Khanyi Dhlomo is not embarrassed

2013-07-31 12:02

It would be unfair to blame her for cashflow problems at the National Empowerment Fund (NEF), said Khanyi Dhlomo, CEO of Ndalo Luxury Ventures.

Controversy is raging around the R34 million loan granted to her by the NEF to open Luminance, a luxury department store in Joburg’s Hyde Park.

Dhlomo was responding to Power FM Power Talk host Eusebius McKaizer’s question this morning on whether she was embarrassed in hindsight that the NEF ran out of cash after she received the R34 million.

The NEF has placed a moratorium on new applications while it awaits recapitalisation.

Dhlomo said: “I’m not embarrassed. There are enough intelligent people at the NEF to deal with the matter. It’s not fair to blame this one transaction for the lack of foresight. Also, you don’t blame an enterprise towards the end. You look at the entire cycle.

“With my limited knowledge, I know that the recapitalisation issue has been under discussion for years and we should celebrate that there are transactions that have happened so far without recapitalisation and have shown some returns.”

Dhlomo said it wasn’t easy for her as a black woman to get a loan from a bank.

“Commercial banks around the world will not fund a start-up and unusual business model. This is not a boutique. It’s a department store and requires a higher investment, and it’s difficult for a black woman to get funding from traditional banks.”

She said the debate over the loan and her business venture was a good issue to discuss.

“I hope when all of this is over there would be important lessons we have learnt, about entrepreneurship, structures of organisations and their funding ... I see more positive than negative.”

Furthermore, Dhlomo revealed that she was not handled with kid gloves by the NEF.

“Our loan was offered on very commercial terms. It’s shorter than usual – five years. The interest rates are higher and our own contributions hit the 30% mark. It was stringent, because the NEF are prudent investors. This is not a grant, this is not a gift, it has to be paid back and on commercial terms,” she said.

Dhlomo insisted that they ticked all the boxes when they applied for the loan.

“We looked at what the NEF looks for as criteria on its website and the general public knowledge. We knew that they fund black people. They look closely at transactions headed by women and they would like you to be operational in the business. They invest in untransformed sectors, they look at local development of industry like manufacturing and clothing, arts and crafts and benefiting marginalised communities such as rural women. We felt we ticked all the boxes.”

Luminance is owned by Dhlomo and her mum, Venetia, at 65%, while Dr Judy Dlamini owns 15%. Dhlomo is operationally involved and they work with rural women’s groups in KwaZulu-Natal and the Western Cape to produce arts and crafts and these own a 10% stake in the business, along with the staff.

She added that the retail sector was untransformed, as black people participate merely as consumers. And the luxury sector is also untransformed “when you look at the racial mix of tenants”.

Dhlomo warned that detractors looked at the business and its benefits narrowly. She said they had employed some 50 individuals and were manufacturing a local fashion range (Luminance Private Label) using a local factory.

They are also selling designs by local designers such as Stoned Cherrie with more to be added later in the year. She said Luminance was going to be marketed as a tourist destination and the local arts and crafts would be exposed to a foreign audience.

“This is not just about a shop in Hyde Park, the vision is to have a multimillion-rand business as big as Edcon,” she said.

Speaking for NEF on the radio show, Moemise Motsepe, said they saw nothing controversial about the transaction.

“It was put together with integrity and the highest ethical norms.”

Referring to the moratorium, Motsepe said they loaned more than R1.3 billion to 135 businesses last year alone.

“It’s not true that this one transaction depleted our resources ... This transaction is a building block into the sector with no black participation and control.”

He couldn’t say when the recapitalisation would be finalised.

Presently, the NEF is putting together a report on the transaction for Trade and Industry Minister Rob Davies.

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