NOMPU SIZIBA: Last week Kevali Chemicals was launched in the Maluti-A-Phofung special economic zone, with the assistance of the Industrial Development Corporation (IDC) and the Department of Trade and Industry (dti). Kevali is one of 102 beneficiaries from the dti’s Black Industrialist Programme. The dti says it has managed to disperse over R2 billion toward the endeavours of empowering black industrialists over the past two years and is set to empower another 100 more in the next couple of years.
Earlier I spoke to Kevali’s executive director Funeka Khumalo and the deputy director-general at the dti, Malebo Mabitje-Thompson, about the initiative. So, Funeka, just tell us what is your business and how did the dti Black Industrialist Programme assist you?
FUNEKA KHUMALO: Kevali Chemicals is a company that manufactures and supplies hygienic sanitation chemicals. We also do water-treatment chemicals, we do adhesives, we also do chain lubrication. The Black Industrialist Programme assisted with a grant to manufacture our plant, which is based in Harrismith. But we also got initial funding to start off our business from the IDC. When we started off we got money from the IDC to put up the plant, which was also assisted by the Black Industrialist Programme.
NOMPU SIZIBA: You’ve covered every question that I wanted to ask you. But just expand on it. As a result of this support provided to you by both these entities, what enhancements have you been able to make to the business and how many jobs have you created since?
FUNEKA KHUMALO: When we started off we were what is called core manufacturing, which means you get a third-party manufacturer. So how the funding affected us was that we could now build up our own plant, but also get our own truck. We were using a third-party manufacturer, we were also using a third-party to do our logistics in terms of delivery. So the funding has assisted us to keep control of that, which actually helps us in terms of lowering our cost base.
When we started we had about eight employees and right now we are sitting with 57 employees, direct employees. But we also have about 12 indirect people that are working in our plant.
NOMPU SIZIBA: Nice story. Malebo, how does a black industrialist qualify for support?
MALEBO MABITJE-THOMPSON: Basically as a black industrialist we expect that you either own a manufacturing plant or you are interested in owning one. So it would be either that you are expanding your current facility or you are starting a new facility. But you must be in manufacturing.
Then of course when you look at the ownership and elements of it, that must be 51% or more owned by a black person. And those black people who own that business must also be in management and they must be making operational decisions for the business. So it’s not just people who a have shareholding and are in an AGM every year, but it’s people who are involved in the business on a daily basis. And of course like you heard with Kevali, these are people who themselves have taken a personal risk in the business. They are entrepreneurial in that they are the ones who identified an opportunity and now are taking that opportunity further and have shown long-term commitment in the business. So a black industrialist is somebody who would have something of a medium- to long-term investment vision in one’s business and they must be operationally involved in the business, daily. And of course we do want people who have some level of skill in the areas where they want to add support. Our focus is of course manufacturing and mainly all the sub-sectors in manufacturing.
NOMPU SIZIBA: I hear what you are stressing – and that’s really to make sure that I suppose there isn’t an instance of fronting. But how do you police that, and how do you check that? Is that a case of documentation?
MALEBO MABITJE-THOMPSON: We have a black industrialist funding forum, whose job it is to assess all funding requests for black industrialist support. And part of the work of that forum is to also verify both ownership and managerial control and the operational involvement of the black industrialist.
A number of tests will be done for any application that comes before us, including site visits, including discussions with the owners and the people who will be directly involved. We do check CVs to make sure that at least there is a level of track record there, and there are other ways in which we try and verify the information that is provided to us to make sure that we are dealing with a legitimate request from people who legitimately qualify – and that the operation falls within what is allowed for the Black Industrialist Programme.
NOMPU SIZIBA: Right, that’s clear.
FUNEKA KHUMALO: And I can assure you they are very thorough, very, very thorough with all of that!
NOMPU SIZIBA: Okay, we’ll take your word for it, Funeka. Now, since the black industrialist programme’s inception, how many industrialists have been funded by the dti, how many direct and indirect jobs have been created, and what sort of sectors have you been funding?
MALEBO MABITJE-THOMPSON: To date we’ve been able to fund around 108. So Kevali is one of 108 black industrialists. All of them have a combined predicted investment value of R9 billion. That means when all this investment comes into production, we would have R9 billion of investment injected in the economy. Of course, there are 15 000 projected jobs from all these companies that we have supported and for that R9 billion government has approved around R2.2 billion of investment. So if you think about it, for R2.2 billion of investment in black enterprises, we’ll be able to get money and inject it into the economy.
NOMPU SIZIBA: Mm, not a bad multiplier. Now apart from funding, the dti has also assisted industrialists with what’s termed market access support. What does that entail, exactly?
