‘Black industrialists’ finally defined
The department of trade and industry (the dti) this week unveiled a new piece of the “black industrialists” programme, which has been evolving for more than a year.
The Black Industrialists Policy mostly sets out a scheme to help qualifying companies find joy with South Africa’s development finance institutions – in response to the frequent complaint that black entrepreneurs have an inordinately hard time getting credit.
Then the dti intends to subsidise the cost of credit through “cost-sharing finance”.
Qualifying projects will have to “demonstrate some public benefit” and government will have the right to select the most appropriate projects to support, says the document.
The policy paper finally defines what is meant by a “black industrialist”. It is a black-owned company in the usual sense, where a black person owns at least 50% in the manufacturing sector.
Additionally, a black industrialist must “provide strategic and operational leadership”, take “personal risk”, stay in the business for a long term and act “entrepreneurially”.
That means the industrialist must identify new opportunities and develop ways to exploit them, reads the policy’s definitions section.
The definition seems designed to exclude the passive partnerships that often seem to characterise BEE transactions. Those who qualify “should have extensive experience, operations and a track record in their respective or envisaged industrial sectors and value chains”.
The policy paper makes frank judgements of government’s success with black empowerment thus far, criticising the state-owned development finance institutions (DFIs) for favouring established white businesses and stating that black people’s participation in state procurement is “surprisingly low”. Government support has been “fragmented”, it says.
The policy sets out 10 years as the default time frame for supported companies to “become major players” in the market they are targeting.
A Black Industrialists Funding Package will be developed, and a Black Industrialists Financing Forum, which will consist of officials from seven DFIs, namely the Industrial Development Corporation, Export Credit Insurance Corporation, Development Bank of Southern Africa, Land Bank, National Empowerment Fund, Public Investment Corporation and the Small Enterprise Finance Agency. The forum will, in essence, be a one-stop shop for applying to all the DFIs at once.
Black business groupings that have been making calls for a black industrialists’ programme have also advocated “set-asides”, but the policy document makes no mention of this mechanism for reserving some government procurement exclusively for black businesses.