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 The development of black industrialists in South Africa

2015-04-02 00:00

The Department of Trade and Industry (dti) hosted the Black Industrialists Indaba on the 25th and 26th of March at the Gallagher Estate in Johannesburg where President Jacob Zuma was the keynote speaker.

The aim of the indaba was to advance government’s key developmental objectives of industrialisation, skills development, job creation, localisation and supplier development to create and develop black industrialists and entrepreneurs.

USB-ED was approached by the dti as the tertiary institution to assist with the development of the Black Industrialists of South Africa. USB-ED is the public company of University of Stellenbosch Business School that delivers management development programmes in the context of the private sector, public sector as well as civil society.


The State has a moral obligation to creatively harness national resources towards the resolution of the historical injustice of racial, gender and class exclusion in all spheres of life. In the realm of economic life, this implies the need to transform the patterns of asset ownership in a manner that reinforces the national objective of building a society that truly belongs to all who live in it. This derives from the recognition that the bulk of industrial assets in South Africa have hitherto been racially concentrated, and thereby generating uneven social and economic relations that undermine this national objective.

In light of the foregoing, the democratic government has evolved various policy instruments whose objective is the achievement of an inclusive economy. All of these instruments have been aggregated within the strategic framework of Black Economic Empowerment. These interventions have all been directed towards transforming the structure of the South African economy in a manner that promotes spatial integration, high levels of decent employment and demographic transformation of our industrial assets.

However, it is important to note that the goal of a dynamic and sustainable growth need not be achieved at the expense of economic inclusion as the two are not mutually exclusive but rather intertwined; as reflected by both the National Development Plan and the Industrial Policy Action Plan.

The National Development Plan outlines South Africa’s Vision 2030 and seeks to eradicate poverty and reduce inequality. The National Development Plan also recognizes the importance of improving the quality of economic management for the purposes of both sustainability and impact on inclusion. To achieve more dynamic growth trajectory requires all South Africans to work together to implement measures to create a united society and an inclusive economy that is characterised by less inequality. This must be an economy that creates high levels of sustainable employment and equitable distribution of the wealth produced.

The Industrial Policy Action Plan (IPAP) requires the country to pursue an industrial development path that is characterized by increased participation of previously marginalized citizens and regions of our country. This is an acknowledgement that if no special measures are put in place, the country can possibly industrialize and become globally competitive while at the same time deepening apartheid patterns of economic development and wealth distribution. The IPAP also outlines specific measure to achieve a more dynamic and sustainable economic growth; which is a core goal of the National Development Plan.

All these pillars place particular emphasis on the need to strengthen and increase black participation in the mainstream economy which remains stubbornly concentrated in the White minority. The continued economic dominance of the white minority, as reflected through the patterns of ownership, management and control of strategic resources within the economy; systematically directs almost all economic opportunities and benefits away from the majority black population.

It is in the context of the above that the Black Industrialists Programme arises. It is a practical tool of achieving the demographic transformation of economic power and spatial concentration within the overall industrial strategy outlined in IPAP and the objectives of national development as articulated in the National development plan.

DEFINITION OF BLACK INDUSTRIALISTS 

The concept of black industrialists refers to black people directly involved in the origination, creation, significant ownership, management and operation of industrial enterprises that derive value from the manufacturing of goods and services at a large scale; acting to unlock the productive potential of our country’s capital-assets for massive employment locally. The following are important elements of being an “industrialist”:

•    Significant influence in an enterprise or industry,

•    Control of an enterprise through shareholding,

•    Board and executive management control, and

•    Production of products (goods and/or services) with significant wide use

For the purposes of this Programme, the term Black Industrialist will in a general sense refer to Black South Africans who own and, through significant shareholding; control an enterprise whose products are significantly used and have significant impact on decent employment and creates broad based economic opportunities.

Policy

The policy seeks to achieve the following objectives:

•    Accelerate the quantitative and qualitative increase and participation of Black Industrialists in the national economy through state-backed integration plan into selected industrial sectors and value chains; as reflected by their contribution to growth, investments, exports and employment,

•    Create multiple and diverse pathways and instruments for Black Industrialists that will enable them to enter strategic and targeted industrial sectors and value chains in the short to medium terms; pursuing a higher aggregate control of productive assets throughout the national economy in the long-term.

•    Building broad consensus among key state entities for a coordinated approach to supporting Black Industrialists,

•    Positioning of Black Industrialists as drivers of BBBEE by providing opportunities for small to medium enterprises (SME) along their value – chains

•    Creating greater industrial linkages amongst Black entrepreneurs and established industrial enterprises through customized networks and delivery mechanisms, 

•    Enhanced capacity and competitiveness of black manufacturers through use of modern technology and innovation.

Targeted beneficiaries
The following categories of beneficiaries will be targeted and supported through special and exclusive support measures:
               Established industrialists: This category includes those that have extensive experience, operations, and track record in their respective industrial sectors and value chains; and who require support to expand their operations and/or improve their business efficiencies.
               Emerging industrialists: This category includes those that are new entrants and/or about to enter into operations.

Priority sectors
Prioritisation of industrial sectors will be informed by a combination of factors including industrial policy direction, presence of black players in specific value chains, taking advantage of strong state levers in certain industrial sectors. The following are the initial set of prioritized industrial sectors in which this Programme will be implemented:

i)    Agriculture
ii)    Construction
iii)    Financial services
iv)    Manufacturing
v)    Mining and mineral beneficiation
vi)    Services
vii)    Creative Arts

The development and implementation of a Black Industrialists Development Programme is both a constitutional and a pragmatic response to the socio-economic development challenges that the country faces.
A rapid expansion of the pool of Black Industrialists cannot take place without dedicated support measures that respond to the needs of the Black Industrialists and also the regional and sectoral contexts in which they operate. In addition, the delivery mechanisms should be responsive to the needs of the Black Industrialists. Partnerships with a wide range of public and private sector entities will be one of the key principles in the delivery of this Programme.

For more information contact Hennie Oosthuizen, Executive: Strategic Engagements at hennie.oosthuizen@usb-ed.com
Hennie was also interviewed on CNBC -
CNBC interview
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