Elias Monage is president of the Black Business Council. Photo: Supplied
By Elias Monage
Reflecting on the Black Industrialists and Exporters Conference hosted by the Department of Trade Industry and Competition (Dtic) last week, one is left with the mixed feeling that while the aspirations of the Black Industrialist Programme are noble, not enough is being done to push the boundaries and realise its full potential.
One of the fundamental flaws limiting this programme’s success is the lack of a clear and well-articulated description, coupled with a broader vision of what the notion of a black industrialist actually entails.
Lewis Carroll’s old 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 that the term “black industrialist” is beginning to take on 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 (IDC), National Empowerment Fund (NEF) or the Dtic and holding notional equity stakes in companies.
This is not to suggest that this notion of a black industrialist should be used as a gatekeeper with regards 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 something to aspire to, simply because the concept is neither understood nor properly defined. At the same time, 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 progress and success of black industrialists is happening.
One is led to make this second conclusion based on the assessment of the past 30 years of democracy, 20 years since the implementation of the Broad Based Black Economic Empowerment (BBBEE) legislation and nine years since the launch of the Black Industrialists Policy, that the country cannot attest to having a black-owned commercial bank, telecommunications company or oil major.
There are a handful of law firms, consulting houses and auditing firms that are black owned and controlled; however, these are few and far apart, while the mainstream firms in these respective areas cannot be attributed as being in the hands of black people.
While it is the stated intention of government to develop a class of black industrialists – who will diversify the historic pattens of ownership of industries, making the industries 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 purposefully attain this aspiration.
The spectrum auction and licensing round of 2022, with the next phase set for 2024, is one such area where the state missed an opportunity to sow the seeds for the development of a black-owned telecommunications company of formidable stature. However, much of this capacity was taken up – and likely to happen again in the next round – by the established telecommunication companies, entrenching their dominance.
The Public Procurement Bill is another such area that could be leveraged by the state, given its R1 trillion annual spend, to run a massive scale 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, but prior versions of the bill did not explicitly take this as an opportune moment to drive the black industrialist’s agenda.
Common to both of these examples is that these are public instruments, or areas in which the government has considerable influence, but are seemingly unable to match up the stated black industrialists’ aspiration with the very tools in the government’s tool kit.
It is my assessment that the factors contributing to limiting the impact of the governments own stated intention to develop this class of black industrialists is, firstly, a lack of a clear and well-articulated vision of what the black industrialists programme seeks to achieve. And, secondly, an ancillary but fundamental factor is what a black industrialist actually is. This is where the government needs to go back to the drawing board, because articulating these aspects will guide which direction policy will go and, by extension, 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. Firstly, a company that is both majority black owned with effective beneficial value accruing to the owners. Secondly, there must be demonstrable operational involvement by the industrialists in all aspects of the business, and not limited to boardroom positions.
On the part of the government defining its vision for black industrialists, it is important to note that many instruments are in the direct control of the state to achieve the aspiration of developing a black industrialist class of noteworthy scale; however, political will to achieve this is the ultimate overlay if any such programme is going to enjoy success.
Elias Monage is president of the Black Business Council.
BUSINESS REPORT