Submission on Public Sector - JSE - Insurance to NDP

01 April 2012
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BLACK ADVANCEMENT MONITOR (BAM)
PROJECT REPORT
PHASE 1
THE PUBLIC SECTOR, THE JSE AND INSURANCE
Vivian Atud, 2009
2
Contents
1 Introduction _____________________________________________________ 3
1.1 Black Advancement Monitor (BAM) __________________________________ 3
1.2 Black Advancement Index (BAI) _____________________________________ 3
1.3 The use of terminology _____________________________________________ 3
1.4 Background to study _______________________________________________ 4
1.5 Data collection methodology _________________________________________ 5
1.5.1 The public sector __________________________________________________ 5
1.5.2 The JSE and insurance ownership6 ____________________________________ 6
2 Black advancement in the public sector_______________________________ 6
2.1 South Africa’s population racial analysis _______________________________ 6
2.2 Black advancement in the public sector_________________________________ 7
2.2.1 Racial representation in the public service ______________________________ 7
2.2.2 Analysis of selected government departments____________________________ 9
2.2.2.1 Department of Correctional Services ___________________________________ 9
2.2.2.2 Department of Foreign Affairs_______________________________________ 10
2.2.2.3 Department of Defence ____________________________________________ 12
2.2.2.4 Department of Public Enterprise _____________________________________ 13
2.2.2.5 Department of Housing (Department of Human Settlement) _______________ 15
2.2.2.6 Department of Justice and Constitutional Development ___________________ 16
2.2.2.6.1 Department of Justice and Constitutional Development ___________________ 16
2.2.2.6.2 High Court judges ________________________________________________ 18
2.2.2.7 Department of Provincial and Local Government ________________________ 18
2.2.2.8 The National Treasury _____________________________________________ 20
2.2.2.9 Government Communication and Information System Department __________ 21
2.2.2.10 Independent Complaints Directorate __________________________________ 23
2.2.2.11 Department of Science and Technology _______________________________ 24
2.2.2.12 Department of Home Affairs ________________________________________ 25
2.2.2.13 South African Revenue Service (SARS) _______________________________ 27
2.2.2.14 National Intelligence Authority (NIA)_________________________________ 27
2.2.2.15 Department of Trade and Industry (DTI) ______________________________ 28
2.2.3 Conclusion on black advancement in the public sector ____________________ 29
3 The Private Sector
– Ownership of the Johannesburg Stock Exchange (JSE) _______________ 30
3.1 South African Reserve Bank (SARB) _________________________________ 30
3.2 Foreign ownership ________________________________________________ 31
3.3 Black financial product penetration ___________________________________ 32
3.4 Unit trusts_______________________________________________________ 34
3.5 Actual ownership of the JSE ________________________________________ 34
3.6 Conclusion ______________________________________________________ 35
4 Recommendations on how to achieve sustainable Black advancement ____ 35
4.1 GDP/real disposable income per capita _______________________________ 36
4.2 The question of the income gap ______________________________________ 37
References ______________________________________________________ 38
3
BLACK ADVANCEMENT MONITOR (BAM)
1 Introduction
The aim of this project is to measure in an accurate, comprehensive and objective
manner and to continue to monitor Black Advancement in South Africa as a result of
changes brought about by democracy.
What is black advancement? There is no consensus on this topic, but in the context of
this study it will mean true progress in all aspects (economic, social, political etc) made
by Blacks compared to other racial groups since 1994.
1.1 Black Advancement Monitor (BAM)
BAM will provide statistical evidence of the progress made by black South Africans
alongside other racial groups since 1994. Research will be broken down into several
phases, each phase concentrating in a certain sector of the economy. In this study,
PHASE I, the sectors covered are:
The Public sector,
Black ownership of the JSE,
Ownership of insurance policies.
1.2 Black Advancement Index (BAI)
Using the above cornerstones as a compass, an index of black advancement will be
constructed.
In order for a sector to achieve a high BAM rating, its data must show that, since the
transition to democracy, there has been a real increase in the number of Blacks
(Africans, Asians and Indians) employed and appointed to the various levels of decision
making, as well as an improvement in the quality of black advancement (such as greater
ownership of assets and participation in decision making) compared to Whites. Tables
and graphs will be used to demonstrate the level and/or progress made in black
advancement in a given sector.
1.3 The use of terminology
This study uses data covering the years 1993 to 2008. Over this period there has been a
change in the meaning of given terminology with reference to the use of ‘Indian/Asian’
and ‘African/Black’. This clarification is very significant for the understanding of this
report.
Before the introduction in 1998 of the Employment Equity Act and new reporting
4
structures enforced by the government, most government departments generally used
the word ‘Black’ to refer to black (skin colour) South Africans and ‘Asian’ when
referring to South Africans of Asian descent.
After 1998, the reporting structure changed with the specification of ‘African’ to refer to
black (skin colour) South Africans and included two additional categories, ‘Indian’ and
‘Coloured’. These three classifications make up what is now called ‘the broad definition
of Black’ in South Africa today. White refers to South Africans with white skin colour.
In this study, the following classification of the various racial groups will be used,
African, Coloured, Indian (includes all Asians), and White. When Black is used, it will
represent all previously marginalised groups, African, Indian, and Coloured.
It must also be noted that in line with the use of Black before 1998, the general public
sector as at 1994 and 1996 will be analysed where Black refers to black skin colour.
1.4 Background to study
Racial segregation has been one of the defining characteristics of South Africa.
Apartheid structures seriously limited the economic and social opportunities of NonWhites,
leaving few from this vast group able to participate in the formal1
economy.
Since the transition to democracy, new administrations have taken on various initiatives
to adjust this skewed racial profile. From policy changes in personnel recruitment to
how suppliers of goods and services are selected or what type of enterprise development
and social engagement is to be conducted, these administrations have taken a keen
interest in reorganising South Africa’s social, political, and economic structures.
