In this weeks Black Business Executive Circles BEE Conference there was a review of transformation in South Africa over

the last ten years of democracy. I would like to reflect on the two key observations made in the presentations in the conference. Firstly looking at the ownership levels, one of the most glaring variances between what gets reported and the actual reality is a cause for concern. Is this variance due to companies misrepresenting their information? Not really, companies report the legal ownership as it appears on the share certificates or STRATE which does not apply the flow through principle as it is not yet required by law. The flow through principle tracks the true benefits that accrue to natural persons and thus determine the true ownership by black people in an entity. The average ownership by black people in the JSE is estimated to be approximately 4.7% and this represents legal shareholding. When the flow through principle is used this estimated 4.7% will decrease but if the question of encumbrance is introduced then this figure become very insignificant. These differences show the severe lack of real capital in the hands of black people. They have to borrow money to be able to build their capital and there are inherent uncertainties of how long this direct unencumbered capital of at least 25% of the aggregate capital in South Africa can be built over time. Therefore a high growth rate will help accelerate the acquisition of real and sustainable capital by black people. The other observation made in the conference is the both the progress and lack thereof made from employment equity initiatives. It was noted that employment equity has not reversed white male preference and dominance. The statistics show that at the highest occupational category of legislators and senior management white males account 43.3%. Significant disparities on employment equity progress were also identified between the three groups contained in the definition of black people. Black people in terms of the Employment Equity Act are defined as Africans, Indians and Coloureds. The concluding observation made in the conference when looking at the disparities between the different groups was, The best beneficiaries so far are the highly skilled groups who also happen to be black (i.e. Indians); those who are skilled but are not black (whites) continue to dominate and those who are black, but not skilled (Africans) are left out, its tougher if you are neither black nor white (Coloured) without high level skills. Furthermore if you are black, female and not skilled you are still left out and if you are person with a disability you do not appear on the screen It is necessary to unpack the facts that shed some light to this conclusion. When one evaluates the income levels that are contained in the Income and Expenditure of Households Statistical Release from Statistics South Africa (Release number P0111) for 1995 and 2000 the differences become apparent. All population groups have moved more households into the highest expenditure group that spends over R52 800 per annum, but the white and Indian households increased the most. Approximately 84% (62% in 1995) of white households spend more than R52 8000 per annum and 66% (46% in 1995) of the Indian households are in highest expenditure groups. Even after the movement from lower expenditure groups, the Coloured population group still has 70% of its households spending less than R52 800 per annum, with 87% of the African households below this level.

The evaluation of the HSRC Human Resources Review of 2003 echo the similar differences in higher education. Firstly they look at the distribution of graduates by qualification levels where African graduates are clustered at the lower qualification levels, comprising only 19 percent of university doctorates and 26 percent masters degrees but 87 percent of undergraduate diplomas and certificates. Secondly they evaluate the overall success rate of the different population groups, and conclude that white students succeeded far better overall in universities (83 percent) than Indians (75 percent), Coloured (72 percent) and African (68 percent), especially in contact mode. The results are far worse for African distance education students. This shows that the majority of Africans acquire lower level qualifications which may not equip them to function at the higher occupational categories in companies. There are also glaring inequalities in the representation of black women and people with disabilities that needs to be proactively dealt with. Therefore what needs to be done is to ensure that more focus is put in leveling the playing fields for the different population groups especially the Africans and Coloureds who are lagging behind in most lifestyle indicators. There are clearly a lot of emotions that these statistics may arouse however a pragmatic and mature approach has to be taken to ensure that progress is made in an equitable manner. A shot-gun approach of breaking down targets according to the different population groups for every indicator of the seven pillars of Broad-based BEE would be cumbersome and complex. However a laisse faire attitude to the issues raised by the status quo is also dangerous because it builds an uncomfortable time bomb that could explode at any time to the detriment of South Africa.