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National Empowerment Fund mandate not in question

Trade and Industry Minister Rob Davies

Trade and Industry Minister Rob Davies

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The mandate of the National Empowerment Fund (NEF) is not in question, Trade and Industry Minister Rob Davies said on Friday.

In a joint statement issued by the Department of Trade and Industry (dti) and the NEF, Davies said the overall progress of the NEF in becoming a development finance institution of significance, with an exclusive mandate to support Black Economic Empowerment and the productive economy, was not in question.

Davies and the NEF had been briefing Parliament’s Portfolio Committee on Trade and Industry regarding the loan to Ndalo Luxury Ventures (NLV) by the NEF.

In August 2012, the NEF approved loan finance to the value of R34.1 million for construction of the Luminance store, the local manufacture of a clothing range for the Luminance brand and the procurement of stock and shopfit material from local suppliers.

Davies told the committee that the transaction could not be seen as the “touchstone” and emblem of the NEF, as it was less than one percent of the total NEF’s loan portfolio of R5 billion.

“What I think we are looking at in retail in particular, is retail activities which stimulate productive activities in this country. If we look at this transaction, there were features that were in line with that.

“All of the local procurement and support for the cooperatives factory are perfectly in line with all those objectives. The NEF did much to improve this transaction in those respects,” said Davies.

NEF CEO Philisiwe Mthethwa said that the transaction was in line with the mandate of the NEF, as it sought to promote rural economic development, empowerment in an untransformed sector, local manufacturing and procurement.

“Ndalo Luxury Ventures (Pty) Ltd is a broad-based 100% black women-owned and managed company that manufactures clothing locally and imports a variety of top-end international brands. Black rural women own a 10% stake in NLV, while staff and management of NLV own 10% of the business.

“Ultimately, 81% of the NEF's funding will be used for localisation purposes. In addition to skills transfer from international fashion luminaries, the locally manufactured products, which include the arts and crafts procured from women in the rural areas, some of whom are NLV shareholders, will enjoy access to local and international markets,” Mthethwa said.

Davies said there was a need for the dti to re-emphasise some important objectives.
The minister had therefore decided to make public the department’s directive to its agencies. The shareholder instruction seeks to ensure that all transactions, including procurement, lending and developmental activities relevant to the agency, comply with both the spirit and the letter of the need to support the local industry and the productive sectors of the economy.

The directive requires the following of the agencies falling within the dti family:

  • Government funds may not be used to support the importation of finished goods and services. Where local suppliers do not exist, the agency must obtain the concurrence of the dti’s Accounting Officer and Executive Authority to deviate from this instruction.
  • Agencies should make every effort to find local suppliers of finished, intermediate and capital goods.
  • Where agencies provide support directly to private enterprises, agencies should actively encourage these enterprises to procure locally. Enterprises may also be referred to the Industrial Procurement Unit at the dti for assistance in finding local suppliers.
  • Government funds are to be prioritised to supporting the productive sectors of the economy, namely Agriculture, Mining, Manufacturing and Value-added Services such as Tourism, Business Process Services and the Creative industries. 


Davies further welcomed the committee’s unanimous support for the NEF’s recapitalisation, and said the dti would continue to work to secure an adequate capital base to expand the work the NEF is doing.

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Edited by SANews, SA government news service

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