Johannesburg- A study by the Southern Centre for Inequality Studies (SCIS) has found that corporate structures in South Africa remain highly concentrated, generating high profits but with limited reinvestment while excluding new entrants and stifling the growth of small black businesses.
The SCIS, which is based at Wits University, in its Broad-Based Black Economic Empowerment (B-BBEE) Chapeaux Report, said B-BBEE needs to go beyond solely pushing for the market entry of black players in traditional sectors.
The focus should also be on developing new industries and sectors with high-growth potential.
Such industries include the renewables sector, electric vehicles and fuel cell technologies that could build on South Africa’s comparative advantage in platinum,” the report reads. “This will require resolving the challenges of institutional co-ordination, confronting the market power of incumbents, and dealing with the day-to-day challenges faced by black industrialists.”
B-BBEE commissioner Zodwa Ntuli said earlier this year that 18 years after empowerment legislation came into effect, its benefits do not filter to people on the ground. She said the country should deal decisively with fronting by terminating the operating licences of companies that lie about their black ownership status.
The SCIS report came in a week when the country’s richest black man, Patrice Motsepe, saw his stock rise in another milestone B-BBEE deal. South Africa’s fourth-biggest bank, Absa, and Sanlam are to merge their investment businesses in a deal that is set to create a black-owned asset manager with more than R1-trillion in assets under management.
Sanlam’s largest shareholder is Motsepe’s investment vehicle, Ubuntu-Botho Investments, with ownership of 14%.
The 27four’s annual BEE.conomics survey shows that total assets managed by black-owned firms advanced to R1.15-trillion at the end of June from R667.8-billion the previous year.
This uptick was largely attributed to the inclusion of Sanlam Investments, adding R344-billion to overall assets under management.
Public Investment Corporation’s Abel Sithole said there is also scope for Africa’s largest asset manager to transform the white-dominated asset management firms and other sectors of the economy.
“Yes, we can aspire to change the future in terms of new black players. But actually, there is a bigger opportunity to transform the existing white players, whether they are asset managers or companies in general. One such example is making sure that the boards of those entities are also driving transformation within those entities.”
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