But what have been the benefits of these actions? Have the people who were previously
disadvantaged by the policies of the apartheid regime gained from new-found freedom
and new policies? There appears to be no consensus regarding the extent to which or the
mechanisms through which previously disadvantaged South Africans have benefited
from the transition to democracy. Some authors argue that freedom from apartheid has
not had a substantial impact on the social and economic development of Black South
Africans. Others hold the view that for these people to succeed, they need further
government assistance through programmes such as Reconstruction and Development
Programmes (RDP) and Black Economic Empowerment (BEE).2
Yet there are others
who think that the core ingredients for the true realisation of human potential is
economic freedom and the development of a strong legal framework, a robust
infrastructure, and human security.
This study. Phase I, documents the actual progress made by the different racial groups

1
Formal economy refers to all economic activities that are officially registered to operate and counted/recorded in
government statistics, while informal businesses are often not registered, do not pay tax, and yet contribute to the
economy.
2 Broad definition of Black includes Indian and Coloured.
5
in the Public Sector, the JSE and Insurance Funds since the transition to democracy.
First, it examines historical data on racial disaggregation of the employee base of the
sectors concerned to assess what changes have occurred in the racial profile of their
workforce. Second, it considers what the impact of these changes has been on the
broader political economy. Third, it explores alternatives to the current model for
addressing past wrongs.
1.5 Data collection methodology
1.5.1 The public sector
In 1994, the South African government consisted of 28 departments. During the past
three administrations, the number fluctuated, with departments having to amend their
titles and functions to accommodate the changes. This year, 2009, on his election,
President Zuma and the current administration announced and put into action the
establishment of more departments, so that, today, the public service consists of 40, an
increase of 42%.3 Again, to accommodate this increase, many existing departments have
had to undergo a change in title and function.
This observation is important as it reveals the difficulty of researching each and every
department since the transition to democracy. It would be an arduous task to institute
corrections at each interval where titles and functions changed. This would also leave
some room to question the validity and reliability of the findings. Instead, this study will
analyse first the entire public service as at 1996 (two years into the transition to
democracy) to obtain an initial view of the public service. Secondly, key departments,
many of which have seen minimal change over the last 15 years, have some publicly
available data, perform core functions of the State, and have a large employee base and
are therefore more representative of the Public Sector, will be analysed.
The departments selected were: Correctional Services, Foreign Affairs, Defence, Public
Enterprises, Housing, Justice and Constitutional Development, Provincial and Local
Government, National Treasury, Government Communication and Information
Systems, Independent Complaints Directorate, Department of Science and Technology,
Home Affairs, Department of Trade and Industry, as well as the National Intelligence
Agency (NIA), and the South African Revenue Service (SARS).4
The data as documented in the Human Resource Management Section of the
departments’ annual reports was used to analyse the change of race composition within
each department. The graphs used to illustrate the racial transformation in the various
sectors were drawn by the author.
Two levels of analysis are presented. The first is of Black representation as a percentage

3
See http://www.info.gov.za/aboutgovt/dept.htm.
4 The choosing of these departments does not imply that other departments perform a lesser role in the functioning
of the government.
6
of the total employee force compared to that of White. The second examines the
advancement of Blacks to top management and decision-making positions.
1.5.2 The JSE and insurance ownership
As far as information on JSE share ownership is concerned, the data was collected from
Who Owns Whom in South Africa. Data from 1987 to 2007 was disaggregated
according to ownership. Data from the South African Reserve Bank quarterly reports
and Cazenove’s5
report was also used to further disaggregate the JSE material to obtain
a clearer understanding of the ownership structure and to measure Black ownership on
the JSE and of other financial products such as insurance policies.
2 Black advancement in the public sector
2.1 South Africa’s population racial analysis
Figure 1 shows that since 1993 there has been growth in the SA population in all racial
groups. The Black population increased by 2.3%, the Coloured population by 1.68%,
the Indian population by 1.19%, and the White population by .01%.
Figure 1: SA percentage population increases from 1993-2007
Source: South African survey 2008 Stats SA

5 Cazenove report (2002): Black economic empowerment, South Africa Economic Research, Oct, 2002
7
2.2 Black advancement in the public sector
The public sector consists of 40 government departments, parastatals, government
agencies and employs a significant portion of the labour force of South Africa. This
makes it a good focus for the purpose of this study
2.2.1 Racial representation in the public service
Comparison between 1994 and 1996
Figure 2: Percentage racial representation in the public service 1993/1994
Source: Data from Payroll Statistics 1993/994
Figure 2 shows that Africans made up 42% of the public service in 1994. Indian
representation was 2%, Coloured representation 4% and White representation 52%.
Africans made up 90% at lower skilled levels of the public service, against 1% Indians,
7% Coloureds and 2% Whites. At the skilled level, Africans made up 24%, Indians 8%,
Coloureds 10% and Whites 58%. At management level, Africans made up only 10% as
compared to 3% Indians, 2% Coloureds and 85% Whites. And at senior management
level, Africans made up 6%, Indians 1%, Coloureds 2% and Whites 91%.
In 1993/1994, at the time of the transition to democracy, Blacks were not well
represented in management, especially top management positions, leaving much room
for advancement.
8
Figure 3: The South African public service employees by race 1996
Source: Pay roll stats November 1996
Figure 3 shows that of the total workforce in the public service in 1996, 65% were
Africans (775.956), 3% Indians (39,845), 9% Coloureds (110,221) and 23% Whites
(269,816). At the lower skilled levels, Africans still made up the majority, 83% against
2% Indians, 9% Coloureds and 6% Whites At the skilled level, they made up 63%,
Indians 4%, Coloureds 9% and Whites 24%. African representation at management and
senior management levels was 33%, compared to 5% Indians, 7% Coloureds and 55%
Whites, and 32% compared to Indian 3%, Coloured 2% and White 63% respectively.
From the above, it can be noted that there was an immediate change in the composition
of the public service. By 1996, more Blacks filled the various positions in the public
sector from lower skilled levels to senior management.
African representation increased from 42% in 1994 to 65% in 1996, Indian from 1% to
2%, and Coloured from 7% to 9%, while White representation decreased from 52% to
43%.
