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Competition Commission to tackle economic concentration by large companies, Ramaphosa promises

President Cyril Ramaphosa

President Cyril Ramaphosa

20th March 2024

By: Darren Parker

Creamer Media Contributing Editor Online

     

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Government will be setting a target for the Competition Commission to undertake market inquiries in more strategic sectors of the economy over the next few years to address high levels of economic concentration by major companies and low participation by small- to medium-sized enterprises, President Cyril Ramaphosa has said.

“We need to open up the economy and make it more inclusive. This means that we need to address features of the market structure that inhibit the participation of black industrialists in the economy,” he said at the Black Industrialists and Exporters Conference, in Sandton, on March 20.

Ramaphosa said that the International Monetary Fund and the World Bank both agreed that one of the key problems with the South African economy was the high level of concentration, ownership, control and market dominance by large companies.

“If you look at our own economy, you will find that, if you go around various cities of our country, you'll find the same firms dominating business all around the country. And they are few, they’re white-owned, and they have enormous market dominance. This is precisely what we now need to change,” he said.

Ramaphosa also addressed the concern that many black industrialist entrepreneurs at the conference voiced during a poll, which showed that many experienced a lack of access to funding.

In 2020, he promised South Africans that a R200-billion Covid-19 loan guarantee scheme, which was to be guaranteed by the government, had begun to process applications from small- to medium-sized businesses.

However, Ramaphosa said at the conference that he was “shocked” to learn that, to date, only R20-billion of that money had been allocated.

“We asked what happened to the [remaining] R180-billion, and we found that the [banks] were setting onerous conditions, almost impossible conditions that black businesses could not attain. Those onerous conditions must be reformed. Many of them must be dropped. We must make funding available to black businesses, so that they can help and contribute to growing the economy, because the economy cannot grow without funding,” he said.

He blamed the problem on the financial institutions responsible for allocating the funds.

“Our economy has been highly financialised. Financial institutions have a lot of money. They hold the money, and they don't deploy that money to productive initiatives or productive assets,” Ramaphosa complained.

He said government would need to relook at how it can incentivise or even compel financial institutions to support small- to medium-sized black-owned businesses.

“Truth be told, there will be no meaningful growth in our economy without business, people or businesses being financed, there will be no growth. If we want to grow, we must take the risk. We must take the risk and finance businesses so that we can grow our economy. The whole economy in the end benefits from the growth and will benefit from the growth of black owned businesses,” Ramaphosa said.

The President also emphasised the need to bolster manufacturing and beneficiation in South Africa, noting that, for too long, South Africa has exported raw materials only to import manufactured products made from those materials.

“We remain the largest repository of many critical and strategic minerals. We want opportunities to be open for black industrialists to beneficiate those. We need to export more of our processed products, including through the African Continental Free Trade Area. We must beneficiate our minerals. We must stop exporting rocks, dust, and soil. We must now export finished products,” Ramaphosa said.

To facilitate this, he said government would set a target for the number of black industrialists who will need to be supported and assisted through the black exporters network to get into export markets over the next five years.

He explained that these targets would guide the work of economic sector regulators, development finance institutions, and government departments.

“The process of empowering our black industrialists does not only reside in the Department of Trade, Industry and Competition. It is a government wide programme. All government departments are a part of this. As we break down the silos in government through utilising methods or models like the District Development Model, enhancing greater cooperation in government, we will be able to get more and more cooperation in government right across the board,” he promised.

Ramaphosa said that, to support these types of programmes, government would also work to unlock funds within the private sector through supplier development funds, local procurement commitments, and public interest conditions that are made when licenses are issued, or regulatory approvals are obtained.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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