By Lehlohonolo Lehana.
Businesses are not meeting their B-BBEE scorecard targets, collectively achieving only an average of 87.16% of their contribution targets, according to the 2022 Sanlam Gauge Report.
“This year’s report drills down into the hard facts of economic transformation, what’s working, what is not working and what needs to change with South Africa’s B-BBEE policy,” said Andile Khumalo, co-founder of the Sanlam Gauge Report.
“I am particularly proud of the fact that in our second year of research the study’s sample size has more than trebled, this year investigating the B-BBEE scorecards of more than 10,000 companies grouped in 11 sectors. This increased sample size provides the research with even more credibility and provides a valuable benchmark for organisations to measure themselves against.”
The 2022 Sanlam Gauge Report found that, with the exception of the socioeconomic development pillar, most sectors are struggling to meet their targets. For the second consecutive year, management control poses the biggest challenge to the newly reconstituted B-BBEE Advisory Council, achieving only 55.9% of its target in this year’s report.
Enterprise and supplier development (ESD) is the next biggest challenge, achieving only 64.5% of the target. If done correctly, this element of the scorecard offers huge potential for inclusive economic growth based as it is on encouraging procurement from small black-owned businesses, in the process providing them with support to grow and develop.
Black ownership achieved 74.8% of target, a slight drop from last year.
Socioeconomic development was once again a standout pillar with companies in this year’s database exceeding the target by an average of 160%. Although some companies do use this pillar as opportunity to ‘tick the box’ by throwing money at it, other often larger companies are making an effort to ensure their contributions make a meaningful impact on beneficiaries.
Given that targets are not being met, there is a school of thought that says that the overall B-BBEE strategy needs to be adapted – or even overhauled completely – to measure qualitative as well as quantitative areas in order to better reflect transformation on the ground, said Khumalo.
Ray-Anne Sedres, chief transformation officer at Sanlam said what the report very clearly reveals is that there is still a great deal of work to be done as far as transformation is concerned. “To reach their targets, businesses will need to collaborate. We challenge all businesses to prioritize this critically important journey.”
“Despite all the challenges surrounding B-BBEE – of which there are many – I am convinced that there is no other policy that can alleviate poverty, reduce inequality and create jobs to the same extent. Therefore, we have no choice but to make BEE work – our very future depends on it,”Khumalo said.
Banks meanwhile have received a mixed transformation report card in an industry-sponsored survey, with local lenders making good progress in areas such as preferential procurement and black ownership but falling short on management control.
The 2022 Transformation in Banking Report, compiled by Intellidex on behalf of the Banking Association SA (Basa) for the period 2017-2020, showed lenders met many of the targets set by the Financial Sector Code, though work is still required in some areas. That was despite a 6.4% pandemic-induced economic contraction in 2020 that reduced opportunities for job creation and inclusive growth in the sector.