The following changes in representation at management and senior management
positions also took place. African representation increased from 10% in 1994 to 33% in
1996 of management, Indian from 3% to 5%, Coloured from 2% to 7%. Again White
representation decreased from 85% to 55%. At senior management A increased from
10% in 1994 to 33% in 1996, Indians from 1% to 3%, Coloureds remained the same at
2%, and Whites decreased from 91% to 63%.
9
In two short years, overall in the Public Service, Black advancement took place at quite
a rapid rate.
10
2.2.2 Analysis of selected government departments
2.2.2.1 Department of Correctional Services
Figure 4: Racial representation at the department of correctional services 1994-2008
Source: Data from department of correctional services annual reports, 1994-2008
In Figure 4, it is shown that since 1994 there has been a continuous increase in the size
of the Department of Correctional Services. While White representation decreased from
13,360 (40%) in 1994 to 6,117 (14%) in 2008, African representation increased from
12,139 (37%) in 1994 to 29,914 (70%) in 2008 (an increase of 33%). Indian and
Coloured representation differed slightly from 3,994 (12%) and 3,670 (11%) in 1994 to
656 (2%) and 5,845 (14%) in 2008 respectively.
The increase in Black representation in this department shows that there has been Black
advancement from 1994 to the present. To better examine the degree of Black
advancement to managerial positions, the 2007/2008 data was decomposed further to
reveal the representation of the various racial groups at different levels of management.
11
Figure 5: Racial representation by occupation level at the Department of Correctional
Services 2007/2008
Source: Department of Correctional Services annual report 2008
Of the workforce total of 40,530 in the Department of Correctional Services in 2008,
Africans make up (27,914) 69%, Whites (6,117) 15%, Indians (656) 2% and Coloureds
(5,543) 14%. In top levels of management, Africans make up 69% of the legislators,
senior officials and managers, Whites 15%, Indians 2%, and Coloureds 13%. In 1996
African representation was only 33% in top managerial positions. In terms of the
broader definition of Blacks, Black advancement has taken place in this department
since Blacks, Indians and Coloureds now make up 85% of the workforce at top
managerial level.
2.2.2.2 Department of Foreign Affairs
Figure 6: Racial representation at the Department of Foreign Affairs 1994-2008
Source: Department of Foreign Affairs annual reports 1994-2008
12
In between the years 1994 and 2008, African representation at the Department of
Foreign Affairs increased from 620 (42%) to 1,449 (66%), and Coloured from 40 (4%)
to 98 (5%) but Indian representation decreased from 85(6%) to 94 (4%) and that of
Whites from 710 (48%) to 557 (25%).
These figures indicate that generally there has been significant Black advancement in
this department but in order to establish whether Black advancement has occurred in
managerial positions further disaggregation of the 2007/2008 data was required.
Figure 7: Racial representation by occupation level at the Department of Foreign Affairs
2007/2008
Source: Department of Foreign Affairs annual report 2008
Out of the 2,198 employees of the Department of Foreign Affairs as at 2008, 1,449
(66%) were African, 557 (25%) White, 94 (4%) Indian, and 98 (5%) Coloured. Africans
represent the majority at all levels of employment. They are also the most represented at
the top management level at 66%, with Whites 23%, Indians 7% and Coloureds 4%.
This again shows significant Black advancement from the 33% in 1996 to 77% using
the broad definition of Blacks, or 66% advancement for Africans only.
13
2.2.2.3 Department of Defence
Figure 8: Racial representation at the Department of Defence 1994-2008
Source: Department of Defence annual report 2008
Figure 8 shows that the Department of Defence grew from a total workforce of 73,285
in 1994 to 92,855 in 2008. White representation decreased from 28,730 (39%) in 1994
to 13,474 (15%) in 2008, but African representation increased from 35,690 (49%) in
1994 to 69,179 (74%) in 2008. Indian and Coloured representation remained fairly
stable with only slight changes from 732 (1%) in 1994 to 875 (1%) in 2008 and 8,133
(11%) in 1994 to 9,335 (10%) in 2008 respectively. While generally there has been
Black advancement in this department since 1994, Figure 9 examines whether there has
been an increase in the number of Blacks employed in top managerial positions.
14
Figure 9: Racial representation by occupation level at the Department of Defence
2007/2008
Source: Department of Defence annual report 2008
Figure 9 shows that out of a total labour force consisting of 92,855, Blacks are well
represented at all levels of management.
Africans in top management positions represent 76% (22 of the 29 officials), Whites
represent 17%, Indians 7%, and there are no Coloureds. According to the broad
definition of Black, Blacks then represent 85% of the total workforce, and 83% of top
management in the Department of Defence. A significant advance from 9% in 1994 to
85%.
2.2.2.4 Department of Public Enterprise
Figure 10: Racial representation at the Department of Public Enterprise 1994-2008
Source: Data from Department of Public Enterprise annual reports 1994-2008
15
Figure 10 illustrates that between 1994 and 2008, in the Department of Public
Enterprise, White representation decreased from 60 (56%) in 1994 to 20 (20%) in 2008,
and that of Indians and Coloureds increased from 3 (3%) in 1994 to 8 (8%) in 2008 and
from 4 (4%) to 19 (19%) respectively, African representation increased from 40 (72%)
to 98 (68%).
There has been significant Black advancement in this department, since, in 1994, Blacks
represented only 42% of the public service of which a majority were at the lower skilled
level and by 2008 the representation increased to 80%. The decrease in African
representation between 2004 and 2008 could be an indication that the department was
trying to reduce in size to increase efficiency.
Despite the increases in Black representation in the Department of Public Enterprise
since 1994, this cumulative figure may be misleading as the increases in the number of
Blacks may not mean advancement to managerial positions. To better understand the
degree of Black advancement to various managerial positions, the 2007/2008 data was
decomposed to show representation of the various racial groups at different levels of
management in the department.
Figure 11: Racial representation by occupation level at the Department of Public
Enterprise 2007/2008
Source: Department of Public Enterprise annual report 2008
Out of the 145 employees of the Department of Public Enterprise, Africans represent
68% (98), Whites 14% (20), Coloureds 13% (19), and Indians 5% (8). It could also be
noted that Blacks are in the majority at all levels of management in this department.
