Finance Minister Tito Mboweni said more than R800 billion would be injected into the economy to help alleviate the negative effects of Covid-19. Photo: Siyabulela Duda/GCIS
Finance Minister Tito Mboweni said more than R800 billion would be injected into the economy to help alleviate the negative effects of Covid-19. Photo: Siyabulela Duda/GCIS

BEE and black industrialists programme a solution to mainstream disadvantaged people

By Miyelani Mkhabela Time of article published Jun 1, 2020

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JOHANNESBURG – Finance Minister Tito Mboweni said more than R800 billion would be injected into the economy to help alleviate the negative effects of Covid-19. Conscious implementation of economic and affirmative action practices are a great challenges faced by black professionals in different houses aligned to the allocations of the R200 billion set aside to boost about 700 000 firms and three million employees.

We must protect the gains of 1994 as that’s sustainable for the South African economy. 

Reflecting on the hope shared by Black Economic Empowerment Commission chairperson Cyril Ramaphosa and Lott Ndlovu, on 13 September 2000, at the dti Portfolio committee meeting, President Cyril Ramaphosa spoke of black economic empowerment as part of the transformation process, he explained the need for it, and set out the institutions such as Investment for Growth Accord and a Black Economic Empowerment Act, and other implementing agencies that continue to serve this purpose. 

President Cyril Ramaphosa explained the need to define black economic empowerment and the Commission's focus on it as a transformative process aimed at redressing past inequities and ensuring meaningful economic participation by black people. He explained that there is both a moral and an economic case for this process, the latter because of the economic repercussions of marginalising the black majority outside the economy.

President Cyril Ramaphosa explained the key elements of the National Strategy that the Black Economic Empowerment Commission is proposing. First, he referred to the idea of an Investment for Growth Accord, which would involve commitments by government, business and labour. These would include commitments to investments in areas of national priority. Mr Ramaphosa stated that this is a mild initiative that would help to overcome the confidence problems that Governor Mboweni of the South African Reserve Bank has recently brought to the fore. He suggested that such an Accord could kickstart the economy and lead to a higher growth path. 

Twenty years later, The former chairman of the BEE commission is the president of the country and the former Governor of the Reserve Bank is the current Finance Minister, in strategic positions to transform the South African economy, pondering on their aspirations during the formation of the Black Economic Empowerment Commission 2000, helps South Africa that reflective leadership on the transformation policies in joyous and disastrous moments, critical and analytical thinking remain pivotal in guiding the nation to respect the constitution. There is a new phenomenon in South Africa professionals that benefited from affirmative action and now they are lost in podium speaking down Black Economic Empowerment and transformation, because of looking at themselves selfishly and think, transformation is no longer a necessity in South Africa. 

We request the President to guide the nation on the importance of Black Economic Empowerment and transformation in South Africa, the president is mainly silent in critical issues that takes away from transforming the South African economy and that will result in a terrible five years, when it’s not quickly corrected. 

Broad-based black economic empowerment (BEE) is a government policy to advance economic transformation and enhance the economic participation of Black people (African, Coloured and Indian people who are South African citizens) in the South African economy. It’s also important for Black Management Forum, The Association of Black Securities and Investment Professionals , Black Lawyers Association and The South African Apex - Black Business Council need to reflect on the Twenty Years of the Black Economic Empowerment, On  September 2020. 

The Constitution of the Republic of South Africa, 1996, provides all people in South Africa the right to equality and fulfils the formal element of equality by creating a basis for equal treatment.

Despite the right to equality, not all people in South Africa are born to equal circumstances. The history of South Africa has resulted in an economic and opportunities disparity based on race and has resulted in many Black people in South Africa not enjoying the same opportunities and so being substantively equal to the remainder of South Africa.

The purpose of BEE is to bridge the gap between formal and substantive equality to ensure that all people in South Africa fully enjoy the right to equality.

The biggest part of the R500-billion would be a R200-billion loan guarantee scheme, in partnership with major banks, the treasury and the South African Reserve Bank. This, Ramaphosa said, would help to pay salaries and suppliers. The scheme is open to companies with a turnover of less than R300-million a year and would support about 700 000 firms and three million employees.

Ministers in all sectors must emphasise Black Economic Empowerment act compliance as part of the R200 billion loan guarantee and all commercial banks and government agencies working on the allocation of the funds, must rethink transformation and respect the constitution of South Africa. We mustn’t create future problems while having tools to utilize and best systems that are proven to be good for a nation. The solutions of today can be the challenges of the future when we forget reflections on the constitution.

