State’s plan to create 100 black industrialists

2014-10-19 15:00

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Economic transformation in South Africa is driven by BEE and by the Public Investment Corporation, the Development Bank of Southern Africa, the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF).

But the department of trade and industry (the dti), unhappy that empowerment has been slow, believes its creation of 100 black industrialists will change the face of South Africa’s economy.

Its strategy is more or less that of a private equity investor excluding the actual equity investment. It plans to help companies grow through financial and nonfinancial support, after which they will list on the stock exchange.

“BEE has been a bit slow and to a certain extent, has been manipulated. When the concept of BBBEE [broad-based black economic empowerment] came in, it meant that rural villagers had shares, but they were not very significant,” said Mzwandile Masina, the deputy minister of the dti.

He said BEE had spawned a new class of rich black people – such as Tokyo Sexwale, Cyril Ramaphosa, Mzi Khumalo and Saki Macozoma – “but now we don’t see rich black people altering the structure of the economy”.

He added: “If you look at the JSE now, the participation of black people is only about 4% and is a major problem?–?and we need to change that.”

According to him, government’s programme would create black industrial companies with an emphasis on those sectors in the Industrial Policy Action Plan such as transport, green industries, agroprocessing, biofuels and chemicals.

Black companies will be plucked from these sectors and provided with financial and nonfinancial support.

The programme will be looking for 100 projects that are viable and sustainable, that need funding or are in phases of expansion.

“The dti is currently developing a policy framework and strategy on black industrialists,” said Masina.

“However, there is a dedicated section to serve this purpose at the BBBEE unit to attend to all enquiries regarding black industrialists.

“Other sister agencies like the NEF, IDC, Small Enterprise Development Agency and the Incentive Development and Administrative Division [incentives of the dti] are already working closely with the BEE unit to ensure that 100 black industrialists are achieved in the next three years.”

Black industrialists will receive financial support through a combination of incentives, grants, and developmental loans and nonfinancial support such as mentorship, and access to skills, technology and markets.

This is part of the reason Masina has assembled an advisory panel that includes Sandile Zungu, Xhanti Payi and others.

“The job of the panel is to advise. They are not even on the payroll of government and they have skills and capabilities: it’s a group of engineers, manufacturers, lawyers and accountants, and their role is to advise us.”

But Masina said he expected a few problems.

“There are two things that are problematic with energy. Firstly, we need to sort out electricity security; we can’t run out of electricity if we want to do things. Secondly, we need to resolve issues of the cost of electricity to industry so it’s affordable for industries to do work in South Africa,” said Masina.

“Similarly with water, we haven’t spent time consolidating and repairing our infrastructure.”

The deputy minister is looking to government to be the biggest champion of the black industrialists in the wake of slow economic growth.

“Government spends about R1?trillion on buying goods and services every year. Where does that money go? So that’s why the ANC’s election manifesto speaks about 75% local procurement.

“In essence, this is what we seek to achieve with this particular project with black industrialisation.”

Africa will present a key opportunity for the black industrialist programme, he added.

The programme has already begun with one project in the oil and gas industry.

The unnamed black industrialist is a woman.

“My vision is to see 100 black multibillionaires who have contributed to the growth of the economy of South Africa, who have altered the status quo of the JSE from 4% to possibly 20% or even 30% by listing their own companies,” said Masina.

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