26 Jan

South Africa Needs Black Industrialists

By: Nedbank ABC OF BEE


Celebrating 20 years of democracy should be done in context of the successes and lessons learnt during the same period. Irrefutably; the last two decades have created far more socio-economic benefits for more citizens than any other period in the history of our country.

Depending on the person you are talking to or the research you access, B-BBEE has yielded varying levels of success. For instance, the South African Institute for Race Relations (SAIRR) shows that the number of Africans who are employed has nearly doubled since 1994, with total employment having risen from 63% in 1994 to 71% in 2013. On other hand, JSE still only has 3.9% owned by black enterprises and the country’s quality of education continues to decline.

Progress takes time, and yes, one cannot redress almost 50 years of apartheid in 20 years. So, if this is the case, how much progress should we realistically expect to have achieved as a nation during this time?

Since inception, Broad Based Black Economic Empowerment (B-BBEE) has strived (amongst other focus areas) to increase the number of black people who manage, own and control enterprises and productive assets. This includes individuals, communities, workers, co-operatives and other collective enterprises.

Government, as part of its policy of transforming the economy, has earmarked black industrialists as central characters for job creation, enterprise and industrial development. The Department Trade and Industry (DTI) has expressed dissatisfaction with the pace of progress and as a result, has embarked on a programme to create 100 black industrialists by 2017 to expedite economy transformation. Emphasis is placed on sectors such as transport, green industries, agro-processing, biofuels and chemicals as prioritized within the Industrial Policy Action Plan.

Yet, a very important question still remains unanswered: can industrialists be created or do they exist and just require support and assistance? South Africa is endowed with natural and mineral resources which can be used to establish and/or support black owned industries. The country’s legislative framework supports the need for black industrialists. So where are the gaps? Do we have the political and corporate will and skill to drive entrepreneurship which would lead to black industrialists?

According to the 2013 Global Entrepreneurship Monitor (GEMS) the challenges facing entrepreneurship in South Africa have not changed over the last 20 years, although in the last 14 years, the trend is marginally improving.

In a country paralysed by some of the highest unemployment rates in the world; it would be mutually beneficial and sustainable to nurture an entrepreneurial spirit, rather than feeding the dependency on government grants where there is now more than 16.1 million people dependants – up by over 600% from 2.4 million in 2007.

The benefits for entrepreneurship are clear. Not only do Small Micro and Medium Enterprises (SMMEs) create more than two thirds of the country’s employment, they also contribute 60% towards the GDP. Interestingly, the percentage of black Africans who are involved in opportunity-driven entrepreneurship has been increasing steadily, from 22.9% in 2005 to 58.3% in 2013. Over the same period, the percentage that is driven by necessity has remained static around 29% (GEMS: 2013).

Given these sobering facts, it is crystal clear that creating and enabling a thriving environment for black industrialists would not only go a long way in bridging the unemployment gap and contribute to the country’s economic growth; it would also go a long way in reducing the social unrest caused by unemployment and the growing income gap between the haves and the have nots.

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