State plans to speed up industrialists plan
• Programme will be expanded to 100 projects by the end of 2017-18
The government plans to speed up the black industrialist programme in the coming fiscal year amid mounting expectations for the radical transformation of the economy. The target of 30 projects per year for the first two years starting March 2016 and 40 projects in the third year has been expanded to 100 projects by the end of 2017-18.
The government plans to speed up the black industrialist programme in the coming fiscal year amid mounting expectations for the radical transformation of the economy.
The target of 30 projects per year for the first two years, starting March 2016, and 40 projects in the third year — bringing the three-year total to 100 — has been expanded to 100 projects by the end of 2017-18.
It will require an increase in the allocation for the project in the budget, to be announced by Finance Minister Pravin Gordhan next Wednesday.
In his state of the nation address last week, President Jacob Zuma said the programme was “critical” to achieve the radical transformation required to deracialise ownership and control of the economy.
Department of Trade and Industry director-general Lionel October said the programme would be expanded “because there is pressure and expectation on us to move quicker towards the 100 target”.
“We are hoping to achieve this in the next year. We are on track for this year [2017] but the expectations are high.” Reaching 100 projects by end-March 2018 would mean approving about 70 more grants.
To date, the department has approved R577m in grants for 27 black industrialist projects, with additional forms of loan and equity financing provided by the Industrial Development Corporation (IDC), the National Empowerment Fund, the Public Investment Corporation and the Land Bank. These institutions and the Small Enterprise Finance Agency are represented on the grants approval committee, which facilitates project financing. Once the grant by the department is approved, the projects can be considered by the other institutions.
Including IDC financing, 55 projects have been assisted, of about 200 applications received. As the department had gained experience and worked out the systems and grant approval structures, the pace of grant approval was likely to accelerate, October said, but due diligence probes did take time.
He noted that, without this programme, the black-owned companies would find it difficult to raise finance from commercial banks, as they lacked the required track record. Industrial companies were also generally not favoured by banks.
October was confident the target of 30 projects would be achieved by the end of the current financial year. The 27 projects approved had created 5,235 direct jobs and about 20,000 indirect jobs, he said.
The grant recipients were active across sectors including plastics, pharmaceuticals, car components, metals, agro processing and the green sector.
Stellenbosch University director of the Institute for Futures Research Morne Mostert said black industrialists would not attract investment, “except through the taxpayer, who will be forced to invest in dying industries”.