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Return African Bank to rightful owners - Nafcoc

Durban - Maybe the time has come for African Bank "to be returned to its rightful owners" and change its mandate from micro lending into a fully fledged bank that accepts deposits, said Rev. Joe Hlongwane, president of the National African Chamber of Commerce and Industry (Nafcoc) on Wednesday.

He spoke at Nafcoc's 50th Anniversary Conference. The theme of the conference is: “Lessons of the past 50 years…opportunities and challenges for SMMEs in the next 50 years”.

"There still exists a vacuum in the financial services industry for a black-owned and managed commercial bank with a clear understanding of the needs of the black community," said Hlongwane.

"This begs the question, why did the SA Reserve Bank (Sarb) not bail out the African Bank in 1995 when it was still owned and managed by black people under the auspices of Nafcoc?"

He is referring the matter of African Bank to the National Council for further discussions.

"Under apartheid, we could not trade in ‘white areas’ and yet white businesses were allowed to trade in ‘black areas’. Although apartheid has been abolished, this trend still continues to date," said Hlongwane. 

"Black townships have been invaded by big retail stores and foreign nationals and local black retailers have been turned into spectators in their own back yard. This is exactly what we refused when Pick n Pay founder Raymond Ackerman approached us in 1978 with a proposal to partner with Black Chain Supermarkets to target township and village markets."

Revitalising township and village economies

The big question for SA business is how to make the lessons of the past relevant today in an environment where small, micro, and medium enterprises (SMMEs) are at the centre of economic growth and job creation strategies, according to Hlongwane.

"We are on a slippery slope to a ‘failed state’ and we must do everything in our power to protect our democratic institutions," he said.

Hlongwane said Nafcoc has noted with deep concern the deteriorating state of institutions such as the National Economic Development and Labour Council (Nedlac), which has been relegated to irrelevance after failing to exercise its mandate of bringing about social compacts between business, labour and civil society – resulting in prolonged and violent labour disputes.

Hlongwane thanked Minister of Small Business Lindiwe Zulu "and her counterparts in the Gauteng provincial government" for what he called "following up on our call as Nafcoc to revitalise township and village economies".

"As Nafcoc, we are ready to partner with government and other interested parties in rebuilding small-scale manufacturing and home-based industries within reach of the township residential areas as part of a multi-pronged strategy to boost township economies."

He thanked the government and President Jacob Zuma for insisting on 60% localisation in the manufacturing of trains for the Passenger Rail Agency of SA (Prasa) and locomotives for Transnet to ensure the broadening of SA's black industrial base.

"We would like to urge our government to replicate this model across all facets of the South African economy to speed up the transformation of our economy from ‘white’ to ‘black’ within the shortest possible time," said Hlongwane.

"It cannot be right that twenty years into our democracy black people are still spectators in the theatre of economic activity on their ancestral land. We remain hopeful and are willing to put our shoulders to the wheel to ensure that we realise the objectives of the radical economic transformation programme as proposed by the ANC government."

He said in 1990 Nafcoc called on the business community to see to it that by the year 2000, 30% of all directors on JSE-listed companies must come from the black community, 40% of the shareholding of JSE-listed companies must be controlled by the black community, 50% of the value of their outside purchases must come from black-owned suppliers and contractors and 60% of their top management and personnel must also come from the black community.

Twenty years on, these targets have not been achieved.

"The Employment Equity Report of 2012/2013 clearly shows the biggest beneficiaries of the democratic dispensation have been the white community – specifically white males. The 14th Report of the Employment Equity Commission showed that only 20% of South Africa’s top management positions were occupied by black Africans. Whites dominated top management positions at 62.7%, while Indians made up 8.3%, coloureds 5.1% and foreign nationals 4.1%," said Hlongwane.

Education failing

He said Stats SA recently released a report that showed the skills level of black African workers have not increased as it should have over the past 20 years, with the skills level of black youth aged 25 to 34 having regressed.

The skilled employment among black Africans only increased by three percentage points, compared with increases of 26 percentage points and 19 percentage points, respectively in the Indian and white categories.

"Clearly, our education system has failed the African child and serious mistakes were made by the closing down of teacher training colleges and the discontinuation of apprenticeship programmes in the public sector. The private sector is equally to blame for not investing in the up-skilling of its workforce," said Hlongwane.

The way forward

In spite of the challenges, Nafcoc is proposing various suggestions for the way forward.

Township and village economies

"We need to clearly define potential areas of economic activity in the townships and villages and ring-fence them against competition from big companies. For example, bread is a stable food in many townships. However, bread is produced by big companies thereby cutting out small players," said Hlongwane.

"The solution here is to set up cooperative bakeries to first produce for government institutions such as hospitals, old age homes as well as for government initiatives such as the school feeding schemes. This could be replicated in services such as car washes and many others where government could act as the enabler as well as the market for township and village businesses – alleviating youth unemployment in the process."

Government funding agencies

There needs to be a reconfiguration of government funding agencies to align them to national initiatives such as the National Development Plan (NDP).

Nafcoc calls for all funding agencies operating in the SMME environment to be incorporated under the new Small Business Development Ministry.

Taxation on SMMEs

Nafcoc generally supports the findings of the Davis Tax Committee which, amongst others, found that small businesses spend an average of 255 hours a year to deal with all tax-compliance-related matters.

In line with these findings, Nafcoc calls for a relaxation of the tax regulatory environment in order to create a more enabling environment for more entrepreneurs to enter the marketplace and create employment.

Government’s R1trn infrastructure rollout

This presents an exciting opportunity to increase the participation of SMMEs in the South African economy and boost skills for millions of our people, according to Hlongwane.

Black owned commercial bank

"Economic transformation will never be complete without black people owning their own bank and I want to emphasise the point I made earlier about African Bank returning to its rightful owners," he said.

Growing SMMEs

The NDP will not succeed without active citizenry and the participation of organisations such as Nafcoc, according to Hlongwane.

In order for the Small Business Development Ministry to be effective, the new department "should be made up of people with an acute understanding of the SMME sector as well as the socio-political environment, over and above their business acumen and academic qualifications".

Agriculture

Nafcoc wants to make sure black farmers increase their control of the entire value chain from owning commercial farms, seed production, machinery – even in the production of finished products.

"We are in fact talking to the Polish government about the possibility of starting a tractor manufacturing plant in SA in which black farmers can own shares," said Hlongwane.

"My message today is ‘perseverance’ and ‘faith’ stood us in good stead over the past 50 years, and ‘perseverance’ and ‘faith’ will take us through the next 50 years and those are the hallmarks of the Nafcoc of our founding fathers."

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