Letter From Our CEO - April 2021

We have seen the drivers of local empowerment and the ownership requirements in Africa, one key driver seems to be -national interest empowerment. This is according to an analysis by Bowmans on local empowerment and ownership trends in 14 African countries.


Analysis shows a growing emphasis on regulating ownership in economic sectors and activities that historically were not regulated.


Restrictions on foreign participation on the continent tended to be limited and focused on a few big-ticket sectors, such as aviation, logistics, mining, oil and gas and broadcasting and telecommunications, but it appears as if this is changing.


An example is our private security industry. The Private Security Industry Regulation Amendment Bill proposes that at least 51% of the ownership of both existing and new security services providers must be held by South African citizens. “This bill has been pending since 2012 and has yet to be signed into law.”


The Telecommunications and Broadcasting service: On the 1st of April, the Independent Communications Authority of South Africa (ICASA) announced regulations aimed at promoting historically disadvantaged South Africans in the ICT sector. Among the changes is a requirement for licensees to comply with the mandatory equity ownership requirements, 30% equity ownership by black people and a level 4 BBEEE status.


The regulations now establish penalties of up to R5 million or 10% of the licensee’s annual turnover where a licensee fails to maintain the mandatory minimum requirement.


South Africa is revisiting ownership requirements in broadcasting and telecommunications. Its draft regulations propose setting new broad-based black economic empowerment (B-BBEE) ownership for both those sectors.


We have also seen the draft Legal Sector council proposed changes around ownership. The Transport Sector gazette seems to have died a slow death. Every now and then we hear of rumblings from the Mining Sector? Business in these two sectors have stuck together and not accepted all the suggestions that the DTI tried to push their way. The Financial Sector submissions from companies reporting on their BEE status need to be submitted by early May and I would suggest that the sector code will then start demanding more stringent targets?


The variety of regulations and proposed changes can make international investment decisions complicated, especially for investors with cross-border operations. We can only hope that sanity prevails and that the powers to be start encouraging international companies to enter the country instead of beating them away with a stick.

The citizens of SA need employment not prohibitive legislation that discourages investment in Africa.


So, B-BBEE is here to stay and as we have said over the last 10 years its geared to become more and more stringent on companies.


We specialize in various ownership structures and can resolve this frustration for you.


Sincerely

Hilton Johnson

CEO – Compliance Hub

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