Preparing your practice for tougher EE targets
Black ownership, management control and skills development are three critical elements by which financial services firms can track their transformation, even if the policymakers move the targets.
In this case, the sectoral targets set under the Financial Sector Code (FSC) through the Department of Trade, Industry and Competition (dtic) look to be supplanted by tougher, binding targets issued by the Department of Employment and Labour (DOEL) under the recently amended Employment Equity (EE) Act.
This matters for future FSP licensing
South Africa’s smaller brokerages and financial advice practices will likely escape the DOEL EE targets by virtue of employing fewer than 50 people. But the country’s broader transformation objectives will impact these businesses at some point, especially given the requirement for transformation plans as part of licensing under the yet-to-be-enacted Conduct of Financial Institutions (COFI) Bill. Financial services firms will, therefore, benefit from emulating the self-examination undertaken by firms in the asset management and life insurance disciplines.
The transformation progress of these sectors was up for discussion at the launch of the Association for Savings and Investment South Africa (ASISA) Transformation Report 2025. It takes just short of 100 pages for the association to document its members’ progress over seven years, starting in 2018. “Over the years, there had been this constant refrain that business, and in particular the financial sector, was not transforming enough,” said ASISA CEO, Kaizer Moyane, at the launch of the fourth iteration of the report.
He added that ASISA took a closer interest in the issue after the sector was given a dressing down by Parliament around 2019. In the absence of detailed information on the sector’s progress towards transformation targets, ASISA undertook its own study in which member firms participate on a voluntary basis. Their first report, issued in 2022, covered the period 2018-2022 with updates published in 2023, 2024 and 2025. “This is the kind of data that should inform policy direction and the ensuing interventions that government takes,” Moyane suggested.
South Africa needs a skills audit
The association said that its transformation report, combined with a yet-to-be-undertaken audit of sector-wide skills shortages, should form the basis of ongoing employment equity targets. They also argued that targets be refined to accommodate differences across the financial services sector. You cannot, for example, enforce a one-size-fits-all target across asset managers, banks, consulting firms, brokerages, financial advice practices, insurers and UMAs. The same holds for attempting to stuff small, medium and large firms into the same template.
The ASISA CEO offered a brief overview of the seven-year performance of the industry on the three key measures mentioned in the opening paragraph. In 2018, when ASISA started measuring transformation, the life offices (life insurers) were sitting at 14% based on the net value or unencumbered economic interest for black people. By end-December 2024, this percentage had shifted to 30% compared to the 25% target set in the FSC. Over the same period, the asset managers participating in the report grew this measure from 22% to an impressive 39% by 2024.
Lister Saungweme, Senior Policy Advisor at ASISA, said the report was informed by members representing 98% of total assets under management for life insurers, and 83% for asset managers. She commented that the report centred around “driving inclusive growth through sustainable transformation” before encouraging readers to explore the case studies contained in its later pages. These narratives illustrate how ASISA member firms are linking transformation strategies back to economic growth as well as tackling poverty and unemployment.
Colouring in the management control check-box
The second element on the scorecard is management control by black people, with a 50% target set. For life offices, this measure has improved from 29% to 47% over the seven years, and to 50% for asset managers. Moyane labelled the performance on black ownership and management control “an indication of the level of commitment to transformation among ASISA member firms.”
The financial services sector needs to ensure that skills development continues apace, ensuring a pipeline of new hires for management positions. In 2018, ASISA members in the two categories spent a combined R1.71 billion on skills development, growing to R2.42 billion in 2024. The ASISA CEO opined that this level of expenditure would ensure the necessary skills to elevate black people into management control positions.
Saungweme noted that asset managers and life insurers had allocated R14 billion across a range of initiatives over the seven years, including developing career pathways for people in non-management and junior management positions. “We have seen a concerted effort from the asset managers to transform the people that run the day-to-day operations, over and above the change from a shareholder perspective,” she said. “There is more money being channelled in terms of skills development than to the people working within the asset management space.”
The scorecard spans 10 metrics
The overall FSC Scorecard spans 10 metrics including equity ownership, management control, employment equity, skills development, preferential procurement, empowerment financing, enterprise development, supplier development, socioeconomic development (including consumer education) and access to financial services. “There has been steady progress across all the elements of the scorecard over the seven-year reporting period,” Saungweme said, singling out access to financial services as one concern.
The policy advisor pointed out that having a pipeline of skilled black individuals was not the only constraint to tackling the management control issue. Careers in financial services often span well over 20 years, and the country’s existing labour laws do not allow a firm to simply move someone out and replace them. This has long been an argument against demographic targets, with analysts noting that firms cannot grow into the target. At the extreme, a company with 10 white senior managers aged 35 to 45 could wait 20 to 30 years before all retire. And it would be impossible to grow the manager complement by 70 to get the desired split.
This segues nicely into the looming DOEL EE challenge. Saungweme took a moment to compare the latest EE targets to those set by the FSC. “We are still not there in terms of achieving the 60% FSC targets for black people in senior management positions, and yet, the Department of Labour has already increased the target to 77%,” she said. A similar challenge emerges for black people at middle management, hiked from 75% (FSC) to 86% under the DOEL. And the targets for junior management are up to 95% versus 88%. Common sense would be for the industry to benchmark against the highest target set across the two different pieces of legislation.
Continuing the consultation path
Further consultation is inevitable, and only time will tell which of the DOEL or FSC targets win through. It seems ASISA will continue engaging with government by bringing them real data in support of what needs to be done to empower people without impacting the long-term sustainability of asset managers and life insurers.
Writer’s thoughts:
One can rage against enforced racial quotas in South Africa’s firms, or celebrate them; the real issue is whether the Department of Labour employment equity targets being set for financial services firms are realistically achievable? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
