Black industrialists boosted

PROGRAMME: INCENTIVES TO ENTREPRENEURS AIM AT GROWING MANUFACTURING SECTOR

Amina Patterson, head of business development at Edge Growth, shares the importance of a new initiative.

Access to finance is said to be one of the chief constraints confronting black entrepreneurs for inclusive growth.

This topic was featured at a round-table discussion this month where I advocated for an increase in the number of black industrialists.

Following the event, I would like to share some key insights, programme success factors and, more importantly, how the Black Industrialists Programme announced in November 2015 should differentiate itself from other initiatives.

Herman Mashaba of Lephatsi Investments (Pty) Ltd and founder of Black Like Me; Khanyi Dlomo, founder and managing director of Ndalo Media; and Siyabulela Xuza, rocket fuel innovator, all have one thing in common: they are what I define as today’s black industrialists. These are prime examples of entrepreneurs with the capability and expertise to innovate and scale a business, create jobs and contribute positively to economic growth.

However, the black industrialist is not just a terminology. It should be a movement our children aspire to, thus helping us to breed a nation of inspiring, competitive, collaborative and innovative entrepreneurs.

The need for black industrialists is a strategic imperative. The aim of the programme is to stimulate the growth of the manufacturing sector in particular, since this is where massive job creation potential lies.

The manufacturing sector’s contribution to GDP has declined from 20% in 1994 to 12% in 2013.

The Black Industrialist Programme could restore the manufacturing sector through a synergistic focus on the Industrial Policy Action Plan. This is also what government sees as our key opportunity to be globally competitive and achieve large-scale job creation.

This does not mean that an industrialist has to be a manufacturing business. A service-based business which creates jobs en mass could also be considered an industrialist. However, manufacturing is the sweet spot.

With imports affecting businesses’ bottom line and with the current global conditions, there is a need for alternate supply. Government has done well to incentivise organisations to manufacture and/or assemble locally, with implementation across the Capital Projects Feasibility Programme, the Automotive Production and Development Programme, the Manufacturing Competitiveness Enhancement Programme, and the Automotive Investment Scheme.

Unfortunately, companies are not well informed of these incentives and remain unsure of how to utilise their Enterprise and Supplier Development (ESD) funds together with these incentives to promote localisation initiatives.

At the epicentre of this ecosystem is the black industrialist required to drive economic growth.

However, ESD funds on their own will never be sufficient to drive black industrialism. They are best used alongside the other drivers, if it is to be used on this specific drive.

I believe a successful Black Industrialist Programme will have to take into account the following:

1. The selection process will have to be clear and transparent or it will fall victim to the criticisms of other empowerment schemes of the past; 2. The nature, composition and timing of the support offered must be well strategised; 3. The Black Industrialist Programme should seek to select entrepreneurs who demonstrate the ability to innovate in times of adversity – an individual who has also mastered entrepreneurship in a multitude of dynamic environments; 4. Incubation, in the traditional sense, is not a word to be used when looking to support only the best of the best entrepreneurs that the country has to offer. We would be doing a disservice to the black industrialist. These are high-growth-potential businesses who have the ability to create jobs.

At Edge Growth, our current clients are the SMEs we work with and corporate clients who procure our services. The SMEs that we typically work with meet the definition of an ESD beneficiary (as defined by the BBBEE Codes of Good Practice), meaning that they generate turnovers that do not exceed R50 million. There is the likelihood that these businesses will foster future black industrialists, provided that they continue to unlock exponential growth while accessing resources that enable them to unlock this development growth area further.

At the end of the day, the Black Industrialist will not only be an entrepreneur that conquers the local market, but rather the African market.

Now is the time we need to see Africans solving African problems, and benefitting from it.

Unfortunately, companies are not well informed of these incentives and remain unsure of how to utilise their ESD funds together with these incentives to promote localisation initiatives