Who wants to be a black industrialist?

2014-10-12 15:01

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The Black Business Council in the Built Environment (BBCBE) has called for new government support for so-called black industrialists to jettison the usual definition of “black-owned” in favour of 100% ownership by black people.

BBCBE general secretary Gregory Mofokeng told City Press his organisation was advocating for the complete exclusion of white people from new funding and incentive programmes being designed by the department of trade and industry.

The department has recently promised two different programmes aimed at “black industrialists”.

One is a “black industrialist incentive scheme”, which Minister Rob Davies announced in his budget speech in July, about which little is known except that it will be unveiled this financial year.

The other is the “black industrialist programme”, which was announced by Deputy Minister Mzwandile Masina in August.

The latter is also a work in progress, but will apparently entail the selection of 100 black-owned companies that will be built up with state support over the course of three years.

According to Mofokeng, black business’ first preference is for qualifying companies to be 100% black-owned, although he admits that current legislation does not define “black-owned” this strictly.

“At best, there should only be minority white ownership.”

According to Mofokeng, the black industrialist programme should involve grant funding that will allow the chosen companies to borrow further funds from the Industrial Development Corporation and other funders.

But it should simultaneously involve a much more aggressive government procurement framework that finally allows for set-asides.

These would be projects for which only black-owned firms can bid – a mechanism that National Treasury has long barred because it would probably be unconstitutional.

According to Mofokeng, the Treasury’s attitude is softening.

Although the term “black industrialist” has rapidly come to dominate empowerment debates, it has not been formally defined.

Mofokeng says “black industrialist” means a company operating “at the high end, not as a small or micro enterprise”.

As they stand, broad-based black economic empowerment laws have created a “plethora of minority shareholders” who do not have influence, according to Mofokeng.

He also criticised one of the most high-profile, and applauded, industrial programmes in the country – the Renewable Energy Independent Power Producer Procurement Programme.

This programme is a completely novel tender process through which companies are invited to build renewable energy projects in successive “windows”.

They ultimately bid against each other to offer the lowest power tariff to Eskom, which will have to pay for their power.

But the programme also gives black ownership less weight than in normal tenders to instead emphasise black employment and local procurement of inputs.

“Everyone is lauding it as a great success, but from a black business perspective, it is a complete failure,” says Mofokeng.

The BBCBE is suggesting that a few black firms should be exempted from the window system and not compete with the wide range of international bidders that have dominated the process.

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