No room for compromise
It’s pointless for the JSE to keep pussyfooting around with two sets of “research” – only one of which deserves the appellation – on the number of black South Africans invested in the local bourse. There’s the independent research headed by Trevor Chandler of Alternative Prosperity (AP), which bears the hallmarks of reliable interrogation, and something else by the National Empowerment Fund (NEF), which doesn’t.
Both cannot be correct in their conclusions because the differences between them are vast. Either black South Africans own at least 23% of the JSE’s top 100 listed companies; probably closer to 30% once analysis is completed on some outstanding share registers, and perhaps more like 40% of available shares after foreign investors are excluded (according to AP). Or they own 3% (according to the NEF).
The debate defies an academic nit-pick through diverse methodologies equally robust. The stakes, in endorsing the one side or the other, are high and immediate. With government flopping this way and that on what it wants black economic empowerment to mean, it gets to the root of BEE’s future shape with profound impacts on corporate governance. For mandated investments, specifically pension funds that have millions of members, the outcome can also determine whether their shareholdings are at risk of further dilution.
For the first time, according to AP, the number of black South Africans holding shares on the JSE had overtaken the number of white. This was more because of their holdings in mandated investments, inclusive of pension funds in the public sector, than through BEE structures. Shareholders were determined by economic interest i.e. the right to receive dividends, irrespective of how.
The AP research had been commissioned by the JSE. It set out to measure, conclusively and credibly, the extent of transformation in shareholdings. In proudly announcing the findings, JSE chief executive Nicky Newton King could scarcely have anticipated government’s response. Within a matter of days, President Jacob Zuma himself bounced back to contradict them by producing and endorsing the NEF conclusions.