As a loyal customer of Dischem, I often find myself browsing their aisles for my medications and baby products at Baby City, another brand under the Dischem umbrella. Little did I know that this company, which I have supported for years, is one of the major players in South Africa that lacks substantial transformation.
Recently, Cosatu spotlighted Dischem Pharmacies for its lack of transformation within its corporate structure, accusing the company of merely paying lip service to Black Economic Empowerment (BEE). At Dischem’s annual general meeting, shareholders pressed for answers regarding the absence of black individuals in top management and the mere 14.5% representation at the senior management level. The response from CEO Rui Morais, citing limited turnover at the executive level, was underwhelming.
To provide some context, the ownership of Dischem is divided among the Saltzman family with a 35% stake, Coronation Asset Management with 15.01%, the Public Investment Corporation with 18.6%, Royal Bafokeng Holdings with 6.62%, and Stansha with 4.64%. However, this diverse ownership has not translated into a diversified management team.
Black Economic Empowerment is critical for ensuring that companies in South Africa contribute to redressing historical injustices and fostering a more inclusive economy. The key elements of BBBEE that all companies should meet include ownership, management control, skills development, enterprise and supplier development, and socio-economic development. Unfortunately, Dischem’s B-BBEE certificate indicates that the company is a Level 6 contributor, meeting only one out of the five minimum requirements.
To break it down, Dischem scores a disappointing 18.25% in ownership (against a 25% minimum requirement), 6.89% in management control (well below the 19% requirement), 15.26% in skills development (compared to the 20% minimum), and 27.9% in enterprise and supplier development (against a 42% minimum). The only area where Dischem meets the minimum requirement is socio-economic development, with a score of 5%.
Cosatu pointed out that the 2024 Commission for Employment Equity report reveals a stark reality: South African companies are predominantly led by whites, who hold 62.1% of top management positions. Meanwhile, African people, who make up 80.7% of the economically active population, only represent 17.2% of top management roles. This disparity is a clear indication of the sluggish pace of transformation in corporate South Africa, with Dischem being a notable example.
Transformation is not just a buzzword; it is a crucial element for the sustainability and relevance of businesses in South Africa. Companies must strive to reflect the demographics of the markets they serve. It is disheartening to see a company like Dischem, which started as a single store in Mondeor in 1978 and has grown significantly, lagging in this regard. The surrounding community has transformed over the years, yet Dischem’s corporate structure remains largely unchanged.
The recent draft regulation amendments aim to enforce compliance through five-year numerical targets for employment equity, reported annually in financial reports. However, these amendments lack stringent enforcement measures, giving companies a long leeway. Matthew Parks, Cosatu’s Parliamentary spokesperson, suggests that compliance could be driven by equity targets and withholding compliance certificates for government contracts.
As consumers, we also hold power. By choosing to support businesses that are committed to transformation, we can drive change. Companies like Dischem must make meaningful strides toward transformation, ensuring that their management teams reflect the diverse customer base they serve. Only then can we hope for a truly inclusive and equitable economy.
In closing, while I will continue to shop at Dischem for my essentials, I cannot ignore the need for change. Dischem and other companies must prioritise transformation, not only to comply with regulations but to build a more just and representative South Africa. It’s time for Dischem to step up and lead by example.