Black advancement to top managerial positions is represented by 52% for Africans,
12% Coloureds and 9% for Asians, totalling 73%. Whites form 27% of top
management.
16
2.2.2.5 Department of Housing (Department of Human Settlement)
Figure 12: Racial representation at the Department of Housing 1994 – 2008
Source: Department of Housing (now Human Settlement) annual reports 1994-2008
Figure 12 shows that African representation increased from 96 (45%) in 1994 to 221
(72%) in 2008, Indians and Coloureds increased slightly from 11(5%) and 6(3%) in
1994 to17 (5%) and 10 (4%) in 2008 respectively. The figure highlights an abnormal
increase in employee size in 2005. In this year alone the number of Africans in this
department increased from 174 to 856, Coloureds from 10 to 165, and Indians from 17
to 21. Africans are the dominant racial group in this department.
To assess whether these increased figures mean an advancement to decision making
positions by the various racial groups, the 2007/ 2008 data was decomposed to show
racial representation at various managerial levels. One must also note that the name of
the Department of Housing has been changed to the Department of Human Settlement
by the Zuma administration.
17
Figure 13: Racial representation by occupation level at the Department of Housing
2007/2008
Source: Department of Housing annual report 2008
According to Figure 13, out of the 303 employees in the Department of Housing, 221
(73%) were Africans, 11 (4%) Coloureds, 17 (5%) Asians, and 54 (18%) Whites.
Blacks are dominantly represented at all levels of management. At the top level of
management, Blacks represent 81% (Africans 58%, Coloureds 7% and Asians 16%) and
Whites 19%. This Department therefore also shows significant Black advancement at
81%, compared to 33% in the public service in 1996.
2.2.2.6 Department of Justice and Constitutional Development
2.2.2.6.1 Department of Justice and Constitutional Development
Figure 14: Racial representation at the Department of Justice and Constitutional
Development 1994-2008
Source: Department of Justice annual reports 1994-2008
18
From Figure 14, it can be seen that there has been significant Black advancement in
the Department of Justice and Constitutional Development. While White
representation decreased from 2,539 (22%) in 1994 to 22 (13%) in 2008, African
representation increased from 7,100 (61%) in 1994 to 10,438 (72%) in 2008. Indian
representation remained fairly stable with a slight decrease from 890 (5%) in 1994 to
665 (10%) in 2008 and that of Coloureds from 1,100 (9%) in 1994 to1,508 (5%) in
2008.
Despite the increase in Black representation in the Department of Justice and
Constitutional Development, this cumulative figure may be misleading because the
increases in the number of Blacks may not mean advancement to managerial
positions. To better understand the degree of Black advancement to various
managerial positions, the 2007/2008 data was decomposed to show representation of
the various racial groups at different level of management in the department as
illustrated in Figure 15.
Figure 15: Racial representation by occupation level at the Department of Justice and
Constitutional Development 2007/2008
Source: Department of Justice and Constitutional Development annual report 2008
From Figure 15 it can be noted that generally Blacks (African, Asian, and Coloured)
are the dominantly represented population group in the Department of Justice.
Africans represent 10,438 (72%) of the total employees, while Whites represent a
mere 1,878 (13%), Coloureds 1,508 (10%), and Indians 665 (5%) of the 14,489 total
employees of the Department. At top management level, Africans represent 42%,
Whites 41%, Coloureds 8% and Indians 9%. At the top level of management in this
department, Blacks represent 59% as against 41% White. There is also significant
Black advancement in this department compared to the 1994 figures.
19
2.2.2.6.2 High Court judges
Figure16: Appointment of High Court judges by race 1994-2005
So
urce: 2006/2007 SAIRR South Africa Survey, p466; South Africa Yearbook
2006/2007, p392
Figure 16 shows that since 1994 there has been an increase in the appointment of
high court judges in all racial groups. According to the trend line equations over the
years, the rate of increase in the appointment of Black judges to the high court is
0.7063, while that for White judges is 0.639. Black advancement has therefore taken
place in terms of the appointment of high court judges. The growth is calculated
using the equation y = 0.7063x + 5.2424. In lay language, the graph shows about a
third fewer white judges appointed at the end of the period and a four-fold increase in
the appointment of black judges.
2.2.2.7 Department of Provincial and Local Government
Figure 17: Racial representation at the Department of Provincial and Local Government
2004-2008
20
Source: Department of Provincial and Local Government annual reports 2004-2008
Figure 17 shows that although the number of White employees in this department
increased from 55 in 2004 to 56 in 2008, White representation decreased from 14% in
2004 to 13% in 2008. African representation though increased from 298 (77%) in 2004
to 334 (79%) in 2008. Indian representation remained fairly stable with only a slight
increase from 9 (2%) in 2004 to 11 (3%) in 2008. Coloured representation decreased
from 26 (7%) in 2004 to22 (5%) in 2008. In general, some Black advancement has
taken place in this Department.
To find out the degree of Black advancement to various managerial positions, the
2007/2008 data was decomposed to show representation of the various racial groups at
different levels of management.
Figure 18: Racial representation by occupation level at the Department of Provincial
and Local Government 2007/2008
Source: Department of Provincial and Local Government annual report 2008
The labour force in the Department of Provincial and Local Government numbered 433,
of which 344 are African (79%), 56 White (13%), 22 Coloured (5%), and 11 Asian
(3%). At the top management level, Africans represent 67%, Whites 19%, Indians 6%,
and Coloureds 8%. Black representation is 81% at top management level and 87%
generally. This therefore represents significant Black advancement from 1994.
21
2.2.2.8 The National Treasury
Figure 19: Racial representation at the National Treasury 1994-2008
Source: Data from the National Treasury annual reports 1994-2008
From Figure 19 one can see that there has been significant Black advancement in the
National Treasury. White representation decreased from 281 (46%) in 1994 to 222
(27%) in 2008, but African representation increased from 253 (41%) in 1994 to 454
(56%) in 2008. Indian representation increased from 41 (7%) in 1994 to 64 (9%) in
2008 and Coloured from 38 (6%) in 1994 to 73 (9%) in 2008. Some Black
advancement has taken place in this department from 1994 to the present.
