“Transformation is not as advanced as BEE scorecards suggest” - Sanlam Report

“Transformation is not as advanced as BEE scorecards suggest” – Sanlam Report

Companies are ticking boxes and rant about transformation, says Ilias Masilela, president of Sanlam.

Companies are ticking boxes and rant about transformation, says Ilias Masilela, president of Sanlam.

  • The researchers who compiled Sanlam’s 2023 transformation metric say that corporate SA’s transformation is not as advanced as the scorecards indicate.
  • The 2023 BEE results showed some improvements in companies’ empowerment credentials, but some are also worrying.
  • Companies are ticking boxes and rant about transformation, says Ilias Masilela, president of Sanlam.
  • For more financial news, go to News24 Business front page.

Sanlam’s 2023 Transformation Benchmarking Report shows the mismatch between companies’ BEE scorecards and the reality on the ground.

The report, commissioned by Sanlam and compiled by BEE’s research and ratings agency, Empowerdex, is now in its third year of publication.

Empowerdex analyzed 14,542 BEE scorecards across listed and unlisted companies. After analyzing all the data and interviewing the people working for these companies, the researchers concluded that “the turnaround is not as advanced as the scorecards indicate.”

Empowerdex sent out surveys to 93 BEE verification agencies, and 42 agencies responded.

‘not good enough’

BEE points earned by companies are excluded from participating in the Youth Employment Service (YES) programme. Questions have been asked by verification agencies about the skills development aspect of the BEE rating, with comments including that it is a low-key box exercise. The agency’s notes also included concerns that, in its experience, there are companies that spend money just to get points.

They said that companies’ enterprise and supplier development programs are also often an aspect of compliance. In terms of ownership, some point out that there is plenty of room for distortion and glitz. Therefore, this aspect must be reviewed, and some even suggest removing this item from the scorecards.

The one component most agencies were happy with was social and economic development – an area where SA companies consistently exceed targets.

Speaking at the report presentation on Tuesday, Sanlam Chairman Ilias Masilela said that when one takes the numbers at face value, it’s easy to conclude that SA is on the right track due to the overall improvement in enablement ratings over the year. -year. But these numbers are still not exciting. And if it exceeds the overall ratings, you will notice that it is constantly getting a boost from the socioeconomic development ratings.

“It’s just not good enough,” Masilella said.

declining sectors

Masilela said it was time for South Africans to ask why the transformation promised by BBBEE remains so elusive 20 years after the law was introduced to address inequality in South Africa. However, he does not blame BBBEE policy but rather corruption, racism, psychology and attitude of decision makers.

More worrying, Masilela said, is the fact that some empowerment ratings are now worse than they were in 2021 when Sanlam first published the Transformation Scale report. The report shows that corporate SA has taken a few steps back in black ownership, enterprise and supplier development.

And although management oversight improved to 69% of the BEE scorecard target compared to 58% in 2021, 51% of verification agencies surveyed by Empowerdex found no pleasure in it. They believe that the corporate sector is resisting transformation.

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“The trend is not what South Africa would like to see […] This tells us that attitudes have not changed. The positions did not move. We’re still ticking the boxes. “We still pay lip service to conversion,” Masilelli said.

Zooming in on the sectors, it became clear who was holding back. On the black ownership front, the agricultural industry, construction, integrated transportation, property and tourism have fewer blacks owning these businesses than in 2021.

In black management control, culprits who have fallen back include property, forestry, marketing advertising, and communications. Mining and quarrying declined slightly. The degrees of management control in the financial and manufacturing sectors have remained stable for three years.

The listed real estate sector was the worst performer in this area, with black management control falling to 26% of the BEE target for the sector, followed by the integrated transport sector (28%), unlisted property (30%) and agricultural (BEE) listed property (44%). .

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