The role of development finance to assist in the aims of radical economic transformation has come into sharp focus on the sidelines of the ANC policy conference taking place in Nasrec this week.
At a breakfast event hosted by the Progressive Business Forum on Monday, Economic Development Minister Ebrahim Patel responded to claims that development banks – like the Industrial Development Corporation – were not going far enough in supporting black business.
In a question and answer session with Patel, Black Business Council President Danisa Baloyi said council members continue to struggle with development finance institutions. “More than 20 years down the line, we still have a problem as black business in accessing money from the IDC, she said”
In the aims for radical economic transformation, Baloyi said “something has got to give” with these institutions.
Traditional banks, “whether they agree or not, are on an investment strike” she said. And with development finance institutions finance was subject to rules and regulations more stringent than normal banks.
In his response, Patel said that this last financial year the IDC committed R4.7-billion to black industrialists to fund 77 projects. “That is a 60% increase in what the IDC did the year prior to that,” said Patel. “Can we do better? Yes we can … [but] let’s also celebrate the significant gains we are making.”
The ANC economic transformation discussion document speaks to the pressing need to provide targeted financial support to black entrepreneurs. It noted that that consolidation of development finance institutions – such as the recent merger of the National Empowerment Fund with the IDC – will provide increased leverage to “open the economy to new players and provide black South Africans with enhanced economic opportunities”.
Taking to the stage, ANC treasurer general Zweli Mkhize said he agreed with the Black Business Council’s comments on development finance. “It’s an issue that has to be dealt with. We have discussed and we agree there must be some difference with DFIs than with the usual commercial institutions. [Otherwise] where is the advantage? They must be able to give a bit of an edge.”
In addressing the audience, Patel expanded on the good work being done by institutions falling under his department. The Competition Commission would look into the high cost of data and the mandate of the competition authorities as a whole would be broadened to find and address concentration in the economy, he said.