The deputy minister of Trade and Industry, Mzwandile Masina, says that South Africa is regressing when it comes to Black Economic Empowerment (BEE).
In an interview with the SABC, he said that while there were good intentions in 2003 when the BBBEE legislation was enacted, the private sector has undermined its purpose.
He noted that some companies are recording black employees as stakeholders without their knowledge, in order to boost their BEE ranking. This practice is referred to as fronting.
Masina said that some people are not even aware that they are in company BEE certificates, when that company applies for a tender.
The deputy minister said that the government has established a BEE Commission to police compliance, and transformation. He said that more often than not, it was the big companies who are the culprits of fronting.
Masina said that the government is tightening legislation around fronting and that through new amendments to the legislation, the department is able to criminalize the act.
The penalty for fronting is a fine, up to 10 years imprisonment, or both.
“Until we have majority of our people participating in the mainstream economy, we are not making any headway,” Masina said.
“If you look at management, both either top management or senior management level, about 70% of the senior managers in the private sector are white, and yet we have a number of qualified black people who could be taking up those positions,” Masina told the SABC.
“At the level of CEO for instance, we’ve regressed from 15% of the top 40 listed companies (on the JSE), to about 10%.”
Masina was referring to data from the 2015 Jack Hammer Executive Report which showed that the number of black CEOs running the top 40 JSE listed companies has declined from 15% in 2014 to only 10% in 2015.
The report also showed that‚ out of a total of 334 people constituting the executive teams in SA’s Top 40 companies‚ 21% were black South Africans.
Research conducted by BusinessTech found that of 537 directors on South Africa’s top 40 listed company boards in 2015, 72% (386) were white.