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South Africa's Black-Ownership Code May Need Review, Report Says

Buildings stand in the Central Business District of Johannesburg.

Buildings stand in the Central Business District of Johannesburg.

Photographer: Waldo Swiegers/Bloomberg

Benchmarks for measuring whether listed South African companies have adequate black ownership need to be reconsidered, according to a report prepared for the National Treasury and submitted to lawmakers discussing transformation in the economy.

Black economic empowerment codes have failed to fix inequalities, partly because of the focus on shareholdings rather than on black management of companies, according to the report, prepared for Treasury by Lynne Thomas, an independent researcher and consultant. BEE deals tend to favor direct owners over indirect owners, who hold their stakes through vehicles like pension funds, according to the report.