South Africa on drive to broaden existing pool of black industrialists: Ayanda Holo
The objective is to accelerate transformation, ensuring that Black-owned businesses become active players in the mainstream economy.
By Ayanda Holo, South African Government Communications Director: International Media Relation
South Africa: South Africa is on a drive to broaden the existing pool of Black Industrialists. The objective is to accelerate transformation, ensuring that Black-owned businesses become active players in the mainstream economy.
Over the past seven years, the South African Government has helped black-owned and managed businesses expand their operations into vital productive sectors of the economy through the Black Industrialists program.
These businesses received financial and non-financial support -enabling them to invest in crucial industrial sectors and value chains of the economy – which without funding intervention, would have otherwise been beyond their reach.
More than 800 Black Industrialist businesses have benefitted from the programme. In 2021 alone, the developmental finance agencies approved R2.5 billion in the form of loans to support 180 black industrialists.
Given the shifting dynamics in both the global and economy, including the devastative impact of enforced economic closures in the wake of the Covid-19 pandemic, it's become imperative for Government to reinvigorate its funding commitments and support to Black-owned businesses. As such, the Government will reflect on the performance of the programme at its inaugural Black Industrialists and Exporters Conference (BIEC) scheduled for the 20th of July at the Sandton International Convention Centre.
The conference will also incorporate the Inaugural Black Industrialists and Exporters Awards, whose objective is to recognise business excellence. The Awards will honour enterprises that seek to promote innovation, job creation, and sound business ethics.
The gathering will also explore opportunities created by the Africa Continental Free Trade Area (AfCTA), which local Black Industrialists can tap into. The AfCTA advances the diversification of Africa’s export from being heavily dependent on raw materials to value-added products.
While the Black Industrialists programme has injected much need economic development and added jobs to our economy, it is also helping to reverse the legacy of apartheid, which skewed the bulk of the country’s industrial assets – currently concentrated among a minority few.
As we transform the skewed ownership of crucial industrial sectors of the economy, the government objective remains to accelerate the integration of black-owned businesses into the mainstream economy – in the process, building a cohesive society that is reflective of the aspirations of all South Africans.
The Black Industrialists programme falls in the ambit of our Broad-Based Black Economic Empowerment ideals, which seek to transform the economy, broaden ownership, and create jobs. The transformation we seek in our country is about positive change, the only logical path to long-term and sustainable economic growth.
The transformation initiatives allow for new entrepreneurs into the economy by deracialising ownership patterns born of the apartheid regime- the objective of which is to open up more opportunities for black people, particularly women and youth.
Drawing on best practices, including international experience, shows that transformation is a win-win path to an inclusive growing economy. The great success of Malaysia's empowerment initiative demonstrates what can be achieved if we all unite to achieve this cause. In 1970, Malaysia found itself in a similar position we face today and began to transform its society and economy through economic empowerment.
Its empowerment plan, the National Economic Policy, assisted by the redistribution of the country’s wealth to the indigenous Malays known as Bumiputeras, became an acclaimed economic blueprint. It led to a 35 percent decline in poverty and an increase in Bumiputera ownership from 2.4 percent to over 30 percent. Today Malaysia is among the wealthiest countries in Southeast Asia by GDP per capita.
A similar transformation took place in South Korea, whose Government actively worked with companies in the country to address market failures. Local businesses known as Chaebol were guaranteed loans from the banking sector backed by the Government. In the late 1980s, this led to rapid industrialisation, with Chaebol businesses dominating the industrial sector in manufacturing, trading, and heavy industries.
The Government Black Industrialists programme is premised on similar ideals. It aims to achieve success by leveraging the state's capacity to unlock the industrial potential within Black-owned businesses. Over the past five years to March 2020, the Industrial Development Corporation (IDC), among several state-owned entities, approved R24.5 billion worth of transactions to Black Industrialists.
The Government is also creating Black Industrialists through sectoral masterplans, which drives localisation that benefits Black-owned businesses. For example, as part of our Poultry Masterplan, ten Black contract growers have been established with an investment of R336 million. Furthermore, we launched the Black Exporters Network to connect Black-owned companies in the food, engineering products, auto components, and beauty products.
The Government's commitment as it advances to draw more Black businesses into the industrial sector is being supported by R21 billion from the IDC, NEF, and other institutions over the next three years. An additional R25 billion has been committed to helping black women, youth, and worker-owned companies.
As we help more Black business owners transform their businesses into industrial enterprises, we will develop our economy, ensure sustainable growth and ensure many more South Africans benefit.