To find out the degree of Black advancement to various managerial positions, the
2007/2008 data was decomposed to show representation of the various racial groups at
different levels of management.
22
Figure 20: Racial representation at different occupational levels the National Treasury
2007/2008
Source: National Treasury Annual Report 2008
From Figure 20 one can see that from out of 813 employees, 454 (56%) are Africans,
222 (27%) Whites, 73 (9%) Coloureds, and 64 (8%) Indians. Blacks are well
represented at all levels. At top management level, Africans represent 42%, Indians
25%, and Whites 33%. Black representation at top management positions, therefore, is
67%. So here again there is a significant level of Black advancement compared to the
1994 situation.
2.2.2.9 Government Communication and Information System Department
Figure 21: Racial representation in the Government Communication and Information
System Department 1994-2008
Source: Government Communication and Information System Department annual
reports 1994-2008
23
The Government Communication and Information System Department is a strategic
department of state. Figure 21 shows that the majority of employees in this department
are Africans. Compared to other groups, representation of Africans grew steadily from
240 (67%) in 1994 to 325 (77%) in 2008, Indian and Coloured representation remained
fairly stable from 7 (2%) to 11 (2%) and 30 (8%) to 37 (9%) in1994 and 2008
respectively. White representation decreased from 82 (23%) in 1994 to 50 (12%) in
2008.
Significant Black advancement took place in this department in terms of numbers. To
examine Black advancement to managerial positions, the 2008 data was decomposed to
show representation at various managerial positions.
Figure 22: Racial representation by occupation level at the Government Communication
and Information System Department 2007/2008
Source: Government Communications and Information System Department annual
report 2008
Figure 22 shows that of the Government Communication and Information System
Department’s 423 employees, 325 (77%) were Africans, 37 (9%) Coloureds, 11 (2%)
Indians and 50 (12%) Whites. Blacks are the dominant group at all levels in this
department. Black advancement to top management level is significant since Blacks
broadly represent a total of 93% (56% African, 17% Coloured, 20% Indian) with
Whites representing only 7%.
24
2.2.2.10 Independent Complaints Directorate
Figure 23: Racial representation at the Independent Complaints Directorate 1994-2008
Source: Independent Complaints Directorate annual reports 1994-2008
From Figure 23 we can see that there has been significant Black advancement in the
Independent Complaints Directorate. While White representation decreased from 42
(29%) in 1994 to18 (8%) in 2008, African representation increased from 82 (57%) in
1994 to 194 (82%) in 2008. Indian representation decreased from 9 (6%) in 1994 to 8
(5%) in 2008 and Coloured representation increased from 10 (7%) in 1994 to 17 (7%) in
2008.
To find out whether the increase in Black representation means there was black
advancement to managerial positions, the 2007/ 2008 data was decomposed to show
representation of the various racial groups at different levels of management.
Figure 24: Racial representation by occupational levels at the Independent Complaints
Directorate 2007/2008
Source: The Independent Complaints Directorate annual report 2008
25
Figure 24 shows that out of the 237 employees in the Independent Complaints
Directorate, 194 (82%) were Africans, 17 (7%) Coloureds, 8 (3%) Indians, and 18 (8%)
Whites. The top management representation proportion is 94% Black to 6% White. This
shows significant control and advancement by Blacks.
2.2.2.11 Department of Science and Technology
Figure 25: Racial representation at the Department of Science and Technology
1994-2008
Source: Data from Department of Science and Technology annual reports 1994-2008
Figure 25 shows that from 1994 to 2008, African representation in the Department of
Science and Technology increased at a rate greater than the decrease in White
representation. The representation of Africans increased from 86 (49%) in 1994 to 454
(87%) in 2008, Indians from 10 (6%) to 18 (8%) and Coloureds from 6 (3%) to 20 (6%)
while White representation decreased from 72 (41%) to 31 (6%).
Blacks are the dominant group represented in the Department of Science and
Technology. To analyse the advancement of Blacks to various managerial positions, the
data for 2007/2008 was decomposed into representation at various levels of
management.
26
Figure 26: Racial representation by occupation level at the Department of Science and
Technology 2007/2008
Source: Department of Science and Technology annual report 2008.
With reference to Figure 26, out of a labour force consisting of 324 employees in the
Department of Science and Technology, 255 (79%) were Africans, 20 (5%) Coloureds,
18 (6%) Indians and 31 (10%) Whites. The top management level of this Department is
completely controlled by Blacks (80% African and 20% Coloured).
2.2.2.12 Department of Home Affairs
Figure 27: Racial representation at the Department of Home Affairs 1995-2008
Source: Data from Department of Home Affairs annual reports 1995-2008
Figure 27 indicates the changes that have occurred in this Department from 1995 until
2008. It is important to note that data for Coloured and Indian South Africans becomes
available from 2002 only with the new legislative requirements for reporting
Employment Equity. Furthermore, the Department’s annual reports from 1995-2001 do
27
not specify whether the category of ‘Black employee’ includes Indian and Coloured
individuals.6
From the chart, it is clear that a big transformation occurred. The percentage from 1995
to 2008 for Black and White employees in the department changed from 45% and 55%
to 80.1% and 12% respectively. Between the years of 2002 and 2008, the Coloured and
Indian groups averaged 6.64% and 1.31% of the Departments’ workforce respectively.
Figure 28: Racial representation by occupation level at the Department of Home
Affairs 2007/2008
Source: Data from the Department of Home Affairs annual report 2007/2008
Figure 28 portrays the changes at the Top and Senior Management level7
of the
Department between the years of 20048
and 2008. As with the general trend in the
Department, there is an increase in the representation of previously disadvantaged
groups, particularly Black employees. Africans make up 90% of top management,
Coloureds 6%, Indians 1% and Whites 3%. Black representation has steadily increased
over the years since 1994 and their advancement to top management positions is
significant.

6
It is safe to assume that Indian and Coloured employees constituted a small number of the workforce at the end
of the apartheid era as the legislation instituting limitations on the working ability of Blacks also applied to them.
