Creating our Black Industrialist is an investment imperative for black business to compete on a level play fields
Following through on government’s plan to ensure that black industrialists play a more prominent role in South Africa and the economy, the Department of Trade and Industry recently announced that it intends to take a group of black industrialists on “an outward trade mission to Uganda from 18 to 23 September 2017.This, to ostensibly assist them to “search for a market for their products and investments opportunities.”
The government will take what it calls “export-ready Black Industrialists” operating in the economic infrastructure, agro-processing, chemicals, pharmaceuticals, plastics, electronics, as well as textiles, footwear and leather sectors and presumably help open doors for them in Uganda.
This is part of the government’s implementation of the Black Industrialists Programme. The goal of the programme is to accelerate the growth of Black Industrialists who are actively participating in the economy and advancing rapid industrialisation in certain sectors.
The programme assists black industrialists with access to capital and markets and non-financial support. This forms part of government’s overall plan to grow the South African manufacturing sector. This programme is an example of what real black economic empowerment can be.
Fifty projects with an estimated grant value of R1.3 billion have been supported through the then Black Industrialists Incentive Scheme since the inception of the programme in 2015. This is matched by approximately R3.6 billion of private sector investment across all sectors with 8 000 jobs supported. The main sectors in which approved entities participate in are agro processing, chemicals, pharmaceuticals and plastics.
A vital part of the government’s mandate is to create an enabling environment in which business is encouraged to invest in the country and its people.
Crucial to the growth of the economy and increasing the numbers of active participants in it, is government’s role in continuing to seek equitable redress through legislative and regulatory frameworks such as its Black Economic Empowerment policy.
As an example, the government is seeking to re-industrialise the South African economy through, among other interventions, the aforementioned Black Industrialists Programme.
The government has been consistent in its message on economic transformation: that to achieve an inclusive economy requires all participants in the economy to play their part.
Economic transformation depends on two inter-connected themes: the radical change of the productive base of the South African economy, and the challenge of changing the patterns of participation in the economy, drawing from the skills capacity and entrepreneurial spirit of the whole of the population of the country.
Research has revealed that government policy through BEE has created a wealth value chain not just for a few, but one which has benefited many.
Without the government’s intervention, many (especially black South Africans) would not be participants in the economy, would not have been able to better their lives, the lives of their families and their communities.
Research according to Intellidex has revealed that BEE deals done by the JSE’s 100 largest companies have collectively generated R317 billion of value for beneficiaries.
The value represents the net asset value after all debt and other financial obligations are deducted.
Of the total, 34% (or R108bn) has been generated by BEE deals that have matured and are no longer encumbered by trading restrictions or financial obligations (meaning that beneficiaries are free to use the value as they see fit), while 66% (or R209bn) has been generated by schemes that are still ‘live’, but are expected to mature within the next few years.
The research, released in 2015, found that R52bn (16%) of the total is attributable to staff schemes, R196bn (62%) to strategic investment partners and R69bn (22%) to broad-based community schemes.
Strategic partners are companies and prominent individuals, but often have broad bases of beneficiaries. Community schemes, by contrast, are usually non-profit trusts that provide a long-term annuity stream for beneficiaries.
“The amount generated shows that recent statements that BEE deals do not create substantial value are false,” said Intellidex.
“What was particularly interesting is to see the value that staff and communities have derived. The numbers indicate that many poor and working class black South Africans now have access to significant resources because of BEE deals.
“To get a sense of the scale of the value, consider that it is 1.8 times the total corporate income tax take in 2014 and is enough to purchase the entire stock of planted agricultural land and machinery in the country.”
The findings reveal that 2014 saw the biggest amount ever in maturing deals with almost R60bn accruing to beneficiaries.
Again, these deals would not have happened without government policy, despite widely and incorrectly held views that only a few continue benefit from BEE deals.
But as much progress has been made in the past 22 years since democracy, the issue of inclusive growth has to mean that black people can no longer be relegated or seen as labourers and factory workers only.
And government will and should continue to take bold steps to accelerate Black Economic Empowerment across all sectors of the economy under the auspices of the Black Industrialists Programme, for one.
This will challenge the current status-quo where whites are presently dominant in the first economy.
The government, through the Black Industrialist Programme wants to inspire a new breed of black businesspeople. who will move out of the periphery of the economy to the centre stage, and to use the country’s diversified sectors to own the means of production.
Another myth created around BEE is a nonsensical inference that all of us should be made wealthy or millionaires and if we are not, then the policy has failed us.
The advent of democracy was not a panacea for hundreds of years of social and economic inequality and oppression and perhaps those voices, mostly from an entrenched and comfortable vantage point, who continue to lambast the government’s developmental policies should question their motives.
As the government has continued to point out: South Africa’s BEE policy is not simply a moral initiative to redress the wrongs of the past. It is a pragmatic growth strategy that aims to realise the country’s full economic potential while helping to bring the black majority into the economic mainstream.
BEE does not aim to take wealth from one group and give it to another. It is a growth strategy, targeting the South African economy’s weakest point: inequality.
No economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all of its citizens in a meaningful way.
Kashief Wicomb is Deputy President of the Progressive Professionals Forum