reached the transformation targets for all scorecard elements — other than for socioeconomic development — says a lot about how they have been set over time,” says Andile Khumalo, co-founder of the Sanlam Gauge.
“While most achievement percentages are high, we need to ask whether the agreed targets 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’s 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.”
Empowerdex MD Lerato Ratsoma delivered the research findings, which showed that of all five BBBEE scorecard elements, management control receives the lowest score. Sectors secured about 54.7% of their BBBEE points for this critical element.
As a highly regulated industry, the tourism sector is hitting 99.5% of its BBBEE 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 and communications, and agriculture.
The ICT sector, with a level 4 recognition, is one of the poorest performing sectors, though it is exceeding black ownership targets.
Across the board, all sectors are going above and beyond in terms of socioeconomic development, surpassing the BBBEE 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 said skills development scores don’t 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 socioeconomic 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 we need to focus on,” says Socikwa.
Andile Khumalo also hosted a panel discussion with Donald Khumalo (JSE human resource director), Lindiwe Madonsela (BEE Commission head of compliance), Ratsoma and Socikwa on the research outcomes.
Whether BBBEE as the government’s chosen policy for driving economic transformation is adequate or whether more should be done was a 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 SA).
“BBBEE is a very important policy and no matter how we may feel about it, it’s a big part of our business and socioeconomic lives. We have to keep the dialogue going — it’s the only way to build an SA we all want to live in and thrive in,” says Khumalo.
This article first appeared on www.businesslive.co.za on 13 May 2021.