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It’s make or break for industrialist policy

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Mohale Ralebitso
Mohale Ralebitso

The Black Business Council (BBC) has warned that the government’s much-vaunted black industrialist programme may be at risk of turning into a “pie in the sky” scheme.

The programme had to result in a situation where industrialists who were supported through the scheme became catalysts for other black businesses to grow in various sectors, BBC chief executive Mohale Ralebitso told City Press.

The shortcomings observed in the state’s much-criticised broad-based BEE initiatives might also befall the black industrialist programme unless it was carefully implemented, Ralebitso said.

Ironically, the BBC is a signatory to the department of trade and industry’s programme, but Ralebitso dismissed any notion that its comments could be viewed as taking an oppositionist stance against the scheme.

He reiterated criticism of the broad-based BEE scheme, which many have lambasted for empowering the same individuals, while only creating black shareholders who have little influence on the decisions made by the enterprises in which they are empowered.

“We’re not opposing the programme, particularly when it’s in the early stages of implementation. We want to see people actively involved in these businesses because in this way we’re able to deal with this issue that we had with the first wave of broad-based BEE transactions, where you had people being owners at a shareholding level, but who were not fundamentally involved in the steering of those organisations to the point of being able to make decisions. That’s why we’ve had challenges with transformation, even with black-owned companies,” said Ralebitso.

However, the department of trade and industry has allayed the BBC’s concerns and reassured it that there are enough safeguards against any failures in the policy.

Empowering black small and medium-sized enterprises and supporting job creation would make the programme a success if the wealth created supported other black businesses, said the BBC.

“If a black industrialist is inside the enterprise, that person has a realistic opportunity to give strategic direction and see to the execution of that direction. Also, critically, as those businesses grow, the industrialist can create the necessary opportunities for small and medium-sized enterprises, which can be a feeder network because businesses don’t do everything themselves, so they rely on outsourcing things, and that’s where the further opportunities can come in. Anything short of that will render the programme as nothing but a pie in the sky,” said Ralebitso.

He said a majority of companies involved in broad-based BEE transactions seldom changed their business models when empowered black people joined them.

“You have to be in them, you have to say this is my value chain, who do I get my raw material from, am I absorbing empowerment solely for myself or am I being a catalyst for what’s flowing up and down one’s value chain? That’s absolutely essential, and we’re in agreement with the approach that’s been fashioned by the department of trade and industry on the condition of granting funding,” said Ralebitso.

Among the biggest challenges with previous transformation initiatives was that even successfully developed black companies found it difficult to penetrate the markets of established sectors.

Lionel October, director-general of the department of trade and industry, said the BBC’s concerns had been effectively covered in the new policy as the programme was meant to give support to people who had proven themselves as entrepreneurs.

“The biggest problems are access to finance and markets. The selection criteria are that the people must already be running the companies. All we’re going to do now is expand them. That is the criteria. That’s what the black industrialist is,” said October.

“That’s why there’s a qualification criteria that says you must own 50% of the business and be involved in the day-to-day running of the business. You can’t say ‘I’m going to buy 25% of the company’. This is for the owner-managed companies. I can’t see what the problem is because we will make sure that other smaller black businesses also benefit.”

*This article was amended on April 4 2016 to reflect the correct title of BBC chief executive Mohale Ralebitso.

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