Wiseman Khuzwayo
The Strategic Projects Fund (SPF) of the National Empowerment Fund (NEF) has projects in the pipeline estimated at R30 billion, with the potential to create up to 200 000 jobs in the next five years.
This is according to the NEF’s chief executive, Philisiwe Buthelezi, who spoke at the Businesswomen’s Association’s Achiever Awards in Johannesburg last week.
The SPF was established to boost the participation of black people in early stage projects aligned with government policy. Zweli Sapula, the head of the SPF, said the fund currently supported 28 deals and was evaluating others. These were mainly plants in key sectors of the government’s Industrial Policy Action Plan (Ipap), although those falling outside Ipap would not be denied funding.
Sapula gave examples of some of the projects. The NEF was co-founding a plant with the Industrial Development Corporation (IDC) and Russian company Magnesium Metals to produce titanium, hafnium, zirconium and silica.
Worth R2.2bn, the NEF, the IDC and Magnesium Metals would hold 30 percent each and the rest would go to promoters of the project. About 7 000 jobs would open up, of which 2 500 would be permanent.
Sapula said SA Metals Investment was setting up a project to process mine tailings that contained valadium and iron to make pig iron. The exposure of the NEF was R2.5bn.
The agency was also financing the setting up of the fourth-largest hospital group, which would be black owned. It would have three hospitals in three provinces and the NEF’s exposure was R1.5bn.
Buthelezi said the SPF was looking for competitive opportunities for the local economy and black participation at the outset of projects as opposed to during equity closure.
She said: “Black economic empowerment, we are agreed, should also increasingly focus on the creation of… businesses and industrial economic capacity by black entrepreneurs.”
“The mandate of the NEF enjoins us to have due regard to the wider national environment and social milieu within which economic transformation and growth are supposed to take place. In this regard, it is necessary that we have an appreciation of the roles incumbent on the various motive forces for propelling this change in the continuing national effort to build a developmental state.”
Buthelezi said successive research by Who Owns Whom had shown over the years that black people, who constituted more than 90 percent of the population, collectively owned less than 5 percent of the economy in terms of market capitalisation on the JSE.
“What this means is that (broad-based empowerment) is not an option, it is an obligation that must be underpinned by substantial preconditions. That is why we have no choice but to support calls for the review of the Preferential Procurement Policy Framework Act because in its current form it disempowers black enterprises,” she added.
Buthelezi said the act required businesses bidding for government tenders to dedicate 80 percent and 90 percent to capacity or technical ability which made it unnecessary for them to be empowered. Countries such as Brazil, India and Malaysia set aside a portion of tenders for their indigenous populations and that was why these countries had thriving economies driven by small businesses.