South Africa: No time for business as usual

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South Africa: No time for business as usual

The abolition of exchange controls and the start of privatization should do wonders for the illiquid Johannesburg Stock Exchange, but fuller representation of black businesses on the equity market is a vital change that's not so easily accomplished. Mark Ashurst reports from Johannesburg.

"To move forward with purpose requires that we extricate the public and private sectors from the current comfort zones," president Nelson Mandela told the South African parliament at the opening of its 1996 session in Cape Town early last month.

The sentiment is keenly endorsed by the burgeoning black business sector. What is more, the vast majority of brokers on the Johannesburg Stock Exchange (JSE) appreciate the importance of the radical shake-up it demands. Yet beneath this apparent consensus, the legacy of apartheid is writ large across South African business. Nowhere is it more conspicuous than on the JSE's listings board.

Twelve black-owned companies are listed but, as of January 31, their combined market value was R7 billion ($1.92 billion), slightly less than 0.6% of the total market capitalization of R1.2 trillion. This is easily explained, says Jonty Sandler, CEO of New Africa Investments, by far the largest black-owned conglomerate and, in August 1994, the first to be listed: "It is very difficult for black business to raise capital."

Much of South Africa's political transition has been exemplary, but the real test of liberation will be played out on the stock exchange. Without a more equitable distribution of economic power, the process could still come off the rails.

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