The Black Business Council (BBC) has called for the R1.5-billion fund recently established by the private sector to help small and medium-sized enterprises (SMEs) get through the current challenging economic period to be managed by the National Empowerment Fund with participation from business, labour and government.

The BBC’s national council also suggested during a media briefing in Johannesburg, on Tuesday, that periodic reporting to the National Economic Development and Labour Council about the status of fund should be undertaken, as “South Africa Incorporated is broadly represented in the council”.

The announcement of the fund’s establishment was made by financial services company Discovery CEO Adrian Gore during a briefing at the Union Buildings on May 9, where government, labour and business shared the progress made by the work streams established by President Jacob Zuma to assist the country avoid a credit downgrade.

“The fund is a private sector initiative [although] we are hoping that government contributes; but we are focusing on what business can provide. We have injected R1.5-billion into the fund but ultimately we are hoping to raise R3-billion,” Gore told reporters at the time.

He added there had been “a strong overwhelming intent” to support the fund, which Gore said boded well for the future.

BBC CEO Mohale Ralebitso concurred with Gore’s sentiments, stating during the briefing on Tuesday that the reasons for founding the fund were sound. However, he said the BBC was concerned about the nature of black participation with respect to the management of the funds and the decision-making filters relating to the administration of the funds.

“This [fund manager sector] is completely nonrepresentative and lacks meaningful black participation and proceeding along this path could serve to increase the influence of [the] predominant thinking in our economy,” Ralebitso contended.

He said there was a strategic opportunity to address market failures as they related to SMEs, which were in “dire need” of substantial funding.

Ralebitso stressed that, if South Africa was to succeed in growing employment with transformation and black economic empowerment as key imperatives, then SMEs had to be supported.

He further commented that leaving the fund in the hands of existing and largely white fund managers would result in government perpetuating the lack of transformation of the country’s economy.

“This could see us fail to set a new path for investment that is a much-needed catalyst for SMEs and which could help address the structural economic challenges we have failed to tackle since the advent of democracy.”

Ralebitso remarked that the fund could alienate rather than support and motivate the very entrepreneurs it was established to partner with, leveraging the expertise of some of South Africa’s most successful entrepreneurs, whose participation could, “without a doubt” assist with better integrating SMEs into the local supply and delivery chains.

It is for these reasons that the BBC believed there was a need for a three-pronged oversight of the fund, he highlighted.