Trade and Industry Minister Dr Rob Davies showcased four recipients of government’s flagship Black Industrialist Programme (BIP) during his Budget Vote last week, reporting that they were among 46 recipients of an incentive that comprises nonrefundable grants and concessional loans.

The Department of Trade and Industry (DTI) recently announced that the multibillion-rand programme would be accelerated and that 100 black industrialists would receive support by the end of March 2018, instead of the initial deadline of March 2019. Once the target had been met, the DTI would consider whether or not it could be extended or expanded.

The BIP was launched in 2016 and is funded through a R3.6-billion on-budget allocation to the department to support manufacturing investments. It is also backed by loan finance made available through development finance institutions, such as the Industrial Development Corporation (IDC), the Land Bank and the National Empowerment Fund. The IDC has revealed that it has set aside R20-billion to support black industrialists.

Davies reported in his address that more than R2-billion in financial support had been approved for the first 46 recipients, including R122-million in DTI grant funding. The funding would support investments worth R3.7-billion, which is projected to create more than 8 000 direct jobs and close to 12 000 indirect jobs. The four beneficiary firms introduced to lawmakers included electronics firm Yekani Manufacturing, copper and aluminium cables producer United Industrial Cable, valve guides and seats producer Micro Finish and K9 Pet Foods.

Applications had been adjudicated by a ‘professional’ funding forum, which Davies stressed included no politicians. “Those benefiting from this programme have passed through a rigorous test to ensure that they are genuine manufacturing entrepreneurs who have met the identified criteria of ownership and personal leadership and who have placed their own funds at risk in developing their businesses.”

Davies initially refused to release the names of the other beneficiaries of the programme, saying these would only be released in consultation with the individual recipients. He expressed concern that the publication of a comprehensive list of beneficiaries could be abused by those with ulterior motives and could result in the beneficiaries being “harassed”. However, the DTI reversed this position.

In a statement, the DTI said that, following a request for information from a number of stakeholders, it would, with effect from the 2016/17 financial year, release a list of beneficiaries across its incentives programmes. “This will be done along with an incentives report which details the impact of the incentive programmes of the department.

The information will be released at the end of July, following the annual audit by the office of the auditor-general.” R1bn Agroprocessing Scheme Also announced by Davies in his Budget Vote was the creation of a R1-billion agroprocessing incentive to support both brownfield and greenfield investments and encourage investment in upstream and downstream support services, and for the expansion of infrastructure to be used by farmers and agroprocessors.

The scheme forms part of the DTI transition away from generalised incentives, some of which will remain intact, towards sector-specific programmes. “I am confident that the agroprocessing incentive will make a positive difference by creating jobs and supporting smallholder farmers, amongst others,” Davies said, describing the sector as an important labour-intensive sector prioritised in the Industrial Policy Action Plan.

Manufacturing Circle executive director Philippa Rodseth welcomed the new incentive, arguing that the agroprocessing sector had “rich potential for job creation, for rural development, and for exports”. “The Manufacturing Circle has been closely involved in consultations with the DTI, and we will continue this dialogue to ensure that maximum benefits . . . flow from the incentive,” she said.

Separately, Economic Development Minister Ebrahim Patel released details of another sector-specific incentive: a new R1.5-billion fund for downstream steel manufacturers to be implemented from June 1. The incentive, officially named the Downstream Steel Industry Competitiveness Fund, is to be administered by the IDC, which will also provide the bulk of its funding.

The DTI’s flagship sector-specific incentive, the Automotive Production Development Programme, was due to continue to 2020 and a consultative process was under way with stakeholders to develop an ‘Automotive Master Plan’, which would inform the country’s motor industry programme after 2020.

Davies expressed disappointment at the decision of General Motors (GM) to disinvest from South Africa, saying that the decision was presented to government as a “fait accompli”. “At the time we met with GM, the discussions they had been having with Isuzu were not completed and, of course, we now welcome the fact that Isuzu is buying the plant,” Davies said, indicating that the DTI would engage with Isuzu to “mitigate” the job losses. The GM decision was expected to result in the loss of 589 direct jobs.

"We will try to do what we can to see that Isuzu picks up some of the slack.” The Minister also stressed the withdrawal was not a reflection of a “generalised trend” in the sector, where investments were still being undertaken by original- equipment manufacturers. Davies pointed, in particular, to the multibillion-rand investment under way in the Eastern Cape by Beijing Automobile International Corporation, and also highlighted multibillion-rand brownfield investments by Toyota South Africa to produce the Fortuner and the Hilux.