7 Current Employment Equity reporting requirements created six occupational bands that range from Top and
Senior Management to Unskilled and Defined Decision Making categories. See any Annual Report from 2004
onwards.
8
Prior to 2004 there were different reporting requirements in place. To ensure that the categories were comparable
the authors chose to start the subunit analysis at the point where it gave the longest time of comparison for the
level of employment identified.
28
2.2.2.13 South African Revenue Service (SARS)
Figure 29: Racial representation by occupation level at the South African Revenue
Service 2007/2008
Source: Data from the South African Revenue Service annual report 2007/2008
Figure 29 shows that out of the 14,528 staff members employed in SARS as at
2007/2008, 7,023 (48%) were African, 1,507 (11%) Coloured, 920 (6%) Indian, and
5,075 (35%) White. Blacks form the majority of the work force generally. Further
analysis of Figure 29 reveals that top management positions are represented by 40%
Africans, 11% Coloureds, 18% Indians and 30% Whites. Thus there was a significant
degree of Black advancement in this department, but it lags behind others in percentage
terms.
2.2.2.14 National Intelligence Authority (NIA)
Figure 30: Racial representation at the National Intelligence Authority (NIA)
1994-2004
Source: National Intelligence annual reports 1994, 2004 and 2008
The NIA data shows significant transformation in racial representation both in general
and as far as advancement to top management positions is concerned. From Figure 30
one can see that between 1994 and 2008, on a general employee level, there has been an
increase in African representation from 30% to 62%, in Coloured representation from
29
2% to 4%, Indian from 1% to 2%, but a decrease in White representation from 67% to
32%. As far as advancement to top management positions is concerned, African,
representation increased from 28% in 1994 to 44% in 2004, Coloured representation
stayed the same at 8%. Indian representation increased from 4% in 1994 to 10% in
2004, while White representation decreased from 60% in 1994 to 30% currently.
2.2.2.15 Department of Trade and Industry (DTI)
Figure 31: Racial representation at the Department of Trade and Industry (DTI)
1994-2008
Source: Data collected from the DTI annual reports 1994 to 2008
Figure 31 depicts racial representation in the Department of Trade and Industry from
1994 to 2008. During this time, African representation increased from 252 (35%) to 711
(72%), Indian from 36 (5%) to 58 (6%). Coloured and White representation decreased
from 39(5%) to 45 (4%), and from 387 (54%) to 177 (18%) respectively.
It is clear from the above that Black advancement took place in this department between
1994 and 2008. An important observation is that Black advancement in this department
is dominated by that of Africans while other Black groups, Indians and Coloureds, show
little advance. White representation decreased significantly.
To obtain a clearer picture of Black advancement in the Department of Trade and
Industry the data for 2007/2008 was decomposed to a representation of the various
racial groups at the different levels of management.
30
Figure 32: Racial representation by occupation level at the Department of Trade and
Industry (DTI) 2007/2008
Source: Data from the DTI Annual Report 2007/2008
The DTI data also shows significant transformation in racial representation both in
general and in advancement to top management positions. On a general employee level,
while African representation increased from 55% in 2003 to 72% in 2008, Coloured
representation decreased from 5% to 4%, Indian from 7% to 6% and White from 33% to
18%. As far as advancement to top management positions is concerned, African
representation increased from 22% in 2003 to 44% in 2008, Coloured representation
stayed the same at 8%. Indian representation increased from 4% in 2003 to 10% in
2008, and White representation decreased from 60% in 2003 to 32%.
2.2.3 Conclusion on black advancement in the public sector
It is clear from the above analysis that Africans and other previously disadvantaged
employees in the public sector have benefited from the transition to democracy and now
enjoy more employment opportunities than before. Importantly though, each group,
Africans, Indians and Coloureds, did not benefit equally. At every level it is apparent
that African employees are the clear winners when it comes to hiring. Opportunities for
Coloured and Indian employees increased minimally. White employees benefited the
least as there was a near consistent decrease in representation at all levels.
31
3 The Private Sector – Ownership of the Johannesburg Stock Exchange (JSE)
Figure 33: Market capitalisation of the JSE 1987-2007
Source: Data from Who Owns Whom in South Africa
A misleading approach to viewing Black advancement since the end of the apartheid
years is to focus on Black owned or influenced companies. This view of Black
ownership and control of companies listed on the JSE represents enrichment supported
by BEE policies rather than being a reflection of true Black ownership and control of
the JSE.
Figure 33 illustrates that this approach to viewing Black participation in the market
capitalisation of the JSE results in a decrease in control from 6.3% in 1996 to 5.5% in
2007.
For the purpose of this project, to measure and monitor Black advancement, we try to
move beyond the view stated above to a broader definition that we think will reflect true
ownership, rather than enrichment.
Three different sources of data, which complement each other, have been used to
uncover a clearer picture of ownership of the JSE since no single data source has a
complete and disaggregated picture of the ownership structure of the JSE.
3.1 South African Reserve Bank (SARB)
The South African Reserve Bank quarterly bulletin discloses ownership of the JSE
amongst insurers (29%), private pension funds (11%), official pension funds (8%), and
unit trusts (6%). Excluding the shares impaired by free float constraints (13%), this
leaves 33% unexplained. (Refer to South African Reserve Bank Quarterly Reviews,
1994-1999, 2000, 2007, 2008). The limitation with the Reserve Bank data is that it does
not differentiate between foreign and local ownership of shares listed on the JSE.
32
3.2 Foreign ownership
McGregor’s Who Owns Whom was used to overcome the limitation of the SARB data
and to obtain a better picture of the ownership structure. This also solved the problem of
identifying domestic versus foreign ownership of the JSE.
The analysis contained in Figure 34 shows that foreign ownership of the JSE increased
from 4.1% in 1987 to 20.7% in 2007. When attempting to identify Black advancement
through ownership of the JSE, this foreign ownership is excluded in any given year.
Another component of ownership of the JSE that includes Black owners is institutional
ownership, which often is overlooked in JSE ownership analysis studies.
