‘Black in­dus­tri­al­ists’ fi­nally de­fined

CityPress - - Busi­ness - DE­WALD VAN RENS­BURG de­wald.vrens­burg@city­press.co.za

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.

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