By Koketso Mamabolo & Fiona Wakelin
The public sector has always recognised the importance it can play in economic empowerment, using its funds, networks and infrastructure to further transform the economy. Through various initiatives it has sought to decrease unemployment and assist black-owned SMMEs in finding a footing in the mainstream economy. Here we look at a few government initiatives which are giving a helping hand to black-owned businesses and the unemployed.
In order to increase black economic participation, The National Empowerment Fund (NEF) was created through the National Empowerment Fund Act. Its work involves “promoting and facilitating black economic participation by providing financial and non-financial support to black-owned and managed business [sic],” and is governed by the Public Finance Management Act.
The NEF takes three approaches. The first involves asset management, as the “custodian of certain equity allocations in State-Allocated Investments (SAIs)”. The second is fund management for start-ups, expansion efforts and equity transformation. The third approach involves a strategic project fund, providing entrepreneurs with the opportunity to enter into sectors at an early stage, which has seen the NEF break good ground in venture capital finance.
Besides assisting black people, communities and businesses to adhere to every part of the Codes of Good Practice, they also “focus on preferential procurement, broadening the reach of black equity ownership, transformation in management and staff and preventing the dilution of black shareholding”.
The Black Business Supplier Development Programme (BBSDP) offers a cost-sharing grant which supports black-owned businesses in becoming competitive and ensuring that they’re sustainable. The maximum grant is R1-million, R800 000 of which is for “tools, machinery and equipment” and R200 000 for business development and training.
It aims to speed up the integration of SMMEs, which show good promise, into the mainstream economy. Their second aim is to grow black-owned businesses by strengthening the ties between SMMEs and the private and public sectors. The BBSDP supports the work already being done in preferential procurement. The last objective is to support the grant recipients in ensuring they have the capacity to meet the requirements of the opportunities available with larger businesses and the public sector.