JOHANNESBURG – National Treasury says if the country wants meaningful and sustainable economic transformation, it would be a mistake to only focus on ownership.
Treasury recently released a commissioned research document to assess ownership targets as part of its work on transformation in the financial sector.
The research report found that South African retirement funds owned 24% of shares in South African companies listed on the Johannesburg Stock Exchange.
Other local institutional investors and investment managers owned a further 24%.
Foreign investors own 38%.
Only 14% of the shares were directly owned by corporates, trusts or individuals.
Treasury says there’s too much emphasis on company ownership to measure economic transformation.
According to Ishmael Momoniat, Treasury’s Deputy Director-General, ‘What we’re saying is aside from ownership we need to look at management, (and) we need to look at how company procure. Do they use small companies? Do they use black businesses? So you need to look at other elements. Is the company trying to employ more people? Is it adding value to the economy, to GDP?”
The JSE has put black economic empowerment (BEE)-direct ownership at 10%, with a further 13% in indirect ownership.
Treasury says local institutional ownership of South African companies, as well as foreign ownership, plays an important role in growing the economy.
‘Foreign investment is very important to the economy, because we as South Africans don’t save,” says Momoniat.
“It’s mainly your household savings that are used to invest in your economy. We only invest something like 19.5% of GDP. When you compare this to countries like China and India, which are high growth economies, they invest about 30% of GDP.”
The largest single shareholder on the JSE is the Government Employees Pension Fund.
It holds 11% of the top 25 listed companies.
But, major black shareholders with stakes of more than five percent represented only one percent of ownership.
Treasury says most BEE deals are funded.
The department says it’s difficult to measure how much net asset wealth was held by black investors after borrowing was factored in.
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