Minister calls for report into Khanyi Dhlomo's NEF funding
Trade and Industry Minister Rob Davies spoke about the matter after briefing Parliament's trade and industry committee on Tuesday, Business Day reported on Wednesday.
He reportedly said he wanted to determine whether the funding of the high-end mini-department shop, called Luminance, was in line with the National Empowerment Fund's (NEF) mandate and whether there was a need to strengthen that mandate.
"We are looking to see whether this transaction is in overall conformity with the directions of the NEF and whether there is any need to make any changes to the mandate," he was quoted as saying.
"At this point ... I cannot pronounce on the transaction as I have not received the report."
NEF chief executive Philiswe Mthethwa was quoted as telling the City Press on Sunday that the amount was a legitimate investment.
"This is the first major investment in a business owned by black women. They seek to transform a sector dominated by whites and foreign interests," Mthethwa, wife of Police Minister Nathi Mthethwa, reportedly said.
EFF: Return the loan, Khanyi
Meanwhile, on Tuesday, the Economic Freedom Fighters (EFF) said the luxury mini-department shop co-owner, Dhlomo, should distance herself from possibly corrupt politicians and return the loan given by the NEF.
The EFF criticised the NEF loan for Luminance.
The clothing store stocks brands that include, amongst others, Giorgio Armani, Tom Ford, Oscar de la Renta and Alexander McQueen.
"It has come to the attention of Economic Freedom Fighters that the National Empowerment Fund has granted Khanyi Dhlomo R34-million to open an exclusive elite boutique of overpriced clothes in Hyde Park, Johannesburg. Like many South Africans, EFF holds Khanyi Dhlomo in high regard because until now, she had worked her way up and developed her career without questionable money from government," said an EFF statement on Monday.
"The manner in which the R34-million was approved by the wife of Police Minister Nathi Mthethwa, who is the current [chief executive] of the NEF, is questionable."
In response to the outcry, businessperson Dhlomo on Tuesday insisted that her name did not influence the NEF to provide funding for her Hyde Park retail business.
'Anger and misunderstanding'
Speaking on Talk Radio 702, the Ndalo Media and Ndalo Luxury Ventures chief executive said the NEF loan for Luminance was not helped along by her name and that stringent commercial terms set by the funding institution were followed.
“If one reads some of the characterisations of the business as a boutique in Hyde Park that sells expensive clothing, naturally, if you put the figure of R34.1-million next to that kind of description, it will create anger and misunderstanding," Dhlomo said.
“There is far more to it than that. I don’t deny that you can use some of those words to describe it, but it’s a mini-department store, not a boutique, which means it is a retail business that requires a meaningful investment,” she said.
"The DA [Democratic Alliance] welcomes the announcement by the minister of trade and industry, Rob Davies, that he has requested a detailed report from the NEF regarding its funding of Ndalo Luxury Ventures, the company trading as Luminance," said the DA's spokesperson for trade and industry Wilmot James on Wednesday.
James said he would write to the minister on Wednesday, requesting that he table the full report before Parliament’s trade and industry committee for scrutiny once it has been completed.
"I will further request that Minister Davies institute a full ministerial review of the NEF’s investment history, its code of good practice and the framework for empowerment within which the NEF must make its investment decisions.
According to his statement, the ministerial review of the NEF must seek to:
- Determine how the fund invested the R2.4-billion received from government in 2005 and the reasons for it now being bankrupt and seeking further funding from treasury;
- Determine to what extent past investments by the fund have benefited SMMEs and created business and employment opportunities;
- Establish firm investment guidelines for all future investments of the fund, aimed at ensuring that these investments are directed towards truly broad-based projects;
- Introduce measures whereby the fund could assist ventures it has invested in to ensure that the businesses can successfully start up, grow, create jobs and effectively contribute towards economic growth.
- Any decision by government to recapitalise the NEF must be preceded by introducing measures that will ensure that the fund’s future investments will benefit broad-based empowerment initiatives. The ministerial review is now required to ensure that this happens.
James added the fund should commit itself to broad-based black economic empowerment initiatives "that stimulate economic growth by providing support to small business owners to help them start up, grow and create jobs in the sectors where our economic growth prospects rely on the success of first-time business owners and small medium and micro-sized enterprises".
James said that providing financing to wealthy individuals for luxury shops that cater for the "super-rich is anything but broad-based and essentially amounts to 'empowering the empowered'". – Sapa, Staff Reporter