The National Empowerment Fund (NEF) has advanced R35 million to two black entrepreneurs to buy a further 25.1 percent stake in a cement producing company.
The funding will enable Jabulani Cekwana and Siphindile Ngiba to increase their shareholding in Value Cement to 73.79 percent. The investment will also facilitate a 43 percent female participation and a 57 percent direct and operational involvement by black management.
The funding will also enable Value Cement to own the property, the plant and the equipment it is renting as well as create 50 full time jobs.
Cekwana is the managing director of Value Cement while Ngiba is the financial director.
The local cement industry is dominated by multinational corporations, with no black entrants to date.
The NEF said Value Cement produced and sold cement to a wide range of customers across the country and had a strong pipeline of customers interested in its products, including elsewhere in the Southern African Development Community (SADC) region.
Value Cement has a five-year off-take agreement with the Mica hardware group and has 145 outlets nationally. It has been supplying between 100 000 and 300 000 bags of cement a month to Mica.
Value Cement hopes to benefit from the government’s infrastructure development plan, for which R846 billion has been budgeted over three years.
The NEF said a backlog of 2.1 million subsidised houses needed to be addressed in the next four to five years.
“Value Cement is well positioned to take advantage of these opportunities in the market, given its strong empowerment credentials,” it said.
Cekwana, a chartered accountant, said he and Ngiba joined Value Cement to build a cement plant in November 2010 but the working capital was insufficient, so they had turned to the NEF.
“The investment ensures that previously disadvantaged people participate meaningfully in the cement industry and gain invaluable skills in this niche space, which will be useful in the foreseeable future as this is a pivotal sector that will assist the country to meet its infrastructural development goals,” he said.
The deal was facilitated through the NEF’s Umnotho Fund, a funding vehicle that is designed to increase access to capital for black economic empowerment beneficiaries.
NEF chief executive Philisiwe Buthelezi said: “We are very excited about this project, not only because of its strong commercial merit but also its high developmental impact. The firm will contribute to gross domestic product and generate foreign revenue from exports into SADC and other regions.”
He added that it would also generate in excess of 50 jobs and its investment would secure equity in the project.