MALEBO MABITJE-THOMPSON: That entails what we will do with all the black industrialists that we have supported financially to make sure that the business continues to grow through access to markets. Markets can be here locally or even abroad. Already I think we have taken around over 40 enterprises abroad on export exploration interaction, where they’ve been able to go to markets outside of South Africa to see what opportunities exist there, and we are hoping that at least in the next six months or so some of them will be receiving very strong orders. What we’ve seen with the black industrialists is that there is a strong export bias and most of these companies are actually exporting their products.
There are, of course, those that are producing their products for the local market, and for those it’s the work that we have to do with these retailers, and the work we have to do in government to try and make sure that they are also a recipient of government tenders, so that they are able to employ even more people on a more stable and permanent basis because they’ve got manufacturing capabilities and facilities, so mainly the ones that we have already supported financially. Now our focus going forward is to assist them to increase their order book so that they are more sustainable. And I can say it’s a two-pronged approach – the export markets and also here at home, domestic, to ensure than we find their products in the supermarkets where we buy goods.
NOMPU SIZIBA: Funeka, I haven’t forgotten about you. You are obviously a beneficiary of this programme. How important is this initiative, not just for you but for broadly assisting those who have the inclination to be industrialists but haven’t had traditional access to funds and other resources? Do you think it’s going to be a game-changer in the country?
FUNEKA KHUMALO: It is, because I’ll tell you what. I think there are a lot of people that would like to get into manufacturing, but it requires a lot of money. When we started off, we had to put in our own money. When we were still applying for funding from the likes of the IDC, the Black Industrialist Programme also came up and we applied for that. Without that there is no way. I think it was going to take us a very long time to get to where we are. Manufacturing requires quite a lot of money to put up a plant, the equipment, everything. It runs to multiples of millions. So it’s very difficult for an ordinary Funeka from Gugulethu to just have that money available and just go ahead and do that. So I think this is a game-changer. It’s going to assist a lot of people who don’t have those kind of resources to see that’s it’s actually possible for anybody that has the will and the ability to go into manufacturing. They can see that now it’s possible, there is money available and they just need to apply for it. And of course you need to put in a lot of energy, a lot of effort, in terms of making sure that you must manage between aspirations and work.
NOMPU SIZIBA: Well, I wish you all the best, Funeka. You sound very passionate about your work and what you are doing.
But lastly, Malebo, a lot of the businesses you are funding tend to be quite traditional in nature, in the metals and mining chain, chemical production and so on. But are you getting industrialists who are working in more technological environments akin to the Fourth Industrial Revolution that you are looking to fund? After all, that is the future.
MALEBO MABITJE-THOMPSON: Absolutely. I think it was the day before yesterday we were at Kevali launching the Kevali project. Before that we were launching another project in the Free State, and what they are manufacturing are tablets and platforms. So we do have a number of black industrialists who are in that sphere. We would like more, particularly on the soft side of ICT, system development… That is where we still are not seeing as many black industrialists as we would like to see, and also I think in aerospace and the ocean economy – that’s where we don’t see as many applications as we would like. But, as you correctly say, tech in our traditional areas – agri-processing, automotive, chemicals, clothing and textiles, electronics, in metals and also mineral beneficiation, and … we’ve received a significant number of applications there.
NOMPU SIZIBA: Alright, Malebo. Then very, very lastly, I understand that you are hoping to assist yet another 100 industrialists in the next couple of years. What’s the budget for that, and how can people get in touch with you to get the benefit?
MALEBO MABITJE-THOMPSON: The next phase of the Black Industrialist Programme is already on, the minister announced in his budget vote in May. So we are going full-steam ahead with new applications and any entrepreneur who has a business case that is proven and is at turnaround point of investment, we are asking them to contact the dti. They are welcome to go onto the dti website, www.dti.gov.za and under the tab “financial assistance” they will see the Black Industrialist Scheme and they can go through all the requirements of the scheme on the website. The website itself also gives direct contact details of officials who have been made available to come and assist them through the application proves. What we don’t encourage is that people come to the dti though middlemen. We would like to work directly with the enterprises. It helps us to understand their challenges from the very beginning and also … in any way that makes sense for the enterprise. So each enterprise can get assistance in grant form of up to R50 million, depending on the skill of the project.
But this programme also has a loan component, like you would have heard from Kevali – they also received a loan component from the IDC. So when you are applying to us, even if you may not have made contact with the IDC for a loan or other funders for a loan, we are able to get you into contact with those funders so that your application process is streamlined as far as possible. And we are trying to make it as speedy as possible for the black industrialists to focus on setting up a plant, as opposed to running around and getting the funding of the plant.
As you correctly mentioned, manufacturing is a very difficult place, and that is why most black people have been locked out. In the main it’s because of not having enough finance ad also not having enough patient finance to assist them to get through the initial stages. This is what this programme tries to do. We discourage all tenderpreneurs. If you are coming without a plan, it’s not this programme. There are other programmes that can assist. But this one is for serious manufacturers. And of course the project size we are looking at is R30 million and above.
NOMPU SIZIBA: What a pleasure to speak to two ladies about industrialisation.