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 would 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 points out.

Based purely on the information submitted by the parties to the transactions, the expected overall black ownership percentage was higher in 2018/2019 at 60% (48% for 2017/18) with black women ownership at 29% (20% for 2017/18).

Conversely, there is a significant decrease in black voting rights from 46% to 32%.

The voting rights for black women 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 had 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 the lack of new entrants.

The issue of gender parity was also raised, with black women ownership still lack­ing considerably; this has been the most affected demo­graphic in terms of job losses during the pandemic.

Funding was also noted as a major hurdle for black ownership, with the current funding arrangement said not to be providing suf­ficient capacity.

Moreover, it was noted that the country’s market structure still made 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 noted, with this making up a considerable number of claims. However, it was noted that significant progress had been made in this regard in the legal space, and the public would be updated on the progress in due course.

There are currently four fronting cases being dealt with in court.

While the report was welcomed, the com­mission urged that compliance 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 was a need for State intervention in monitoring and evaluating compliance. 

It was emphasised that, until an inclusive economy was realised, there would be no social justice.