Johannesburg - Cosatu wants the government to expedite the Industrial Development Corporation’s (IDC) application for broad-based black economic empowerment (BBBEE) facilitator status as “granting the IDC BBBEE facilitator status would enable the corporation to bolster its power to intervene and shape the South African economy in progressive ways”.
Cosatu general secretary Bheki Ntshalintshali told Business Report yesterday that the federation’s submission was one it wanted the government to deal with urgently, given the importance of the IDCs role in economic transformation and also its proven record as a business rescuer.
“We also believe that granting it would help save jobs as the IDC has a proven track record with successful business intervention. We are not worried who owns a company, but that everyone has a stake in it, society as a whole.
“We believe that the IDCs role is crucial in achieving this,” Ntshalintshali said.
In its submission, Cosatu pointed out that the IDC often took equity in distressed businesses that were unable to find new alternative ownership because they were distressed.
“As part of the restructuring process it may be useful to find new business and (for example) integrate into public or private sector supply chains. Yet this outcome requires an improved BBBEE score and the IDC equity confers no BBBEE points for ownership.
“Such businesses are faced with a dilemma. To restructure and reignite the business they require new BBBEE ownership. But the business is not yet sufficiently stabilised or viable for the IDC to divest and no or few other investment prospects exist. Hence the prospects of the business are stifled,” said Cosatu.
The IDC does not have BBBEE facilitator status. This means the companies in which it has equity in do not accrue BBBEE points through the fact of the IDC’s shareholding.
“Cosatu sees this as an impediment to the work of the IDC. Cosatu believes that the IDC should not be hamstrung in its ability to act as a catalyst for economic change. The country cannot afford to have one of our most significant (development finance institutions) prevented from decisively, robustly, and nimbly stimulating industrialisation and transformation in South Africa.”
BUSINESS REPORT