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South Africa’s economy remains firmly in white ownership — Study

JOHANNESBURG — South Africa’s black majority directly owns less than 10% of the Johannesburg stock market, a study showed on Thursday, evidence that Africa’s top economy remains firmly in white hands nearly two decades after the end of apartheid.

Report by Reuters

Despite the ruling African National Congress’ drive for “black economic empowerment”, under which firms are set black ownership and other targets, millions of blacks remain trapped in poverty and excluded from the formal economy.

Coming less than two weeks before the start of an ANC leadership election conference, the study will increase pressure on ANC President Jacob Zuma for more “black empowerment”, widely criticised for creating a politically connected, self-serving black corporate elite.

In June, Zuma called for a “dramatic shift” to redress the wealth balance in favour of blacks, who account for 80% of South Africa’s 52 million people.

“If you look at the demographics of this country, what would be normal is that no less than 50% of the JSE [Johannesburg Stock Exchange] should be owned by black people,” ANC spokesman Keith Khoza said.

Inequality fuelled labour unrest this year, unleashing a wave of crippling strikes that began in the mining industry and spread for months, unsettling investors.

Frustrated by the slow pace of change, the ANC’s Youth League has called for the wholesale nationalisation of mines and banks and the seizure of white-owned farms — a policy that triggered economic meltdown in neighbouring Zimbabwe in 2000.

The League’s former leader, Julius Malema, was expelled from the party this year but he remains popular among the young and poor, and the JSE figures add weight to his calls for radical redistribution of land and state seizure of the mines.

“If you’re not making changes there then all you have is this cosmetic facade on the JSE — and it’s not even an impressive cosmetic facade,” League spokeswoman Khusela Sangoni-Khawe said.
The JSE-commissioned study showed that black investors directly hold 9% of the bourse’s top 100 companies, which represent nearly 90% of its US$834 billion market capitalisation.

Black ownership rises to 21% when pension funds and other indirect holdings are taken into account, and a heady 33% when foreign holdings of Africa’s biggest stock market are stripped out.

But some experts question the ability to track black ownership through pension funds, which ultimately represent thousands of people, or exchange traded funds.

“I have a problem with what comes after the 9%,” said Duma Gqubule, a consultant who specialises in black ownership issues. “In South Africa, we’d call it manga manga accounting — financial witchcraft.”

Trevor Chandler, the consultant who ran the study, said the research was in line with government guidelines for calculating black ownership that recommend stripping out the value of foreign holdings.

Despite the ANC’s misgivings, a black business lobby group said the incremental progress made had hammered home the need to redress three centuries of white economic dominance.

“There’s reasonable progress in the level of ownership by black people, notwithstanding the fact that the economy has not grown significantly over the last year,” Sandile Zungu, head of the Black Business Council, told Talk Radio 702.

“What that really means is that there’s beginning to be an attitude among South Africans that we have to transform the economy.”

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2 Responses to South Africa’s economy remains firmly in white ownership — Study

  1. Ollie Olwagen December 9, 2012 at 10:21 pm #

    One should never forget the cultural differences that do exist in South Africa — high finance and investments have a long way to go before filtering into the mindset of rural communities where wealth still means owning much cattle. Westerners in Europe and elsewhere do not quite understand the African way of life, while politicians play their own game by promising the moon to the unprivileged. Nobody seems to understand that black empowerment will only come through massive education and not through economic handouts to the disadvantaged.

  2. Nkululeko Dube December 13, 2012 at 1:26 pm #

    Education plus sound economic & political policies create the right environment. Education alone will create a frustrated mass of under employed people as in Zimbabwe!

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