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Black industrialisation vital for transformation, says dti

Cape Town – The black industrialisation programme set up by the dti (Department of Trade and Industry) was crucial for radical economic transformation in South Africa, dti deputy minister Mzwandile Masina said on Thursday.

Referring to a recent memorandum of understanding between SAA and the dti to address the inclusion of black industrialists in the industry, Masina said it might seem out of the norm, but “we have to do things a bit differently” to achieve the above objective.

The dti announced in 2014 that it would create 100 black industrialists in the next three years.

“The reality is that [after] 21 years of democracy … [only 3% of the JSE is owned by black business, which] is an insult to the majority of our people,” he said, ahead of his budget speech in Parliament.

“They continue to suffer from unemployment and poverty and inequality and something different has to be done so this is what we’re doing as a starting point,” he said. “SAA is just one programme in a greater scheme of what we’re doing in the economy.

“If we fundamentally want to change, we have to introduce programmes,” he said. “We are resolute. We will do it.”

Masina said he found it puzzling that people would criticise the programme, as they’re doing something similar to what the previous government did, but differently.

“We have learnt a lot about what happened in the past. You will remember how IDC (Industrial Development Corporation) created [businesses like] Sasol ...,” he said. “There was a deliberate programme that was set up by the state.”

WATCH: Masina speaks about black industrialisation


Masina’s black industrialisation speech

Masina’s budget speech, which followed that of Minister Rob Davies, focused heavily on black industrialisation.

He said the Black Industrialist (BI) Programme referred to black people directly involved in the origination, creation, a minimum 51% ownership, management and operation of industrial enterprises that derive value from the production of goods and services at a large scale; "acting to unlock the productive potential of our country’s productive assets for massive employment locally".

He said black-owned manufacturing entities had “limited capacity to finance their industrial ambitions and have difficulty accessing private credit without productive assets to use as collateral”.

“They are likely to pay higher interest rates on loans than their peers,” he said. “This is added to the likelihood of being denied loans by funding institutions. It is in this context that we intend on using this Black Industrialists scheme to provide various support mechanisms to transcend these barriers to entry and growth."

Advisory panel

Masina said the Black Industrialists Advisory Panel was made up of experts from different sectors to help draw up a policy and implement framework.

He said draft policy proposed a combination of financial and non-financial support mechanisms intended to boost the industrial asset share of black industrialists. These broadly include:

- working capital support in the form of concessional loans;

- investment grants that may cover up to 80%, capped annually, on capital equipment for entities with about 51% to 100% black ownership;

- joint venture support with investment packages and grants where black industrialists have equity and management control in strategic sectors; and

- export support through export insurance concessional funding and market support.

Criteria for qualifying

The central properties to this criteria is 51% black ownership, majority black management and control of the enterprise, and production of products with wide use in specified sectors of the economy, said Masina.

“We have prepared and will present a consolidated policy implementation plan before Cabinet. This will assist us to release, for public engagement, a final policy action plan from government to the people,” he said.

“We have 40 applicants who volunteered as soon as we announced the idea of the BI programme,” he said.

“They have not undergone any adjudication process, but will be processed alongside all other applicants when the implementation starts.

“As part of our implementation plan, we want to have processed and accredited 50 beneficiaries under the scheme by the end of 2015.

“This will increase to 100 at the end of the second year. This is in view of our three year medium-term objective of assisting 100 black industrialists.

“The third year will be used for preliminary assessment of the implementation and what reinforcement mechanisms are required as we leap into the future.”

* Comments for this story will be moderated. Fin24 encourages constructive debate.


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