The development of a specific support framework for black industrialists has been flagged for the first time in the latest version of the South African government’s Industrial Policy Action Plan (Ipap).

The 2015 document – the seventh iteration of the yearly plan – was launched by Trade and Industry Minister Dr Rob Davies in Johannesburg on Thursday, amid a weakening manufacturing climate and fresh concerns over new broad-based black-economic-empowerment (BBBEE) codes, which came into force at the beginning of May.

The Ipap 2015/16 indicated that, over the coming year, a ‘Black Industrialists Development Programme’, backed by R1-billion in incentive funding from the Department of Trade and Industry (DTI), would be designed, developed and structured.

The aim of the scheme, which government planned to implement in collaboration with several development finance institutions, would be improved inclusion and participation of black industrialists in manufacturing activities.

Davies described the document’s section on support for black industrialists as the “first practical steps towards realising government’s commitment to transformation and empowerment in the manufacturing sector”, adding that the initial aim would be to support 100 black industrialists.

Details remained sketchy, but the action plan indicated that the programme would include financial and nonfinancial support with a specific focus on access to finance, access to markets, skills development, meeting quality standards and productivity improvements.

“The Black Industrialists Development Programme will be aimed at promoting industrialization, sustainable economic growth and transformation through support of black-owned entities in the mainstream of South African manufacturing industry and related manufacturing service sectors,” the Ipap outlined, indicating that it would embrace both new and existing support instruments.

The DTI would oversee the development of the scheme in collaboration with the Industrial Development Corporation, the Export Credit Insurance Corporation, the National Empowerment Fund, the Land Bank, the Public Investment Corporation and the Development Bank of Southern Africa.

The architects of the programme, which should be operationalised during the current financial year, would also take their lead from the recent Black Industrialists Indaba, which took place in March.

Following the two-day gathering it was agreed that a committee comprising government, the private sector and co-opted experts be established to explore ways to accelerate the implementation of the programme.

It was also agreed that the Preferential Public Procurement Act be reviewed and that the “black-majority threshold” be set at 75% for companies qualifying for the programme. Three commissions had since been established to explore access to finance, access to markets and State procurement, and policy and skills development.

Davies indicated that the new BBBEE codes, recent surprise changes to which having been heavily criticised by business and verification agencies, had been designed to support the black-industrialists thrust.

He acknowledged that those basing their scorecards on the previous codes could expect to fall a level or two under the new regime, as government had purposely redesigned the system to encourage supplier development and the inclusion of active, strategic shareholders rather than passive ones.

However, he also stressed government's willingness to show flexibility and "learn as we go", including on the controversial decision to limit, to three, the number of points that could be earned for broad-based or employee share ownership schemes.

INCENTIVES REVIEW

Movement on the Black Industrialists Development Programme was also framed as part of a larger proposal by government’s Economic Cluster, which oversees the Ipap, to strengthen South Africa’s industrial financing and incentives system.

The Ipap envisaged a “recalibration” of existing incentives, following a dialogue with manufacturing companies on ways to improve the effectiveness of the incentives package.

Over the coming months the design, range, quantum, conditions, take-up and impact of the full suite of government industrial financing packages and incentives would be scoped.

Thereafter, the DTI would seek to develop proposals for strengthening the suite of existing support mechanisms, beginning with further fine-tuning of its flagship Manufacturing Competitiveness Enhancement Programme.

In addition to the specialised incentive to support black industrialists, the Ipap proposed that a comprehensive system of industrial financing and incentives be adopted by the end of the current fiscal year.

Davies reported that, during 2014/15, a total of 3 384 companies received R13.6-billion in support through various public-sector incentives.

Also prioritised in Ipap 2015 was the need to improve compliance within the public sector for government’s plan to leverage procurement and the multibillion-rand infrastructure programmes to drive demand for locally produced goods and services.

Outside of the public sector, government planned to work more closely with the mining industry in an effort to improve linkages with the domestic manufacturing sector, including in the area of mineral beneficiation.

As with Ipap 6, the latest version continued to also highlight the importance of growing exports, particularly to the rest of Africa, while pursuing action to accelerate regional integration.