The democratic government has invested in an organised effort to reconstruct South African society through the socio-economic promotion of historically marginalised sections of the population. In the realm of economic life, this implies the need to transform the patterns of asset ownership in a manner that reinforces the national objective of building a society that harnesses the power of diversity. 

In light of the latter, Government developed various policy instruments with the objective of achieving an inclusive economy within the strategic framework of black economic empowerment. The intent of this is to transform the structure of South Africa’s economy in a manner that promotes spatial integration, high levels of decent employment, demographic transformation of our industrial assets, growth, and global competitiveness of black-owned enterprises operating in the manufacturing sector.

It is in the context of the above that the Department of Trade and Industry (the DTI) has  launched the Black Industrialist Programme mid-late November 2015. On 4 November 2015, cabinet approved the Black Industrialist Policy which aligns with the Industrial Policy Action Plan, the National Development Plan 

The Black Industrialist Policy places particular emphasis on the need to strengthen and increase black participation and enhance entrepreneurial dynamism in the mainstream economy. According to the DTI, thus far R2 billion has been assigned to kick-start the incentive drive, with more funding expected to be raised from stakeholders such as commercial banks and Development Finance Institutions.  Furthermore, multi-corporations and State-owned Enterprises are set to partner with the DTI to assist black industrialists with access to markets. 

With the recent introduction of the new broad-based economic empowerment codes, Government has taken a rigid approach (or unable to be bend) to support black industrialists in a bid to enhance South Africa’s industrialisation efforts.

The concept of black industrialists refers to black people who are directly involved in the origination, creation, high-level ownership (>50%), management, control and operation of industrial enterprises that derive value from manufacturing goods and services on a large scale, thereby acting to unlock the productive potential of our country’s capital assets for massive local employment. Government is essentially looking for black industrialists who not only make long-term commitments to business but are also medium-to-long-term investors.

The incentive seeks to achieve the following socio-economic objectives:

  • Accelerate the quantitative and qualitative presence and participation of black industrialists in the national economy through state-backed integration plans – this includes the systematic ring-fencing of state procurement opportunities so that such opportunities are only accessible by black industrialists;
  • Create greater industrial linkages amongst black entrepreneurs and established industrial enterprises;
  • Improve the capacity and competitiveness of black manufacturers through the use of modern technology and innovation; and
  • Utilise black industrialists for economic growth, economic transformation, employment creation and sustainability.

Targeted beneficiaries include established industrialists with extensive experience, operations, and track records in their respective industrial sectors who require support to expand their operations and/or improve their business efficiencies. Also included are emerging new black industrialists in pursuit of starting a new business or taking over brownfield projects.

Government has been quite strategic and smart in selecting priority sectors that make the greatest contribution to the economic hub. These include the likes of: Agro-processing ; Manufacturing; Construction; Clean technology; Energy; ICT/ TMT; Mining; Mineral beneficiation; Creative arts; Pharmaceutics, and Automotive components.

The challenges of accessing capital and markets, developing the necessary technical skills and improving productivity are without a doubt the main constraints confronting black entrepreneurs in general. This is often due to the limited pool of financiers, lack of security to back up loan applications, high cost of borrowing and, simply put, fear of rejection when applying for loans. The Black Industrialist Programme responds to these challenges by offering the following support:

  • Investment grants and equity loans for the purpose of acquiring, constructing, expanding or rehabilitating plants;
  • Working capital support via low-interest concessional loans;
  • Incubation and mentorship support for emerging entrepreneurs and enterprises;
  • The creation of a portal for networking and match making;
  • A joint venture support package consisting of an investment grant and an equity loan;
  • Funding of feasibility studies, licenses and quality assurance standards on a cost-sharing basis; and
  • Export support in the form of export insurance funding and market access support.

If we want a strong economy that is inclusive and sustainable, we must address the challenges that black businesses face. In so doing, we will broaden the industrial foundation together, as a diversified nation.

South Africa needs to continue reflecting and debating wide-ranging issues such as international trade regulations, transformation of corporate South Africa, good governance, public-private partnerships, unity (Vunwe), reform of and support for national chambers of commerce, leadership, youth unemployment, gender and health issues. 

South African black business leaders and professionals mustn’t be ashamed to implement transformation, as Nelson Mandela believed in transforming the South African economy for economic development and Gross National Happiness. 

Miyelani Mkhabela is a Chief Executive and Capital Markets Strategist at Antswisa Transaction Advisory Services, contract us on : www.antswisa.co.za | [email protected] | Tweet : @Miyelani_hei

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