Department of trade & industry makes BEE-line for change
The department of trade & industry (DTI) is putting a lot of effort into its black industrialist incentive programme to achieve what black economic empowerment policies failed to do — genuine and sustainable transformation.
According to the department, black industrialists are black South Africans who own and, through significant shareholding, control an enterprise whose products are significantly used and have significant impact on decent employment and create broad-based economic opportunities.
Trade & industry minister Rob Davies said the criteria to get into the government-sponsored programme are tight.
"We demand that you are actually in a business that is in the industrial space. It must be a black-owned, managed and operated business," he said.
Davies said the black industrialist programme will correct the shortcomings of the country’s BEE policies "where what passed as BEE was that somebody did a deal in somebody else’s company. They often borrowed money to acquire some shares through some special-purpose vehicle. They did not get any dividends until they paid back the capital".
He said that model of empowerment did not work because most of the deals were essentially fronting.
"Empowerment will be found in allowing more entrants into our economy. The problem with the SA economy is that it is too concentrated, which gives rise to rent seeking. Well-established old boys’ networks are running too many value chains in this country. The entry points are too small. As a result, empowerment is limited and stunted," he said.
Lionel October, the department’s director-general, said the country’s BEE policies resulted in empowerment partners becoming "junior" partners in other people’s companies. The black industrialist programme will give rise to black investors who will own and run their businesses, he said.
The programme, which is meant to benefit black industrialists who own and run their businesses, has resulted in investment of R11.1bn from 128 projects so far.
October said the government wants to have well-recognised black companies in the mould of Nigerian business magnate Aliko Dangote’s. "We must have an industrial sector that is representative," he said.
Last week the department held the inaugural black industrialists round-table dialogue aimed at helping to open discussion between the government and the private sector, including beneficiaries of the black industrialists scheme. At that meeting, it became clear that lack of funding is not the only impediment to black participation in the economy.
Lack of market access still poses a problem for black industrialists. "We need to pay attention to market access. Finance is important but you also need to find market," said Sizwe Mbanjwa, the CEO of Africa Blaize Apparel.
Mbanjwa’s company, one of the beneficiaries of the scheme, is a KwaZulu-Natal clothing and textile company. The firm, which is based in Verulam near Durban, manufactures chinos, T-shirts and jeans for SA retailers. "We also produce workwear for corporates."
Mbanjwa is optimistic about his firm’s prospects despite the tough conditions in the manufacturing sector. "There are signs of improvement in the textile sector. Labour in China is becoming expensive," he said. In addition, the company might benefit from the US-China trade war, if local companies replace Chinese imports to the US.
"We are following a lead in that regard," Mbanjwa said.