Black-owned businesses played a huge role in helping President Cyril Ramaphosa surpass the R1.2-trillion investment target he set five years ago when he launched the annual investment gatherings.
It was announced on Thursday at the 5th South Africa Investment Conference that the government had raised R1.51-trillion, 26% more than its initial target of R1.2-trillion. The pledges are in areas that include telecoms, property development, logistics, mining, manufacturing, renewable energy and call centres.
But questions have been raised about the economic impact of the investments pledged at these conferences when it comes to growth and job creation.
Prominent among those who promised billions in fixed investments were black-owned businesses in mining, renewable energy and medicinal cannabis.
Nkwe Platinum, a company chaired by former finance minister Tito Mboweni, pledged R13bn in new mining investments, mainly in Limpopo.
Mitochondria Energy, founded by businessman Mashudu Ramano, committed R4.3bn to be invested in renewable energy projects.
Black women-owned fund manager Mahlako Energy Fund, which last year built a solar plant for US technology group Amazon Web Services in the Northern Cape, is spending R550m on a renewable energy project for Harmony Gold.
The company, a subsidiary of Mahlako A Phahla Investments group, was founded by sisters Makole Mupita and Meta Mhlarhi. It is in a consortium with partners in the renewable energy project for Harmony, which has commissioned a 30MW solar photovoltaic plant for its mine in the Free State, said Mitesh Pema, fund principal and executive director of Mahlako Financial Services.
The project is near Odendaalsrus in the Welkom area and will feed energy into Harmony Gold’s operations. The three power facilities were expected to deliver 68GWh in their first 12 months to the mine’s operations, he said.
The construction of the facilities has created 196 jobs.
KwaZulu-Natal start-up Tri-Medi Canna said it would inject R121m to build a cannabis and hemp industrial park, which is expected to be finalised in the next 12 to 18 months. Tri-Medi Canna wants to produce medical cannabis products.
It's been 20 years of the BEE Act and 29 years of democracy; we should be having more black companies growing and expanding
— Kganki Matabane
Thokozani Shongwe, head of corporate development at Tri-Medi Canna, said the first phase of the park would focus on the production of medical-grade cannabis; this would be followed by medical-grade extraction oils for medicinal use. The plan is to export the products to international markets.
Tri-Medi Canna’s park “is unique because we found a tool to allow our people to be part of the cannabis economy. We have come up with an innovative way [to produce products]. We are tired of our people sitting on the periphery and always looking in, so we are creating an inclusive economy to be part of the journey,” said Shongwe.
Tri-Medi Canna CEO Bandile Mkhize said the investment was expected to create up to 200 jobs. However, there would be more temporary employment during the construction phase.
Another KwaZulu-Natal company, Afro-Zonke Group, which makes a range of chemicals solutions, household detergents and water treatment chemicals, had pledged R1.5bn to be spent over two years in setting up a chlor-alkali plant for the production of chemicals such as sodium hypochlorite, industrial hydrochloric acid, calcium chloride and food-grade carbon dioxide, said founder and group chair Sthembiso Mkhize.
The project is expected to create 100 permanent and 1,000 temporary jobs. Afro-Zonke, which employs 40 people, has been in operation for six years. Its clients are mainly blue-chip companies in process chemicals, water treatment, mining, detergents, food and beverages, pulp and paper and agro-processing, as well as chemical traders.
What Nkwe Platinum, a company chaired by former finance minister Tito Mboweni, pledged in new mining investments.
— IN NUMBERS: R13bn
Black Business Council CEO Kganki Matabane said while it was encouraging to see black companies pledging, “we would like to see more and can only do so when transformation is happening”.
“The number of new black companies that are pledging also signifies the slow pace of transformation. It's been 20 years of the BEE Act and 29 years of democracy; we should be having more black companies growing and expanding,” he said. “We have to ask ourselves what the picture will look like after 20 years. We must find ways to expand and bring the previously marginalised into the mainstream economy. What we saw [at the investment conference] was the mainstream economy and, unfortunately, black-owned and women-owned companies are very few.”
Matabane was critical of the pledges, which may or may not translate into real investment, saying that there is no correlation between that and economic growth or job creation.
“Youth unemployment is high and the economy is growing at less than 1% [a year]. Are those real investments because they are not felt on the ground — in the townships and rural areas? We should be asking if those investments are resulting in job creation and economic growth, otherwise we are just wasting time.”
Youth unemployment is high and the economy is growing at less than 1% [a year]. Are those real investments because they are not felt on the ground — in the townships and rural areas?
— Black Business Council CEO Kganki Matabane
Other black-owned companies that have pledged money include Madinda Utilities, which plans to invest R600m in its electronic manufacturing facility in Gauteng, and Mohlalefi Engineering, whose R120m will go towards making safety equipment for the mining industry.
During his speech, President Cyril Ramaphosa said the investments pledged were opening new sectors of the economy.
“With your support, with your investment, we can realise more growth, offer more opportunities and create even more jobs,” he said.
Ramaphosa said money raised at the four investment conferences held to date had stimulated industrial, technological and institutional modernisation.
“These investments have supported the expansion of human capital and knowledge transfer, and created more jobs and learning opportunities,” he said. “Bringing development and creating jobs is the true measure of the success of these five conferences. Investors are keenly aware of the impediments to growth and development and also see the progress we are making in fixing these problems.”
The government has set a target of raising R2-trillion in the next five years.
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