The Black Business Council (BCC) has criticised a new funding agreement between the Department of Trade and Industry (dti) and First National Bank (FNB) designed to improve access to funding for black industrialists, describing it as “nothing more than a public relations exercise”.
Speaking at the launch of the joint Black Industrialists Scheme (BIS) recently, Minister of Trade and Industry, Dr Rob Davies, highlighted that the partnership would focus on facilitating information sharing regarding the dti’s incentive programme.
“By committing to this agreement, we undertake to collaborate with FNB in marketing our incentives and other related programmes on their website; we will also put measures in place to evaluate applications for financial support that are received through FNB,” he said.
Davies added that this partnership would improve access to finance for black manufacturers, pointing out that the dti’s Black Industrialists Programme (BIP) had already approved 52 projects for support with a projected investment value of R4.5 billion – which had been co-funded by other financial institutions.
BBC secretary general, George Sebulela, said he had “high hopes” for the BIP as one of the “major policy instruments that could be used to achieve radical economic transformation” but added that he would have preferred to have seen the new BIS agreement more focused on funding at a discounted rate than one that was focused on information sharing.
Ernst Kwinda, executive director of finance advisory firm Identity Advisory, agreed that access to funding at “appropriate funding rates” was paramount to the successful implementation of the BIP. “The success of the policy will require innovative tailor-made funding solutions which address both the financial position of the entrepreneur and the economic realities of the targeted business,” he said.
He added that since black business would largely be emerging start-ups or expanding businesses they would require generous loan tenures.
A call by FTW to both the dti and FNB for clarity on the “ease of access to funding” went unanswered but the sixpage BIS document on the FNB website notes that the scheme includes both financial and non-financial support for successful applicants.
Funding is on a costsharing grant basis, ranging from 30-50%, to approved companies. This basically means that applicants are rated according to a points system and will receive the relevant percentage of the funds back from the dti. According to the document, those companies with more than 90% black ownership will qualify for the highest percentage of cost-sharing grants.
CEO of FNB’s Public Sector Banking division, Kgosi Ledimo, said in a statement that the longterm goal of the FNB/dti partnership was focused on enabling access to all the dti’s schemes and funding platforms by making this information more accessible through FNB platforms.
“We have dedicated resources to assisting government’s focus on growing entrepreneurship and involving a greater number of previously disadvantaged and/or predominantly blackowned businesses,” he said.
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The success of the black industrialists policy will require innovative, tailormade funding solutions. – Ernst Kwinda.