Figure 34: Market capitalisation of the JSE 1987-2007
Source: Who Owns Whom in South Africa 28th edition 2008
Figure 34 also shows that institutional ownership of the JSE increased from a 1.4 % in
1987 to 12.8% in 2007. If we add the amount owned by corporate institutions such as
33
Liberty Life, Investec, Bidvest Group, SA Mutual, Sanlam, ABSA, RMB/Fist Rand, and
Sasol, etc, on behalf of their members through policies and pension funds, the figures
will show an increase in Black ownership.
The SARB analysis shows a total of 48% of the JSE being owned by domestic
institutions, while my analysis of McGregor’s data shows 35%. Either way, Black
ownership of these institutional assets through policies and pension funds does exist.
For instance, PIC, which manages the government pension fund, controls about 6% of
the JSE. PIC states that 80% of the government employee pension fund is African, 9%
Coloured, 7% White and 4% Indian.
3.3 Black financial product penetration
Another way to get a clearer picture of Black ownership is to examine Black financial
product penetration.
Table 1: Black financial product penetration as a % of total
1993 1995 1997 1999 2002 2007
Savings 69.8 69.6 69.5 69.7 71.5 72.0
Investments 24.4 22.2 26.2 22.3 22.3 23.1
Loan 24.5 24.0 26.0 34.2 38.5 39.2
Whole life Policy 50.7 46.4 48.5 48.1 52.2 52.9
Endowment/Savings/ Investment
policies
40.8 37.5 40.1 39.9 46.9 47.3
Retirement Annuity/ Personal
pension policy
35.2 30.9 37.1 37.6 46.0 47.4
Funeral Insurance 66.5 63.7 64.3 66.9 72.2 73.1
Medical Insurance 28.2 24.5 29.7 31.4 44.3 44.9
Source: AMPS, IMS
Table 1 shows that there has been stable participation by Blacks (Africans, Coloureds
and Indians) in the financial system. For example, by 2007, they owned 47.4% of
retirement annuities (up from 35% in 1993). However, Black penetration levels of 52%
in life assurance do not imply 52% in Rand value. This might be true of endowment and
retirement annuities but not pension funds because savings products are bought out of
discretionary income whereas pension payments usually are deducted at the payroll.
To estimate the monetary value of product sales by race, the Life Style Measure (LSM)
income bands by race will be multiplied by product penetration by race. See Table 2.
34
Table 2: Life assurance premium by race
LSM1 LSM2 LSM3 LSM4 LSM5 LSM6 LSM7 LSM8 Total
Population 6,299 6,506 7,670 6,001 5,504 6,357 5,475 5,139 48,994
Adult
Population
3,633 3,815 4,111 3,728 3,308 3,443 4,238 4,213 30,489
Black 99.1 98.3 95.3 92.8 85.1 68.5 31.0 10.2 74.5
White 0.0 0.1 0.0 0.1 1.5 8.8 41.5 75.0 14.4
Other 0.9 1.6 4.6 7.1 13.4 22.7 27.5 14.8 11.0
Annual
income Rm
9,896 11,765 16,132 22,457 26,715 45,241 79,733 192,279 404,219
Use of Insurance product %
Whole life 0 0 1 3 6 11 25 53 11.4
Endowment
Retirement
Annuity
0 0 0 1 3 7 19 46 8.7
Funeral 0 1 3 5 12 21 25 35 11.9
Estimated recurring Premium income (Rm)
Black 0 11 57 193 462 1,074 1,601 26,49 6,041
White 0 0 0 0 8 138 2,139 19,442 21,728
Other 0 0 3 15 72 356 1,417 3,822 5,686
Total 0 11 60 208 543 1,568 5,157 25,910 33,455
Source: Cazenove, South African Advertising Research Foundation (SAARF)
Based on my analysis and an historical Black penetration of investments (shares) of
23%, I estimate that, currently, Old Mutual and Sanlam’s books are 22% Black. This
gives me an industry estimate of 21% Black ownership. Based on current sales trends
and further employment equity, I believe that Black ownership of life assets will be
between 30% and 40% by 2012. The LSM stands for the Lifestyle Measure as devised
by SAARF and classifies the population into various LSM levels from 1 to 8 showing
increasing better lifestyle.
35
Table 3: Estimate of racial profile of life assurance liabilities
Life Funds Policy holder’s
liability (Rm)
2002
Black % (African,
Indian, Coloured)
2002
White
%
(2002)
Black %
(African,
Indian,
Coloured)
2008
White
% 2008
Old Mutual 223.2 20.0 80.0 21.8 78.2
Sanlam 145.3 20.0 80.0 22.1 78.1
Liberty Group 75.6 7.2 92.8 9.4 90.4
Liberty Life 68.1 2.5 97.5 4.5 95
Charter Life 7.5 50.0 50.0 51 49
Metropolitan
Life
27 90.0 10 90 10
Momentum
life
68 5.0 95 7 93
Average 539.1 19.8 22.1
Source: Cazenove, others
3.4 Unit trusts
The unit trust industry owns 4% of the market capitalisation of the JSE through about
1.9m account holders. SAARF data shows 1.59 million adults holding unit trusts, of
whom 59% are Whites and 41% are Blacks, even though unit trusts are a preserve of the
elite with only 6.5% of South Africans owning one. The good news is that unit trust
penetration amongst Blacks grew 40% (growth rate) from 1998 to 2007 from 2.1% to
about 3.2% (actual value). This is a significant level of Black advancement in unit trust
ownership.
3.5 Actual ownership of the JSE
In terms of the JSE ownership, foreign ownership should be balanced against foreign
assets, while corporate cross holdings and free float impairments should be excluded to
avoid double counting. This means that the remainder of the JSE is dominated by local
institutions, which control about 70% of the JSE’s remaining assets given my estimate
of 42% Black pension fund ownership, 22% life fund, 17% unit trust ownership and 5%
private individual ownership. This gives an estimated 23.8% Black ownership of the
JSE. Considering current sales of shares to Blacks and various designated groups
coupled with various Black owned businesses in the private sector growing and being
listed on the JSE, I estimate that Black advancement in ownership on the JSE will show
significant increases in the future, about 34% in 2012.
