Transformation has been a buzzword in South Africa for a long time, but questions still linger about whether transformation has taken place in real terms in the country over the last 30 years, up to 2024.
The National Treasury, in its 2017 Budget Review, identifies broad-based transformation as an instrument to promote growth, mobilise investment, create jobs, and empower citizens. “It must create new resources to support social change, including assets and livelihoods for the majority, and strengthen South Africa’s constitutional foundations,” the report says.
By way of comparison between the public and private sectors, the state is significantly ahead in addressing male-female inequality in the top echelon and attending to other aspects of transformation, such as addressing workplace discrimination and ensuring equitable deployment filling of positions.
The number of women in the Cabinet has grown markedly over the years, ostensibly inspired by the 50-50 equality benchmark initiated by the former ruling party for its political deployments. Of the 34 Cabinet Ministers, 14 are women, which was already close to half. Out of 43 Deputy Ministers 18 are females.
Further, to ensure equity, it had become an unwritten convention in the ANC-administered municipalities that where an executive mayor was a man, a council speaker has to be a woman and vice versa, except in a few instances. Geraldine Mettler, writing in the Local Government Bulletin, acknowledges Gauteng as the only province where there is near equal representation of genders.
While transformation was no longer an issue in the state, the private sector in South Africa is lagging behind. Generally, the leadership echelon of many companies does not reflect the country’s demographics. There are many cases of lack of transformation in company ownership and executive leadership. Some employers openly resist transformation while tokenism, fronting including hiring of foreign immigrants at the expense of locals to fake compliance or fill quotas is common practice.
In the financial services sector, the 2023 Transformation Report, commissioned by the Banking Association South Africa, indicates that the total number of directors in banking declined for the second consecutive year. Instead of growing, the industry saw the percentage of African board members drop to 39%, compared to a target of 55% for the period. That’s 30 years plus since the dawn of democracy in 1994. However, ownership levels increased significantly in 2021, with Black voting rights now at 32% (up from 27% in 2020), while Black women’s voting rights climbed to 15 (up from 12%).
The 2022 report, released earlier, showed a decline in the number of white managers among senior management over the past two years. The number of Black African managers increased from 38% in 2019 to 48% in 2020, but remains below the 2018 total of 55%. The number of Indian and Coloured top senior managers also increased over the prior year.
In senior management, a 12.7% increase in African senior managers brought the total number to 1,853, forming a sizeable pipeline of black managers with the potential to move into the top senior level.
In 2019, the Council commissioned a survey on transformation and community development performance among its 32 member companies, which represented 79.5% of the industry total and 93% of the employees. The study found the Historically Disadvantaged South Africans (HDSA) owned 39,5% (weighted average) of the equity, significantly above the 26% equity ownership 2014 target. The survey was focused on five key transformation elements, including ownership and employment equity.
Outlining transformation in business, Shaun Smit, director of Transcend Capital, said in South Africa, employee ownership is primarily driven by B-BBEE or BEE) and Employee Share Ownership Plans (ESOPs), which are designed to increase employee engagement, align employee and shareholder goals, reward employees and a tool for business succession planning. “Black ownership via an ESOP helps to improve a company’s overall BEE status and competitive positioning. Although ESOPs have not been widely utilised, there is no question that the private sector could more effectively use them to drive transformation,” Smit wrote in Bizmag in 2022.
He said South Africa’s BEE strategy is not only intended as a moral initiative to redress the wrongs of the past but also as a growth strategy to fully exploit the country’s economic potential by bringing the black majority into the economic mainstream.
Black Business Council Chief Executive, Kganki Matabane, condemns what he calls “tick-a-box” transformation by many white businesses. He said that some in the private sector only did the bare minimum just to meet requirements and get points without being committed to genuine transformation. This despite the law demanding that ownership and control of companies must reflect the country’s demographics.
Matabane said that blacks in the private sector were mainly hired for support services, and the highest they could advance to were corporate services – such as human resources and marketing. However, very few were elevated to ownership, including shareholders and top executive levels, where profit and losses are discussed and acted upon.
“They make sure blacks are not running the core business or placed in positions of control where they could be company CEOs and COOs. The private sector talks about the transformation, but they do nothing to promote black individuals in an honest manner. Those who own and control the organisations are the ones who decide where the company must procure from and that is where transformation must happen,” Matabane said.
In its 2017 National Treasury Budget Review highlighted that South Africa needed transformation that opens a path to inclusive economic growth and development. “Growth without transformation would only reinforce the inequitable patterns of wealth inherited from the past,” Treasury said.