The black industrialist programme, a government-led initiative that plans to create 100 black industrialists, has been criticised for not giving small and emerging enterprises access to market due to increasing red tape.
Speaking at the Moneyweb Expo on Friday Vuyisa Qabaka, the practitioner and partner at Entrepreneur Traction, said the model and policy framework of the black industrial programme doesn’t promote the growth of emerging entrepreneurs.
“The reality is that everyone knows that you don’t make an industrialist overnight. Entrepreneurs that sign up to the programme are made to fill many application forms. Politicians are good at policy formation but don’t understand how businesses actually work,” Qabaka said at a panel discussion casting the spotlight on the success of the black industrialist programme.
Another challenge, Qabaka said, that the programme doesn’t address is access to funding for small entrepreneurs. He cited the lending model of commercial banks, which don’t have a risk appetite to “fund small businesses”.
“The government and private sector can make the industrial programme work by funding small entrepreneurs. We must encourage banks to participate in funding,” Qabaka asked.
“Banks needs to look at alternative forms of credit. When it comes to the credit worthiness of small businesses, banks must not use past credit score performance of entrepreneurs but their current performance.”
The Department of Trade and Industry launched the black industrial programme in 2015 to address the skewed patterns of ownership in SA’s economy. The idea was to fund 100 black-owned companies in order for them to grow, offering them a maximum grant of R50 million. According to the department’s estimates, about 45 industrialists have been created since the programme was launched.
Muhammed Mia, the chief risk officer at the National Empowerment Fund, said access to capital and markets is important.
“The black industrialist programme is trying to help entrepreneurs to get access to both [capital and markets]. We can’t only rely on the government to do this. We need more private sector involvement and we can’t leave it alone to the government. We need to focus on banks in the private sector,” said Mia.
Qabaka has accused government departments of not procuring goods and services from small businesses. “Government procurement is only 20% of the total value of the economy. The government can’t procure sufficiently enough from small businesses. The pie is big enough for us to share on government business.”