Sanlam Transformation Gauge: Is policy keeping pace with industry change?

The third edition of the Sanlam Transformation Gauge is set to provide clarity on the performance of broad-based BEE in SA through a comprehensive economic transformation scorecard of the country. The report will be published by Sanlam, the largest non-banking financial services group in Africa, in partnership with the Sunday Times Business Times.

Since legislated in 2003, BBBEE has faced severe headwinds. This has ranged from it being connected to corruption and state capture to a disillusioned, unempowered majority of South Africans who have watched the policy fall short of its expected outcome to achieve financial equality and inclusion. 

Andile Khumalo, co-founder of the Sanlam Transformation Gauge and CEO of KhumaloCo says, the negative national conversation surrounding economic transformation calls for an objective assessment of its performance and proposals for interventions and course corrections. This will be provided by the Sanlam Transformation Gauge 2023. 

With sector-specific analysis, the report will pose the burning question: “Is BEE policy keeping pace with major changes in industries?” It will assess the unseen solutions that could solve persistent policy uncertainty regarding procurement and other areas of BEE.

“This next edition will continue in the same vein as the past two iterations, with tightly defined views of how sectors in SA are transforming and where they are being hindered. This has the power to enable key players to work together to action meaningful inclusivity, growth and transformation within their industries.” 

Khumalo says a key theme that emerged in the 2022 Sanlam Gauge Report was that an overhaul of the BBBEE framework was necessary to improve transformation. “We believe this is going to develop into an important issue in the short term.” 

The Sanlam Transformation Gauge 2023 pursues a current view across ownership, management control, skills development, enterprise supplier development (ESD) and socioeconomic development, to inform industry and country conversations. One consistent theme is that the reality on the ground is worse than the scorecards suggest. 

Adding to the robust insight of the intelligence report and to stimulate the debate over the future direction of transformation policies, the Sanlam Transformation Gauge 2023 will include results of a survey that canvasses the views of BBBEE verification agencies. These agencies, through their interactions with businesses across all sectors, are at the forefront of measuring BBBEE in companies and are acutely aware of the challenges affecting transformation. 

Like the second iteration, the panel of economic and social development experts will put forward actions for progress in the annual publication. For example, the 2022 edition highlighted the lack of a credible and effective national measurement process for BBBEE. The report indicated that ESD was the second-worst performer in the country and, in February 2023, the BBBEE Commission released an ESD research report with a focus on “how ESD funds can be effectively implemented for the purposes of promoting the development and growth of black-owned businesses”. 

There is no doubt in the minds of BBBEE experts that changing how we unlock ESD offers huge potential for inclusive economic growth. Ray-ann Sedres, chief transformation officer at Sanlam, says procuring from small black-owned businesses, providing support and developing new enterprises is solid in principle and, if effective, would generate a strong base of small businesses that would grow and employ more people. This would address SA’s triple challenge of poverty, inequality and unemployment. 

“We need to work with the BBBEE Commission and sector councils to overcome the barriers being encountered in measuring transformation. The Sanlam Transformation Gauge continues to facilitate debate on the pace of socioeconomic transformation of the SA economy, drive action that propels the country towards a more inclusive economy, and to safeguard the integrity of the original intent of the BBBEE legislation.” 

The Intellidex-led research relies on BBBEE scorecards from companies, grouped into sectors using the International Standard Industrial Classification codes. It reports across 11 sectors of the BBBEE classifications system: agriculture; construction; defence; finance; forestry; information communications technology; integrated transport; marketing, advertising & communications; property and tourism — the Sanlam Transformation Gauge reflects a national picture of transformation.

The third Sanlam Transformation Gauge event will take place on July 18 2023, presented by Arena Events. This will be followed by the publication of the highly anticipated research findings in the Sunday Times Business Times. 

Click here to reserve your free virtual ticket to the Sanlam Transformation Gauge launch.

This article was sponsored by Sanlam Gauge.