Black industrialists tripped up by market stumbling blocks

Black entrepreneurs struggle to access markets because of inadequate funding and bigger players standing in their way.

This was the key takeaway from the Black Industrialist and Exporters Conference held in Sandton, Johannesburg, on Wednesday. 

“We need to open up the economy and make it more inclusive. This means addressing features of the market structure that inhibit the participation of black industrialists in the economy,” President Cyril Ramaphosa said during his speech. 

He went on to say that the government will mandate the Competition Commission to undertake a set number of market inquiries in strategic sectors in the next five years. These market inquiries will be aimed at addressing high levels of economic concentration and low participation by small businesses.

Anna Mokgokong, of Community Investment Holdings, said in a panel discussion that black industrialists have always been relegated to the township economy because of market dominance and this is something that needs to change. 

“I cannot remain an SME [small and medium enterprise] for 40 years. We also want to sink our teeth into the mainstream economy,” she said. 

An International Monetary Fund report on market power, growth and inclusion in South Africa said there is evidence that firms resort to mergers, exclusionary conduct and lobbying for entry — all practices that inhibit competition. New entrants struggle across the value chain including advertising, distribution, logistics and finance, according to the report.

Ramaphosa noted that the government has introduced new legislation increasing the powers of the competition authorities to act against abuse of dominance by large firms that keep black South Africans and their businesses out of markets. 

These interventions by the government, Ramaphosa said, have resulted in an agreement to end long exclusive leases, stopping insurers from keeping smaller township-based or black-owned panelbeaters off their insurance-approved lists. 

A small business owner, Gerald Skosana, told the Mail & Guardian it has been difficult for him to get clients because the market is saturated and big companies are reluctant to give him work. 

Skosana has a business based in Katlehong where he produces screw cap liners. These are important for the shelf life of products, ensuring that they aren’t tampered with.

He started his business when he was retrenched in 2020 from the company he had been working for as a quality assurance officer. 

“When I got retrenched during the pandemic I was so worried about what I would do. But I realised that I have a skill that I have been sharpening for over 20 years and I had received a severance package. But the problem was getting clients,” he said. 

Skosana has employed nine people since he started, but he still conducts his business manually because he cannot yet afford to mechanise. 

Skosana makes about R700 000 a year and that is not enough to cover all of his running costs. He said he sometimes does not get a salary. 

He joined the Black Industrialist Programme early this year and is in the process of applying for funding but “they want so many things and I have to go stand in queues at Sars”. He was an exhibitor at the conference in hope of getting more clients. 

Thobekile Mkhize, who sells luxury leather goods made from the hides of the Nguni cows, said she became tired of applying for government incentives because never received a response after going through a long process.

Mkhize was invited to the Essence Festival in New Orleans so she funded the trip herself. Her main reason for going was to penetrate the international market because her goods were not selling in South Africa as it was difficult to reach customers who were frequenting the larger retail stores. 

During a panel discussion Fikile Majola, the deputy minister of trade and industry, said entrepreneurs complain about the amount of time it takes to apply for funding or certifications. 

“Our rules are too rigid. Cut red tape and roll out the red carpet for business”, Majola said.  

Mokgokong had the same sentiments, urging the government to look into the tedious regulations. 

“I had international partners who lost interest because two years down the line we had not received the necessary authorisations. They took their money elsewhere and I lost out,” Mokgokong said.