/ 29 March 2024

Black industrialists programme needs an overhaul

President Cyril Ramaphosa and DTIC minister Ebrahim Patel on a guided tour of the exhibition centre at the second Black Industrialists and Exporters Conference. Photo: @PresidencyZA/X

Reflecting on the Black Industrialists and Exporters Conference, hosted by the department of trade, industry and competition this week, one is left with mixed feelings. Although the aspirations of the programme are noble, not enough is being done to push the boundaries and realise the full potential of the black industrialists programme. 

One of the fundamental flaws limiting this programme’s success is the lack of a clear and well-articulated definition of what a black industrialist is.

Nineteenth-century author Lewis Carroll’s adage that if you don’t know where you are going, any road will take you there, rings true here. There is a growing sense of the term “black industrialist” being a catch-all phrase to blanket everyone from those who have built empires from the ground up, hold controlling equity stakes and demonstrate deep operational expertise in their respective businesses, to anyone with a loan or grant from the Industrial Development Corporation, National Empowerment Fund or the department and holding notional equity stakes in companies.

This is not to suggest that the notion of black industrialist should be used as a gatekeeper with regard to who can and who can’t be referred to by the term. However, there are some obvious risks to the approach that is currently being adopted, hence some perceived limitations of the programme. 

The first, and perhaps a subordinate issue, is that blanketing all and sundry as black industrialists does not give the emerging and upstart entrants anything to aspire to, simply because the concept is neither understood nor properly defined. At the same time, the flippant use of the term dilutes the weight of the notion of a black industrialist for those who have a proven track record and have created and developed multi-generational assets of significant scale. 

The second, and more prevalent matter, is that it becomes increasingly elusive to tangibly measure where the progress and success of black industrialists is happening. One comes to this second conclusion based on the fact that despite 30 years of democracy, and the fact that it has been 20 years since the implementation of the broad-based black economic empowerment legislation and nine years since the launch of the black industrialists policy, the country cannot attest to having a black-owned commercial bank, telecommunications company or oil major firm. 

There are a handful of law firms, consulting houses and auditing firms that are black owned and controlled, however these are few and far between, while the mainstream firms in these sectors cannot be seen as being in the hands of black people.  

While it is the stated intention of the government to develop a class of black industrialists, who will diversify the historical pattern of ownership of industries, making them representative of the country’s broader demographic, and to create fertile ground for these industrialists to build something of generational value, a few areas can be highlighted where the state is missing a fundamental opportunity to attain this aspiration.

The telecommunications spectrum auction and licensing round of 2022, is one such area where the state missed an opportunity to sow the seeds for the development of a black-owned company of formidable stature. Much of the capacity was taken up by the established telecommunication companies, entrenching their dominance  — and this will probably happen again in the next round, set to be held this year. 

The public procurement bill is another area that could be leveraged by the state, given its R1 trillion annual spend, to run a massive industrialisation programme targeted at setting up and developing black industrialists. However, not only has the process of legislating the bill taken an inordinate amount of time, prior versions of it did not explicitly gear it to drive the black industrialist’s agenda.

Common to both of these examples is that these are public instruments, and areas in which the government has considerable influence, but it is seemingly unable to match the black industrialists’ stated aspirations with the very tools in its kit.

It is my assessment that the first factor contributing to limiting the impact of the government’s stated intention to develop a class of black industrialists is the lack of a clear and well-articulated vision of what the black industrialists programme seeks to achieve. 

Second, an ancillary but fundamental factor is the lack of a definition of what a black industrialist actually is. This is where the government needs to go back to the drawing board, because articulating this will guide in which direction policy will go and, by extension, the resources that need to be mobilised to achieve the goal. 

As a start, my submission is that the definition of a black industrialist should entail two critical aspects. First, a company that is both majority black owned, with effective beneficial value accruing to the owners. Second, there must be demonstrable operational involvement by the industrialist in all aspects of the business, not limited to boardroom positions.

On the part of the government, when defining its vision for black industrialists, it is important to note that many instruments to achieve the aspiration of developing a black industrialist class of noteworthy scale are in the direct control of the state, however, political will to achieve this is the ultimate overlay, if any such programme is going to enjoy success.

Elais Monage is the president of the Black Business Council.