/ 7 September 2010

Black ownership defies calculation

‘Are the figures accurate? No, of course they are not accurate — even this is wrong, but it’s a lot more right than the others,” said Russell Loubser, chief executive of the JSE.

He was speaking at a media briefing on Wednesday afternoon on the findings of the JSE’s initial study into black ownership of companies listed on the exchange. The study revealed three different figures: 8% of the top 100 companies listed on the exchange are directly owned by black people.

But when calculated in accordance with the department of trade and industry’s black employment equity code of good practice, the figure was 18% black ownership. And when the research team removed foreign ownership from the equation it found that 36% of available share capital was held by black shareholders.

The JSE compiled the report in collaboration with independent research house Trevor Chandler and Associates and it was overseen by the independent BEE verification agency, AQRate. The shareholder data was supplied by the JSE and was extracted on March 12 this year.

Chandler argued that the statistics were far more accurate than previous ones. . “No one else had access to this data.” Listed companies were asked to provide information which was independently audited and verified. Their annual reports were also reviewed.

“Eight percent is as firm as it [the number] can be based on the research. The other figures are derived,” said Loubser. “For every complicated problem there is a simple answer; the only problem is that it is wrong. “This is just a small portion of the bigger picture,” he said, referring to private (non-listed) companies, which were not part of the report.

Shares directly held by investors — understood to be less than 10% of the total — were also excluded. Chandler said that the figure for black ownership may actually be higher. The study, he added, had not looked at financing. ‘A lot of equity on the JSE is encumbered; debt is a necessary precursor to empowerment. “We haven’t even touched on the voting rights attached to economic interest,” Loubser said.

The number of black people who share this portion of wealth was also not revealed in the report. When asked why the JSE decided to look at the top 100 listed companies but not the remaining 360, Loubser explained the top 100 accounted for 85% of the exchange’s total market capitalisation.

Earlier this year empowerment ratings agency Empowerdex put black shareholders at 1.6% of JSE-listed shares. Trade union Solidarity has calculated a figure of 23.8% black ownership of JSE companies, based on “participation and ownership of financial products”.