The Broad-Based Black Economic Empowerment (BBBEE) Commission's 'BBBEE Transactions Analysis Report for 2018/19' shows that, of the 95 ownership deals filed for registration, 70 were subsequently registered but 25 were rejected owing to their failure to comply with the registration requirements.
The report looks at ownership deals with a transaction value of R25-million and more and is based on the black ownership deals that parties recognise on their scorecard for compliance with Statement 100 of the Codes of Good Practice.
The parties are required to register such transactions within 15 days of conclusion.
The report looked at all 95 major BBBEE transactions filed for 2018/19, with an overall transaction value of R111.94-billion, compared with the 272 transactions valued at R188.7-billion registered in 2017/18.
Entities measured under the financial sector contributed the highest towards the total value with 39% (R44.16-billion) of registered transactions, followed by those in the generic codes sector with 37% (40.97-billion).
The report shows that 31 of the 95 transactions were vendor financed, followed by share-swaps and bank loans, with the lowest being government financing.
Vendor-financing remains the dominant method of funding in these transactions with a notable rise in share-swaps, the commission pointed out.
Based purely on the information submitted by the parties to the transactions, the expected overall black ownership percentage is higher in 2018/19 at 60% (48% - 2017/18) with black women ownership at 29% (20% - 2017/18).
Conversely, there is a significant decrease in black voting rights from 46% to 32%.
The voting rights for black women have also decreased and fell from 20% to 17%.
The new entrants percentage also decreased significantly from 22% to 13%.
Meanwhile, individual assessments were conducted for 56 of the 70 transactions, which are at different stages of alignment; however, 12 transactions were referred for investigation as they have failed to remedy the concerns raised by the BBBEE Commission.
Participants in a BBBEE Commission webinar session on August 5 noted their concern over trends of black ownership, especially the decrease in voting rights and lack of new entrants.
The issue of gender parity was also raised, with black women ownership still lacking considerably.
Funding was also noted as a major hurdle for black ownership, with the current funding arrangement said to not provide sufficient capacity.
Moreover, it was noted that the country’s market structure still makes it very difficult to enter, with entrenched ownership, which needs to be dealt with as part of the transformation agenda.
The issue of fronting was also mentioned, with this noted as making up a considerable number of claims. However, it was noted that significant progress has been made in this regard in the legal space, and the public will be updated on this progress in due course.
There are currently four fronting cases being dealt with in court.
While the report was welcomed, it was urged that compliance should not just be about “box ticking”, but should go further into actually implementing elements of the BBBEE Act within companies.
Moreover, it was noted that there is a need for State intervention in monitoring and evaluating compliance.
It was emphasised that until an inclusive economy is realised, social justice will not be.