The lack of financing for black businesses is hurting transformation efforts, members of Parliament have heard.
The standing committee on finance was this week briefed by organisations including Broad-Based Black Economic Empowerment Commission, the Financial Sector Transformation Council, Treasury and the SA Reserve Bank on transformation in the sector.
The briefing comes after just days after President Cyril Ramaphosa met with the Black Business Council, where transformation was discussed.
In the president's newsletter issued on Monday, he lamented the lack of transformation in the private sector given that top management positions in the sector are still dominated by white men. "Africans only make up 15% of top management, despite accounting for 79% of the economically active population," Ramaphosa said in his newsletter.
Similarly, reports by both the B-BBEE Commission and the FSTC presented at the committee meeting show that there has been regression in transformation targets in the financial sector.
The B-BBEE Commission, which is mandated to receive and initiate investigations into non-compliance with the country's transformation policy, also keeps a register of B-BBEE transactions and analyses transformation reports from JSE-listed companies, public entities and organs of state, said that so far this year 23 entities had submitted reports.
The commission found that the level of black ownership in the financial sector had regressed from 38% first reported in 2016 to 31.79% reported in 2017 and 21.64% reported in 2018. The level of black people being in management control of entities has also been on a declining trend, from 57% reported in 2016 to 52.85% in 2017 and for 2018 declined further to 51.50%.
The FSTC, which is mandated to enforce the financial sector transformation code of B-BBEE policy, had presented a draft report to parliament, and the final report will be finalised in December. Some of the highlights on the draft 2017/18 report show that ownership levels and management control is also still below targeted levels.
Lack of finance
During a question and answer session in the meeting, EFF MP Mbuyiseni Ndozi suggested that one way to promote transformation in the sector would be through the establishment of banking or financial institutions which unapologetically favour black people.
ANC MP Maidi Mabiletsa expressed views that the lack of transformation in the financial sector was linked to lack of finance for black people.
Acting CEO of the FSTC Busi Dlamini admitted that "access to finance is a big issue", especially for black South African businesses. She said the matter is receiving attention and the FSTC is in a process of reviewing targets in the current code.
The B-BBEE Commission also noted in its report that funding for B-BBEE transactions and new black businesses could be improved and proposed that the sector consider partnering with government funding agencies.
Commissioner Zodwa Ntuli said that of the 272 BEE transactions across multiple sectors worth R188.7bn, only 19% of funding came from the financial sector. "There is an opportunity to increase that so that we make finances available to empower black people to start their own businesses and also to acquire stakes in existing businesses," she said.
Committee chairperson and ANC MP Joe Maswanganyi said that convening a summit on the financial sector, which will address the implementation of resolutions to enforce transformation, was a matter of urgency. "We are not sitting here and theorising on black transformation. We have reports authenticated and backed by data that transformation is moving at a snail's pace and something must be done," he said.