The world is changing fast and to keep up you need local knowledge with global context.
By Alec Hogg
As long-time readers of this missive will know, I’m no fan of urban legends. Especially when they’re trotted out as “fact” by those who should know better. Claims relating to racial participation in the South African economy are among my pet peeves.
This week a good friend who runs a business school told me Whites make up under half his MBA students. On graduation, Black MBAs, he added, get substantially higher salaries. And juicier share options. To say nothing of their participation in share-driven BEE deals. All of which is entirely logical. Demand for Black MBAs reflects the way corporate South Africa is striving toward meeting transformation targets. But this information hasn’t made it to the Presidency. Or if so, is being ignored.
In his response to the State of the National debate this week, President Jacob Zuma told the world “the black majority still owns only three percent of the Johannesburg Stock Exchange, pointing to the need to move faster to achieve meaningful economic emancipation.” Here’s some good news for you, Number One. On Thursday night I asked the JSE’s chief executive Nicky Newton-King if that 3% was accurate. She said the actual number is “much higher”. The updated figure, following extensive research, was released on Friday morning (see full details below). Great timing. Hopefully the news will rapidly permeate through the Presidential information bubble.
From Grant Stevenson
In response to your blog this morning…I think it is “convenient” for the ANC not to get or spread the good news regarding economic transformation (which we all know is actually happening) in order to keep votes of the uneducated/uninformed….however, the emergence of the radical EFF may force them to start disseminating the good news instead in order to gain votes from a strong emerging black middle class and perhaps some white voters. Just my humble opinion.
By the way, I also grew up in Newcastle as you did, went to NHS (but am a few years younger than you J)…you may have known my older brother Dean Stevenson (I think you were in Scouts together?). He is now a very successful Psychiatrist in Melbourne, Australia and I am a graduate Mechanical Engineer with an MBA, self-employed in the micro-economic / enterprise development space, living near Stellenbosch.
Enjoying your daily blogs and views!
From the JSE
Black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange
JOHANNESBURG, 20 February 2015 – As at end 2013, black South Africans hold at least 23% of the Top 100 companies listed on the Johannesburg Stock Exchange. The shares held by black investors includes 10% held directly (largely through BEE schemes) and 13% through mandated investment (mostly through individuals contributing to pension funds, unit trusts and life policies).
White South Africans hold about 22% of the Top 100 companies while foreign investors hold about 39%.
A further 16% of the Top 100 shares which are still to be analysed are likely to include a mix of shareholder demographics, including Black South Africans.
These are the key findings of independent research assessing share economic interest as at 31 December 2013, put together for the JSE by BEE advisory group Alternative Prosperity using data from the JSE, Strate and a large number of investors.
In the previous report published by the researchers, they estimated that black economic interest on the exchange was 21% as at end-2011. This grew to 22% as at end-2012 and 23% a year later. “The shareholder analysis over this period demonstrates that economic transformation is taking place.” says JSE CEO Nicky Newton-King.
The biggest proportion of investment funds of both black and white South Africans is held through mandated investments. Alternative Prosperity estimates that at end-2013 mandated investments accounted for about 37% of total investment into the JSE’s Top 100 companies.
Retirement funds are the biggest South African investors on the stock market, the largest of these being the Government Employee Pension Scheme (GEPF) whose members include most civil servants other than those working for municipalities.
Chairman of Alternative Prosperity and leader of the research team Trevor Chandler estimates that broken down by industry, Financials contribute the most towards BEE economic interest values. The researchers observe that BEE performance tends to do well where industries have significant reliance on sales to government, where BEE plays a role in the granting of business licenses and where sectors have made commitments in terms of sector codes.
Direct investments accounted for about 24% of total South African investment into the Top 100. Of the total 24%, less than a third is owned by individuals with portfolios (or 7% of the total equity capital) made up by black (less than 1% of the Top 100 by value) and white (about 6%).
“Whilst the level of economic interest by black South Africans is linked to our country’s history, the low level of direct participation on the exchange by all South Africans is also linked to generally low financial literacy and related savings,” says Newton-King.
“South Africans are often tentative about investing directly on the market. The financial services industry is working to improve financial literacy; for example the JSE runs directed capital educational programs in schools and universities and to the general public. We are also gearing up to promote the tax free savings accounts for South Africans recently launched by National Treasury, due to kick off in 2015. We believe this will be an important route to encourage more individual saving and investment through the stock market.”
The researchers point out that the value of foreign shareholding over the period increased from 34% in 2011 to 39% in 2013.
Johan Kruger – Deputy General Secretary: Solidarity
President Jacob Zuma is misleading South Africans by claiming that black South Africans own only 3% of the listed share capital on the Johannesburg Stock Exchange (JSE) and, in making such a claim, is fuelling racial tension, trade union Solidarity said today. Zuma made this statement yesterday during his speech following the parliamentary debate on his state of the nation address.
According to Johan Kruger, deputy general secretary of Solidarity, in-depth research by Alternative Prosperity shows that by the end of 2013, black South Africans in fact owned at least 23% of the shares on the JSE. Of this figure, 10% was directly owned by black investors and 13% indirectly owned through mandated investments such as pension funds.
“This does not mean that the remaining 77% was owned by white South Africans. Foreigners owned 39% of the JSE in 2013. A further 16% was in South African ownership, but Alternative Prosperity could not determine which population group owned it. The remaining 22% was owned by white South Africans,” said Kruger.
According to Kruger, Zuma is negating the magnitude of economic change that has occurred already. “The figure of 3% that Zuma cited is not only incorrect, it also creates the misconception that all shares which are not owned by black South Africans are owned by white South Africans.”
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