The financial sector is making slow and uneven progress when it comes to transformation, with gains in some areas overshadowed by challenges in others, and weak impact measurement.
This is according to the Financial Sector Transformation Council (FSTC), a non-profit company mandated to enforce the Financial Sector Transformation Code. Its constituencies include the government, labour and communities organised through Nedlac, and the Association of Black Securities and Investment Professionals (Absip).
It presented its State of Transformation report, which measures progress on B-BBEE and financial inclusion in line with the Financial Sector Code.
FSTC CEO Nobambo Mlandu said while progress was visible, the sector remained “nowhere near target” in critical areas as ownership and management control.
“Just to contextualise the recent one, the findings did reflect mixed performance across the sector, reflecting the difficulty of sustaining transformation momentum in challenging socio-economic environments, and I think the economists have painted a picture on the state of economic growth in the country,” said Mlandu.
The Financial Sector Code ensures black South Africans hold equity stakes in financial institutions, encourages employee share ownership programmes, and promotes representation of black professionals in executive, board and senior management roles.
According to the report, there have been gradual improvements in ownership structures and management representation, alongside sustained investment in skills development. Financial institutions have continued to channel resources into training programmes and learnerships and this has improved the entry-level talent pipeline.
The sector has made strides in promoting inclusive growth through empowerment financing and expanded access to financial services. Efforts to coordinate socio-economic development and consumer-focused initiatives have also improved, supported by a strong regulatory framework under the Financial Sector Code, which has introduced clearer accountability measures.
However, the report shows that these advances are not translating into broad-based transformation at the requited pace. Mlandu raised concerns on the prevalence of what she described as “tick-box compliance”, where institutions focus on meeting scorecard requirements rather than achieving meaningful economic outcomes.
This has resulted in a limited link between B-BBEE compliance and real transformation impact.
The findings further highlight uneven outcomes across the sector, with financial inclusion targets still falling short.
While spending on skills development has increased, it has not been matched by equivalent gains in management control, suggesting that progress is not yet inclusive or widespread.
The absence of standardised tools to assess impact, combined with inconsistent B-BBEE reporting templates across institutions, makes it difficult to determine what is working and where interventions should be strengthened.
Structural barriers also continue to restrict meaningful participation by black-owned firms. High barriers to entry into core financial markets persist, even as the sector maintains a necessary focus on financial safety and stability. This has limited the extent to which new entrants can compete and grow within the mainstream economy.
Tshediso Matona, B-BBEE commissioner, said black economic empowerment was now firmly built into how companies operate, with systems in place and leadership taking some responsibility, although this still needs to be strengthened. He added that despite criticism, many firms remain committed. Companies are also aiming for higher B-BBEE scores, with a growing shift towards top performance levels, which the sector is encouraging.
“Over time, especially in the recent period, we are seeing increasing levels of non-compliance and that is level 8 to level 9, there is no consequence to the extent that – first of all the commission does not have powers to fine or to penalise non-compliance,” said Matona.
He explained that B-BBEE is voluntary and no one is forced to do it.
He said a large share of government spending, about R1-trillion of the R2.3-trillion planned over the medium term, goes to public procurement. If this is used properly as a tool for transformation, by strictly requiring businesses to meet compliance standards in order to win state contracts and consistently enforcing those rules, it could drive significant transformation.
“The report of the sector as presented kind of matches with what we found that there is some level of progress in a number of targets, ownership but I think the point about B-BBEE that we must all accept is that it’s a process, it’s a project.
“It’s a project that’s going through different phases, we are not going to see overnight the results we are looking for, we must fix the process, it must have integrity, we must remove all the funny things about B-BEE in terms of the policy, we must clean the policy,” said Matona.
Gabriel Crouse, a director at the Institute for Race Relations, argued that B-BBEE cannot be considered voluntary when it is linked to government
spending.
He said under the Employment Equity Act, which came into effect at the end of last year, companies can be fined up to 10% of their pre-tax revenue for repeated non-compliance.
Crouse said this could push many businesses towards bankruptcy, showing that compliance is no longer truly voluntary.
He added that while it may have been seen as voluntary in the past, that is no longer the case and there needs to be honesty about the current situation.
“I agree that in the 1990’s and the 2000’s it was very clear [that] white people had most 80% of the money, 90% of the wealth. They had to pay for transformation. At this stage, if (Momentum Unisa Household Financial Wellness Index) is right, black people have the majority of the money, so if anyone is paying for transformation, it’s black people paying for transformation,” said Crouse.
- The financial sector is making slow and uneven progress when it comes to transformation, with gains in some areas overshadowed by challenges in others, and weak impact measurement.
- This is according to the Financial Sector Transformation Council (FSTC), a non-profit company mandated to enforce the Financial Sector Transformation Code.
- Its constituencies include the government, labour and communities organised through Nedlac, and the Association of Black Securities and Investment Professionals (Absip).
- It presented its State of Transformation report, which measures progress on B-BBEE and financial inclusion in line with the Financial Sector Code.
- FSTC CEO Nobambo Mlandu said while progress was visible, the sector remained “nowhere near target” in critical areas as ownership and management control.
