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DTI unveils details of black industrialist support mechanisms

Trade and Industry Deputy Minister Mzwandile Masina

Trade and Industry Deputy Minister Mzwandile Masina

5th June 2015

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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The Department of Trade and Industry (DTI), which last year committed to the initial creation of more than 100 black industrialists within three years, has developed a draft policy framework to guide the introduction of financial and nonfinancial support mechanisms to boost the industrial asset share of black business.

The policy framework, which was compiled by an advisory panel comprising experts from various sectors, proposed the provision of working capital support – in the form of concessional loans – to black-owned firms, Trade and Industry Deputy Minister Mzwandile Masina said during his recent Budget Vote speech.

The proposed policy, dubbed the Black Industrialists Development Programme, further outlined the provision of investment grants for up to 80% of the cost of required capital equipment for companies with over 51% black ownership.

It also called for joint venture support through investment packages and grants in companies in strategic sectors in which black industrialists had equity and management control, as well as the provision of export support through export insurance concessional funding.

In support of the programme, the National Empowerment Fund had ringfenced R1.5-billion, the Small Enterprise Finance Agency R100-million, the Development Bank of Southern Africa R2-billion and the Industrial Development Corporation R23-billion, with additional funds to be allocated following the adoption of the policy by Cabinet.

Masina reported that the DTI had prepared a policy implementation plan, which it intended to table before Cabinet.

“Our policy objectives are designed to help the economy overcome the vitality of the market in resolving structural and social inequalities historically embedded in the apartheid State policy. This includes overcoming spatial inequalities amongst provinces in terms of industrialisation.

“In this regard . . . the concept of black industrialists refers to black people directly involved in the origination, creation, management and operation of industrial enterprises that have a minimum 51% black ownership and derive value from the production of goods and services on a large scale, acting to unlock the productive potential of our country’s productive assets for massive employment locally,” Masina asserted.

Drawing from this definition of black industrialists, the DTI and the black economic-empowerment advisory council had generated criteria for qualifying enterprises and had already received interest from 40 ‘applicants’.

“[These] applicants volunteered as soon as we announced the idea of the programme. They have not undergone any adjudication process but will be processed alongside all other applicants when the implementation starts,” said the Deputy Minister, adding that the DTI aimed to have 50 beneficiaries processed and accredited under the scheme by end of the year.

This would, he averred, increase to 100 by the end of the 2016, after which the implementation mechanisms of the policy would, in 2017, be reviewed.

According to Masina, various private financial institutions, including Standard Bank, First National Bank and Bidvest, meanwhile, had expressed a willingness to partner with government on the programme and he invited other interested financial institutions to participate.

Moreover, government had committed its public procurement spend as “an instrument” to be used in advancing this inclusive objective of the Black Industrialists Programme.

This would be implemented through the set-asides for targeted procurement from small, medium-sized and microenterprises, as well as black-owned companies.

The current government threshold on set-asides was 30%; however, the objective was to institutionalise a 70% procurement target from emerging businesses.

In this regard, the DTI has signed a memorandum of understanding with national carrier South African Airways, which would see the airline setting aside R10-billion from its public procurement for black entrepreneurs and industrialists.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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