Businesses are not meeting their B-BBEE scorecard targets, collectively achieving only an average of 87.16% of their contribution targets. This is according to the 2022 Sanlam Gauge Report, the largest independent research taking a holistic measurement of economic transformation in the country. A sector-focused research report, the Sanlam Gauge takes stock of how the public and private sectors are succeeding in transforming their businesses and leadership.
Andile Khumalo, co-founder of the Sanlam Gauge Report explains that, “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. 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.
Ray-Anne Sedres, chief transformation officer at Sanlam says 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.”
While there has historically been no credible source of transformation data available in South Africa, the Sanlam Gauge has a vision to change that by creating a dedicated database providing credible information. Khumalo says, “Despite all the challenges surrounding B-BBEE – of which there are many – I am convinced that there is no other policy which 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.”
The full Sanlam Gauge sectoral report can be downloaded and read online at https://sanlamgauge.co.za/report-2022/