AFRICANGLOBE – South Africa’s Department of Trade and Industry will provide grants and cheap loans to the tune of R1bn as part of the government’s plan to create large and competitive Black industrialists.
The funding was expected to attract an estimated R10bn to R20bn from other funders, such as the Industrial Development Corporation; the National Empowerment Fund; the Public Investment Corporation and banks, department director-general Lionel October said on Wednesday.
“There are discussions to offer loans with interest of between 1% and 3%,” Mr October said on the sidelines of the Black Industrialists Indaba, a forum to discuss support for the sector.
The department would look at ways to direct a portion of the R6bn in annual incentives that it gives to companies to Black manufacturers, Mr October said. He said that when SA’s new broad-based Black economic empowerment codes come into effect in May, only companies with a minimum level of four would qualify for the incentives.
But lobby group the Black Business Council said it would propose that a minimum of R10bn be set aside from the national fiscus to help scale up the operations of Black industrialists.
The government aims to create 100 Black industrialists over the next three years. Aspirant industrialists need to register with the department for the support programme. The 100 large Black industrialists would be expected to aid smaller firms by procuring services from them.
Announcing the package of interventions, department deputy director-general Malebo Mabitje-Thompson said the financial support was to counter rejections by commercial banks.
She said the plan was to offer longer-dated loans at lower interest rates. Black industrialists would also be supported in entering the export market.
Delegates at the conference included fledgling industrialists, bankers, money managers, development financiers and corporate representatives.
President Jacob Zuma, who was the keynote speaker, said manufacturing was one of the “least transformed” sectors of the economy. He said there was “low participation of Black people in critical economic spheres” and reiterated that he was “not happy” that Black business directly held only 3% of shares on the JSE.
“We want more factories and the means of production to be owned by Black people, to show we are achieving economic transformation,” he said. “This is not racism, but getting rid of racism.”
Manufacturing’s contribution to the economy is estimated at 10%-15%.
By: Phakamisa Ndzamela And Mark Allix
Apartheid Did Not Die