South Africa’s new Black Industrialists Policy, which has been approved by Cabinet, has been described as a potential game changer and is being held up by government as central to a more inclusive reindustrialisation of the country’s economy.

Unpacking the policy recently, Trade and Industry Minister Dr Rob Davies argued that, with South Africa’s mining sector taking a “pounding”, the “only way out” was to industrialise inclusively and diversify the economy.

The Department of Trade and Industry was ready to officially implement the policy and kick-start the associated programmes, but Davies stressed that benediciaries would need to be directly involved in manufacturing, with the selection process developed to be “tight” with stringent, specific criteria.

“We are looking for real industrialists,” Davies said, noting the importance of providing more support, as opposed to spreading resources more thinly across many, to “[raise] the game” of industrial development.

“We don’t want rent seekers . . . we want the serious players and we will give them more [in terms of funds and support],” he explained.

Davies defined the targeted black industrialists as “juristic persons that include black-owned cooperatives that create and own value-adding industrial capacity and provide long-term strategic and operational leadership to business”.

The aspiring or existing industrialist needed to provide strategic and operational leadership to the business; boast a high level of ownership or exercise control over the business; identify opportunities and develop the business to take advantage of these opportunities; take a personal risk in the business; do business in the manufacturing sector, with preference shown for Industrial Policy Action Plan focus areas; and have made a long-term commitment to the business and be a medium- to long-term investor.

Further, despite the spectrum of challenges facing black businesses, including skills development, standards, quality and productivity improvements, the policy would focus specifically on access to finance and markets initially, which have emerged as the major stumbling blocks to sustainable development for industrialists.

The financial support would take the form of assistance with early-stage capital to develop a project to bankability stage; industrial financing through development finance institutions; syndicated financing through development funders; government incentives; and strategic collaboration with banking institutions.

A Black Industrialists Forum had been established to select potential candidates and their businesses and guide the disbursement of funds for, besides others, the procurement of new capital equipment, working capital support through concessional loans to ease working capital pressure, and the funding of feasibility studies and business support, including licences, quality assurance and standards.

The policy also proposed various initiatives to enable access to markets, including leveraging State and targeted procurement, with export market support provided for black industrialists.