Banks' Black Business Fund Wins Support From S. Africa's ANCBy , , and
Financial services fund would help jump-start black businesses
ANC economic policy head Godongwana lauds banks’ proposal
South Africa’s ruling party supports the financial services industry’s plan to set up a fund to boost financing for black investors in a bid to increase their participation in the economy.
The drive to create a bigger black business class following the end of white-minority rule in 1994 has been thwarted because emerging entrepreneurs struggled to obtain the capital required to finance big deals, the economic policy head of the African National Congress, Enoch Godongwana, 59, said in an interview in Johannesburg on Wednesday.
“We’re talking about black people who have got to get access to the economy, but for them to get access they need to have money. These are the very people who were deprived of assets in the first place,” Godongwana said. “In the financial sector’s new charter, there’s an interesting proposal of some funding that’s going to come from the financial sector, which is going to be an impressive figure,” he said, declining to give the amount.
South Africa’s biggest banks and financial services institutions, including Standard Bank Group Ltd. and Barclays Africa Group Ltd., are calling for the establishment of a Black Business Growth Fund that could be worth as much as 100 billion rand ($7.6 billion), according to Asief Mohamed, chief investment officer at Aeon Investment Management. Insurers are also involved in the plan.
The fund, which will be set up by the financial sector as whole, including banks, insurance companies and asset managers, is a step in the right direction, according to Godongwana.
“We are dealing with an environment where unless you change the economy and the ownership patterns, you are sitting over time on something which is going to confront you in a violent way because South Africans, the majority of them, will not feel that they have a claim in the state and therefore have nothing to defend,” Godongwana said.
Difficulty in financing black investors’ involvement in industries such as mining and banking has hindered efforts to reduce economic inequality, he said.
“How are they going to fund this unless society makes a concerted effort to make sure there’s available funding,” Godongwana said. “It can’t be government alone.”
— With assistance by Antony Sguazzin, and Gordon Bell