36
Table 4: JSE ownership (%) (2009 and 2012 forecast)
JSE
ownership
Local
ownership
Black
Ownership
Weighted Forecast
2012
Weight
Pension Fund 17.0 32 42 13 50 16
Unit Trust 3.0 6 14 1 25 1
Insurance
Companies
20.0 37 20 7 35 13
Private Investors 6 11 5 1 10 1
Others 7.8 14 10 1 20 3
Corporate(exclud
ed)
16.2 100 23 34
Foreign (
excluded)
30.0
Source: Data from Cazenove/Author’s analysis and forecast
3.6 Conclusion
In this Phase I study, the private sector is represented by ownership of shares on the JSE
and financial products such as insurance policies. From the above analyses, we can
conclude that there has been considerable transformation in ownership both on the JSE
and of financial products. Most notable is that, since the transition to democracy,
ownership by Blacks has increased from about 5% in 1995 to a remarkable 23% in
2008.
4 Recommendations on how to achieve sustainable Black advancement
This study, so far, has already revealed that freedom from apartheid has liberated many
previously disadvantaged South Africans to realise their potential and advance
economically, socially and otherwise. Nevertheless, more has to be done to sustain this
change and to extend Black advancement to the poorest of the poor. This includes
identifying and focusing on the things that enhance growth and individual development,
as illustrated below.
37
4.1 GDP/real disposable income per capita
Figure 35: Changes in GDP/real disposable income per capita of households and private
investments 1990-2007
Source: Stats SA South Africa Survey 2007/2008
Figure 35 illustrates a direct and positive correlation between GDP, real disposable
income per capita and private investments. It also highlights the fact that during the
transition to democracy in 1994 there was an increase in all of these variables from their
1990 values (GDP from -0.3 to 3.7, real disposable income from -1.6 to -0.3 and private
investments from -0.2 to 8.7). In 2007, the increases stand at 5.1 in GDP from 3.7 in
1994, 5.7 for real personal disposable income per capita from -0.3, and private
investments from 8.7 to 24.3.
My findings show significant Black advancement within the same period both in the
public and the private sector. It seems plausible, therefore, to recommend that the
government should continue to free up the economy, and thereby enhance Black
advancement, economic growth and improved real income per capita for all South
Africans.
38
4.2 The question of the income gap
Table 5. Gini coefficient by population group
Population
Group
1991 1996 2001
African 0.62 0.66 0.72
Coloured 0.46 0.50 0.60
Asian 0.52 0.56 0.64
White 0.49 0.52 0.60
Overall 0.68 0.69 0.77
Source: UNDP Development Index 2002
Since the transition to democracy, various critics of economic growth lament the fact
that, although there has been an increase in economic growth in South Africa, the
income gap between the rich and the poor has increased. This is illustrated by the Gini
coefficients in Table 5. The impression is that the rich are getting richer, and the poor
are getting poorer. In reality, despite the increase in the income gap, the poor, in fact,
are getting richer, faster.
The concern about the income gap is misplaced for the following simple reason.
According to Louw, 20069
, if rich person A earns R10,000 and poor person B earns
R100, the income gap is R9,900. If they both get 10% richer due to a 10% abnormal
growth rate, A then has R11,000 and B R110, and the new gap is nearly R1,000 bigger
having increased from R9,900 to R10,800. Table 4 below illustrates a situation where
even if the income of poor person B grows at a 20% growth rate, double that of rich
person A at 10%, the expectation that the income gap would reduce is not met. What
happens? The income gap still increases even while poor person B’s income doubles
faster.
Table 6:
Year Low
Income
Person
Growth Results High
Income
Growth Results Gap
1 R100 +20% =R120 R1,000 +10% =R1,100 R980
2 R120 +20% =R144 R1100 +10% =R1,210 R1,066
3 R144 +20% =R173 R1210 +10% =R1,331 R1,158
4 R173 +20% =R207 R1,331 +10% =R1,464 R1,257
5 R207 +20% =R249 R1,464 +10% =R1,611 R1,362
Table 6 shows that in a growing economy with an enabling growth environment, ‘the
rich get richer and the poor get richer faster’ (Louw 2006).

9 Leon Louw (2006), Habits of Highly Effective Countries: lessons for South Africa
39
As apartheid has unravelled since the transition to democracy, many more Africans
have been able to move up the occupational ladder. As the number in higher-paying
occupations increased, so has the gap between high- and low-paid Africans also steadily
grown. This confirms the findings by Whiteford and Van Seventer, in 1997 as quoted in
Urbach 200910 that the income of the top African decile grew 7%.
They also found that African households comprised 22% of the richest decile. This
means that in the last 10 years there has been a significant shift in the composition of
the wealthiest group in SA, which now includes a small number of extremely wealthy
Black individuals. The poorest layer of the population is still predominantly Black,
although an increasing number of White households is rapidly sinking into poverty.
The best way to increase the standards of living of the entire population is through
economic growth. High economic growth will occur if the government concentrates on
its core functions, substantially reduces barriers to doing business and restrictions on
trade, and liberalises the labour laws. Increased economic growth will have positive
spin-offs for all South Africans, and play a crucial role in Black Advancement.
References
1 Cazenove Report (2002) South Africa Economic Research: Black Economic Empowerment,
October 2002.
2 Government department websites: http://www.info.gov.za/aboutgovt/dept.htm.
3 Leon Louw (2006) Habits of Highly Effective Countries: Lessons for South Africa.
4 Mc Gregor (2008) Who Owns Whom in South Africa 28th edition
www.whoownswhom.co.za.
5 SAARF: South African Advertising Research Foundation: AMPS www.saarf.co.za.
6 South African Reserve Bank Quarterly Reports (1994-2008).
7 Stats SA (2008) South Africa Survey.
8 South African Institute of Race Relations (2008) South Africa Survey.
9 UNDP: Human Development Index 2002 www.undp.org.
10 Jasson Urbach (2009) Income Inequality and Unemployment in South Africa, The Free
Market Foundation.

10 Jasson Urbach (2009) Income Inequality and Unemployment in South Africa, The Free Market Foundation 

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