Government to fund another 100 black industrialists after meeting 1st goal

IDC is targeting to channel 22% of its overall budgeted investment over the next five years to black industrialists; This equates to R23 billion; IDC has announced a special pricing regime for black industrialists: 150 basis points reduction on normal IDC pricing for all black industrialists qualifying according to IDC’s definition; Additional 160 basis points available for other priority development objectives. IDC funding is available for all new entrants as well as established entrepreneurs to grow their businesses; Funding will be available to all sectors that IDC covers.

After the government recently surpassed its goal of providing financial assistance to 100 black industrialists through the Black Industrialists Scheme (BIS), a further 100 black industrialists will be assisted over the next two years, said Rob Davies, minister of trade and industry.

From the inception of the BIS in 2016 until the end of March this year, assistance was given to 102 black industrialists.

The department of trade and industry (the dti) has proven the prophets of doom who shot the programme down wrong, Davies said in his recent budget speech.

Aside from the fact that the dti allowances of about R2 billion helped to unlock investments of around R8 billion, an estimated 18 400 job opportunities were created and retained.

In addition, 48 companies were helped to improve their market access.

According to the recently released industrial policy action plan (Ipap 2018/19-2020/21), the dti allowances went to businesses in various industries, such as plastic and pharmaceuticals (R567 million), agroprocessing (R316 million) and the metal industry (R279 million).

A black industrialist, for the purposes of the BIS, is seen as a business that is more than 50% black-owned, or somebody who controls the business, takes personal risks with his participation and does business in the manufacturing sector (specific Ipap focus areas).

Among the recipients is the multimillion-rand Microfinish Automotive in KwaZulu-Natal, which last year received R13.5 million.

The business manufactures and supplies valve guides and valve seats to original vehicle manufacturers and after-market service providers.

According to the department, Microfinish has clients as far as Europe and the Middle East.

Other success stories that are mentioned in the Ipap document are:

  • Maneli Pets in the agroprocessing sector, which received R50 million;
  • United Industrial Cables received R46 million for the manufacturing of a variety of copper cables;
  • Mthembu Tissue, which received R13 million, and;
  • The commercialisation of the Thakadu nickel sulphate project in North West, by establishing a R250 million plant. The chemical products manufactured at the plant are used worldwide in lithium ion batteries, and delivery agreements are already in place.

In 2016, the BIS was launched with a budget of R3.6 billion, but development financiers like the Industrial Development Corporation (IDC) and commercial banks have also offered assistance through the Black Industrialist Financing Forum.

According to the latest IDC annual report, the corporation approved some 80 transactions totalling some R4.7 billion with black industrialists.

A total of R10.1 billion in funding was approved for black economic empowerment companies (of which at least 25% of the shares are black-owned).

According to Davies, it was clear from the initial phase of the BIS that support to black industrialists had to be expanded to include different categories.

In this manner, industrialists who have received help in the period up to March this year will receive support from a post-investment office to help clear any remaining hurdles, such as regulatory compliance.

The office will also coordinate interaction between the businesses and the government so problems can be speedily resolved.

Financial support in the period 2018/19 until 2020/21 has to go to projects that have expansion potential and new businesses with the ability to grow fast in a relatively short time, the minister said.

The third category involves cooperation with the department of small business development to dovetail some of its programmes with black industrialists whose businesses are still in their infancy. This support will be focused on small companies in the manufacturing sector – especially in townships and urban areas – to help them developed into black industrialists.

Cooperation with the departments of agriculture, mineral resources, public works, telecommunications and postal services is foreseen.

According to Davies, better market access for pioneers is an important aspect of the BIS.

He said targets will be set for state-owned companies to buy locally manufactured goods from black industrialists.

Article sourced from City Press

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