What's Happening?

Beyond tick boxes



The financial services sector of South Africa plays a vital role in promoting economic growth and fostering inclusivity within the economy. In line with this, the Financial Sector Transformation Council (FSTC) is a statutory body entrusted with the responsibility of driving and measuring the transformation of B-BBEE initiatives within the sector. Operating under a framework of primary and secondary legislation, the FSTC is dedicated to its twin-pillar mandate to rectify historical inequalities and pave the way for a sustainable, inclusive, and thriving economy that benefits all.

Against the backdrop of the Amended Financial Sector Code (FS Code), the B-BBEE Scorecard elements measure the level of black economic empowerment across various sub-sectors within the financial industry which encompasses Ownership, Management Control, Skills Development, Procurement, Enterprise and Supplier Development, Socio-economic Development and Consumer Education, as well as Empowerment Financing and Access to Financial Services elements.

In assessing and profiling the sector’s progress, challenges, and opportunities, the FSTC recently published its ninth iteration of the State of Transformation Annual Report (SoTAR) for the 2020/21 period. Underpinned by the adopted 2020/2021 SoTAR methodology in accordance with the FSTC reporting framework, the comprehensive analysis combined both quantitative and qualitative data that encompassed the submission of B-BBEE certificates, B-BBEE scorecards, sworn affidavits, detailed data summaries, and CEO’s surveys, which was a first for FSTC’s reporting framework.

Within this context, measured entities across all sub-sectors submitted data in accordance with the FSTC reporting framework and Section 10(4) of the Broad-Based Black Economic Empowerment Act 46 of 2013.

During the period under review, there was a decline in submissions compared with the previous year (i.e., 2019/20) across the B-BBEE Category levels, signalling a need for increased compliance in the sector.

As the FS Code evaluates the financial institutions’ transformation progress, grading them into compliance level categories in line with nine (9) recognised empowerment levels,  with level one (1) being the highest level of compliance while level nine (9) represents non-compliance (NC), among the generic entities, the highest achievers, comprising 32%, reached Level 1, however 19% of these entities represented non-compliance, signifying a pressing need for enhanced commitment to transformation objectives.

The key findings on element analysis revealed shortcomings across several B-BBEE elements as embedded in the FS Code as a framework for transformation of the sector.


Ownership element, aimed at boosting Black ownership in both existing and new enterprises, saw all sub-sectors falling short for 2020/21, with Asset Managers recording the highest performance, although unable to meet the determined target.


The Management Control element, intended to facilitate Black participation in higher organisational structures, showed none of the sub-sectors achieving their target, with the highest performance recorded for Specialised Enterprises, albeit not meeting target.


Furthermore, Skills Development, a priority element, plays a pivotal role in empowering the community through training and development for Black individuals, including learners and interns, to address managerial gaps, as well as ensuring proper representation at all organisational levels. Unfortunately for the period under review, none of the sub-sectors reached their determined target, although Specialised Enterprises attained the highest performance.


Preferential Procurement, aimed at driving transformation towards an inclusive economy by increasing the economic participation of Black people through the promotion of large and small black suppliers, Black-women owned suppliers and black designated groups across all value chains while simultaneously empowering black businesses through enterprise and supplier development initiatives, experienced a decline during 2020/21 with an exception of Specialised Enterprises, which showed some progress, albeit not meeting the target.
Additionally, only Life Offices met the Enterprise Development targets, while all sub-sectors fell short of the Supplier Development target, although Banks and Asset Managers made notable strides towards meeting it.


The Socio-Economic Development and Consumer Education (SED&CE) elements are key to the upliftment of previously marginalised groups by promoting financial inclusion and providing SMEs and consumers with the knowledge and skills needed for informed financial decisions. During the 2020/21 measurement period, all sub-sectors failed to meet their targets for the SED&CE element, with progress declining across the board.


Empowerment Financing, a priority element, focuses on specific investments like SME growth, agriculture, affordable housing, transformational infrastructure, B-BBEE transactions, and supporting Black businesses through Black Business Growth Funding (BBGF). In the 2020/21 period, both Banks and Life Offices fell short of their targets, with Life Offices experiencing a significant decline in progress.


Despite falling short of the determined targets, notable progress was recognised within the Banks’ contribution of R117 billion in 2020/21 that surpassed the target of R48 billion.


Access to Financial Services is an industry-specific element ascribed within the FS Code for Banks, Long-Term Assurers and Short-Term Insurers and  aims to enhance financial inclusion and extend the availability of affordable financial products and services, which involves creating accessible products that serve previously marginalised groups.

In the 2020/21 period, all sub-sectors fell short of the set target for Access to Financial Services. Some progress was observed among Short-Term Insurers, albeit not meeting the target.

The FSTC encountered several limitations while finalising the development of the 2020/21 report, including, but not limited to the decreased submissions of B-BBEE Reports, repetitive data submissions, absence of a standardised verification reporting framework, insufficient submission of detailed data summaries, lack of support from some constituencies, and non-submission of targets related to Access to Financial Services and Empowerment Financing.

To address these challenges, it remains the joint responsibility of the FSTC and its partners to work together, ensuring the financial sector embraces the transformation framework outlined in the Financial Sector Code, and as such stakeholders should:

  • Consider collaborative measures and embrace progressive methods to prioritise achieving prescribed targets beyond the scorecard compliance.
  • Consider adopting a standardised reporting framework to create a transparent sector-specific report addressing both social and economic impacts.
  • Apply an appropriate theory of change, in consultation with relevant Line Ministries, to address limitations effectively.
  • Conclude the outstanding comprehensive review of the Code to address gaps, clarify misinterpretations, and align B-BBEE scorecard elements with the current economic context.
  • Collaborate with other Charter Councils to establish a unified governance framework aligned with industry best practices.


Through these measures, it is recommended that the parties of the FS Code and the Council engage on a renewed commitment that will define an appropriate framework towards inclusivity for all citizens to achieve intentionality beyond tick boxes.

To access full report visit: www.fstc.org.za