DUMA GQUBULE | BEE clouded by myths and fake news

In May 2025, Wits University associate professor William Mervin Gumede told Newzroom Afrika that he had done research for the government in 2009 which showed that BEE transactions had transferred more than R1-trillion to fewer than 100 politically connected people.

The Transformation Lens on black ownership on the JSE, I explain why this is a bogus statistic, as no one who has interrogated the data could arrive at such a conclusion. It means that 100 black people received an average of R10bn each in 2008, which is obviously not true. In 2008, African Rainbow Minerals founder Patrice Motsepe was the only black person who was worth more than R10bn.

According to my analysis of the EY annual reviews of mergers and acquisitions (1994–1999) and the Dealmakers database (2000 to 2008) there were BEE transactions worth R346bn from 1994 to 2008. There are four reasons why this number is an overestimate and should not be seen as a measure of ownership that was transferred to black people.

Gross (before considering debt) ownership statistics exaggerate black wealth. If you dig below the surface there can be complicated financing structures that make it impossible to determine real black ownership. Sometimes BEE companies pledge shares to financiers with usurious conditions that include high interest payments and a large share of the profits.

BEE deal flow statistics during the first phase of transactions (1994 to 2002) should be treated with caution.

In such cases, black shareholders who are disclosed in annual reports are not the real owners. There is also a significant difference between gross ownership and the net value created for black shareholders after they have settled their debts. In most cases, when black people purchase shares of JSE-listed companies they have acquired an option to buy them at the end of a funding period, usually seven to 10 years. Ownership is not transferred when a transaction is announced. Many do not ever transfer ownership to black shareholders. Sasol has had two BEE transactions worth R44bn in 2008 and 2018 that have not transferred ownership to black people. Others transfer a fraction of gross value.

BEE deal flow statistics during the first phase of transactions (1994 to 2002) should be treated with caution. They involved transactions worth billions of rand by companies such as Nthato Motlana’s New Africa Investment Limited (Nail), Don Ncube’s Real Africa Investments (Real Africa), Mzi Khumalo’s African Mining Group and Cyril Ramaphosa’s Johnnic that were not black-owned and were fronting for white financial institutions, which had the majority of economic interest. At Nail and Real Africa black shareholders had an economic interest of less than 3%. Many of these transactions unravelled in the wake of an emerging markets crisis during the late 1990s. Finally, BEE deal flow statistics use an investment banking methodology that counts transactions where black people buy shares and sell those shares, resulting in a reversal of black ownership on the JSE.

Instead of providing the names of the 100 black people who made R10bn each on average from BEE transactions by 2008, Gumede doubled down on his dubious black ownership statistics in a recent article that was published on the Wits University website. He said he had done research for the Minerals Council South Africa in 2015 which found that 46 politically connected people had secured 60% of all BEE in mining, becoming billionaires or millionaires overnight. He blamed BEE for the loss of 300,000 mining jobs since the 1990s. However, at the end of 2014, Sipho Nkosi’s BEE Holdco, Motsepe’s African Rainbow Exploration and Investment and Royal Bafokeng Holdings accounted for about 80% of BEE net value in mining, according to an analysis that I did at the time.

There must be a review of BEE but it must be based on facts — not fake news and statistics, urban legends and right-wing propaganda.

Most shareholders in these companies were not politically connected. The biggest myth is that BEE has only benefited the politically connected few. While politicians such as President Cyril Ramaphosa and Tokyo Sexwale benefited from earlier BEE deals, they have always accounted for a minority of transactions by value. Today, two-thirds of total black ownership on the JSE are broad-based ownership schemes. In 2002, stakeholders reached agreement on a BEE charter for the mining industry. From 1990 to 2002 there were no BEE policies in mining, yet the industry shed 283,223 jobs as employment declined to 409,677 from 692,900. Most of the job losses were in gold mining and had nothing to do with BEE.

After a century of gold mining, mines were depleted and ageing, ore grades were declining and extreme depths were required to reach deposits, which resulted in soaring costs. From 2002 to 2025, after the signing of the mining charter, employment increased by 60,088 to 469,765.

It is clear that Gumede fabricated the story that R1-trillion was transferred to 100 politically connected people. It is unlikely that there was a government research report that made such a finding in 2009. This is really an issue of media and academic ethics.

The media should have firewalls that prevent the publication of wild and unverified claims about BEE or any other topic. Scholars should not peddle outright lies and the institutions they work for must take action against such behaviour. There must be a review of BEE but it must be based on facts — not fake news and statistics, urban legends and right-wing propaganda.