In search of the

GROWTH

CityPress - - Business - XOLANI MBAN­JWA xolani.mban­jwa@city­press.co.za

Govern­ment must se­cure pri­vate sec­tor buyin and clearly de­fine who a black in­dus­tri­al­ist is for the black in­dus­tri­al­ist pro­gramme to be a suc­cess, ac­cord­ing to Edge Growth, a leader in en­ter­prise and sup­plier de­vel­op­ment in South Africa. Ad­dress­ing a round ta­ble dis­cus­sion on the pro­gramme in Sand­ton, Jo­han­nes­burg, on Thurs­day, Amina Patterson, head of busi­ness de­vel­op­ment at Edge Growth, said that, if per­fectly ex­e­cuted, the pro­gramme could give rise to a new move­ment of black in­dus­tri­al­ists who were less de­pen­dent on govern­ment, and would boost trans­for­ma­tion and job cre­ation.

For­mally launched by the depart­ment of trade and in­dus­try in De­cem­ber, govern­ment has pledged R1 bil­lion to iden­tify 100 ma­jor black in­dus­tri­al­ists, but the pro­ject’s crit­ics dis­pute its suc­cess due to short­com­ings in the broad-based BEE pro­gramme.

Patterson said: “The black in­dus­tri­al­ist pro­gramme will do well to achieve where broad-based BEE has been un­suc­cess­ful, es­pe­cially around the cre­ation of de­pen­dency on govern­ment sup­port, if it clearly gov­erns the man­ner in which op­por­tu­ni­ties are cre­ated for black in­dus­tri­al­ists.

“It will not be good enough to merely see par­tic­i­pa­tion at an own­er­ship level, but op­er­a­tional con­trol and par­tic­i­pa­tion must be demon­strated to en­sure the trans­fer of skills and ex­per­tise from gen­er­a­tion to gen­er­a­tion, which is es­sen­tial to sus­tain­able growth,” she said.

“At the end of the day, the black in­dus­tri­al­ist will not only be an en­tre­pre­neur who con­quers the South African mar­ket, but the African mar­ket too.”

The def­i­ni­tion of a black in­dus­tri­al­ist was also key to mak­ing a suc­cess of the pro­gramme.

“It is crit­i­cal we de­fine the term ‘black in­dus­tri­al­ist’ ac­cu­rately to en­sure the se­lec­tion process is clear and trans­par­ent, or the pro­gramme will fall vic­tim to [the weak­nesses that led to] the crit­i­cism of pre­vi­ous em­pow­er­ment schemes,” said Patterson.

“Se­condly, the na­ture, com­po­si­tion and tim­ing of the sup­port of­fered must be care­fully con­sid­ered on a ben­e­fi­ciary-by-ben­e­fi­ciary ba­sis, or we risk un­der­min­ing the black in­dus­tri­al­ist’s suc­cess.”

Ve­laphi Rat­she­fola, MD of ABI Bot­tling, high­lighted ac­cess to fi­nance and lack of net­works as the two main chal­lenges fac­ing the es­tab­lish­ment of a vi­brant black in­dus­tri­al­ist sec­tor.

“The lack of re­quired net­works and a track record to fa­cil­i­tate mar­ket ac­cess has of­ten proven to be a bar­rier to en­try,” said Rat­she­fola, adding that ABI Bot­tling was search­ing for a lo­cal sup­plier of a prod­uct it was im­port­ing for R30 mil­lion a year.

He warned that if South Africa’s econ­omy did not be­come more “in­clu­sive” of the black ma­jor­ity, with full sup­port for such ini­tia­tives, eco­nomic growth would prob­a­bly re­main in a slump.

Patterson and Rat­she­fola agreed that the pro­gramme should not be ex­pected to suc­ceed overnight and might take years to ex­e­cute prop­erly.

Edge Growth said govern­ment had demon­strated nu­mer­ous suc­cesses in en­ter­prise de­vel­op­ment through var­i­ous ini­tia­tives.

Patterson added: “In re­cent times, govern­ment has done well to in­cen­tivise or­gan­i­sa­tions to man­u­fac­ture and assem­ble lo­cally. Un­for­tu­nately, com­pa­nies are not well in­formed of th­ese in­cen­tives, and are also un­sure of how to lev­er­age their en­ter­prise and sup­plier de­vel­op­ment funds with th­ese in­cen­tives to pro­mote lo­cal­i­sa­tion ini­tia­tives, which, at the core, need the likes of black in­dus­tri­al­ists to drive them.”

There were a num­ber of sec­tors that govern­ment could look at to boost black in­dus­tri­al­ist num­bers.

“With South Africa fac­ing an en­ergy cri­sis, the re­new­able en­ergy sec­tor of­fers an op­por­tu­nity to cap­i­talise on it through cost-ef­fi­cient and en­ergy-ef­fec­tive prod­uct and ser­vice in­no­va­tion. There’s also a large pres­ence of au­to­mo­tive man­u­fac­tur­ers,” said Patterson.

“The fi­nan­cial ser­vices sec­tor is evolv­ing and its lead­ers are be­com­ing cus­tomer-cen­tric by of­fer­ing in­no­va­tive and prac­ti­cal ac­cess to their prod­ucts, but have mas­sive legacy sys­tem is­sues pre­vent­ing them from im­ple­ment­ing so­lu­tions with the agility of ex­ter­nal ser­vice providers.

“There are still huge gaps in ap­peal­ing to the un­banked mar­ket, both in South Africa and Africa at large, leav­ing a cap­tive au­di­ence,” she said.

Edge Growth said men­tors, fi­nanciers, the pri­vate sec­tor and com­pa­nies South Africa bought from in­ter­na­tion­ally needed to be roped in to de­velop strate­gies that ben­e­fited a lo­cal, African and south­ern hemi­sphere pres­ence.

PHOTO: GALLO IM­AGES / NAR­DUS EN­GEL­BRECHT

FANCY FIN­GER WORK A Hisense fac­tory worker at a tele­vi­sion pro­duc­tion line at the Hisense fac­tory in At­lantis in Cape Town. Govern­ment has launched a pro­ject to iden­tify and sup­port black in­dus­tri­al­ists who can be de­vel­oped in the pri­vate sec­tor

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