RICHARD ZULU

There comes a moment in the life of a nation when numbers cease to be neutral. They begin to speak. And what they say demands courage.

Recent analysis compiled by Afika Soyamba, an independent researcher and entrepreneur who used AI-assisted tools to extract, clean and cross-reference publicly available parliamentary disclosures and institutional data across many financial years, casts a revealing light on the funding patterns of the National Empowerment Fund (NEF) and the Industrial Development Corporation (IDC).

The dataset spans the financial year 2017/2018 for the IDC and the 2019 financial year for the NEF’s black industrialist scheme, drawing on parliamentary replies and institutional disclosures. These are not snapshots. They are patterns over time.

Over this period the IDC has funded 856 companies, deploying about R65.9bn across seven financial years. The NEF has supported 392 companies, disbursing about R3.6bn between 2019 and 2024, creating almost 32,000 jobs. Combined, this amounts to 1,248 government-supported enterprises.

The NEF shows important gains. Nearly 48.7% of funded enterprises are women-owned, and 46.2% are explicitly 100% black-owned. On the surface, this reflects a state at work. But beneath it lies a harder truth. The number of firms reached remains small relative to the scale of need. Thousands of viable black-owned enterprises remain outside the reach of meaningful capital, particularly at the lower end, where funding requirements are modest but impact is immediate.

The IDC, by contrast, reveals a deeper structural imbalance. Only 2.9% of deals account for 42.6% of total funding, while about R15.6bn has been directed to entities in which the IDC is already a shareholder. This raises a fundamental question: is public finance expanding participation or reinforcing existing positions?

We must confront this reality without hesitation. Exclusion in this system is not incidental. It is embedded in the architecture of funding — within thresholds, risk models and assumptions about who qualifies as “investment ready”. For many black-owned enterprises the system does not fail at the margins. It closes at the gate.

It is precisely this concern that informed the National African Federated Chamber of Commerce and Industry’s (Nafcoc) recent submission to the parliamentary portfolio committee. The chamber did not allege wrongdoing, nor did it seek to weaken institutions. It called for oversight. Development finance institutions exist to advance inclusive industrialisation, not merely to recycle capital.

Yet representations received from black industrialists point to a troubling pattern: enforcement escalation before restructuring options are exhausted, rigid covenants that restrict operational flexibility, and insufficient post-investment developmental support. More concerning are reported outcomes where distressed assets are disposed of below productive value, eroding industrial capacity that took years to build.

Nafcoc has asked parliament to examine whether a liquidation-first logic is emerging, one that would contradict the mandate of a developmental finance institution. Among its proposals are a structured inquiry into recovery practices, transparency on liquidation vs restructuring outcomes, and a developmental recovery charter that prioritises rehabilitation over foreclosure.

The consequences of inaction are not abstract. South Africa has tens of thousands of black-owned enterprises operating below their potential. If even 10,000 enterprises were adequately financed and supported to scale, the impact would be immediate. At a conservative estimate of 10 jobs per enterprise, this would yield 100,000 jobs and potentially far more as firms grow. The multiplier effects would strengthen households, communities and the national fiscus.

Instead, many enterprises remain trapped, undercapitalised, dependent or absorbed into value chains where their growth is constrained. This is not merely exclusion. It is economic cannibalisation. Let us be clear: we do not oppose industrialisation. South Africa must industrialise. It must expand productive capacity, beneficiate its resources and compete globally.

But true industrialisation cannot exist alongside exclusion. Township enterprises and black-owned businesses must not be treated as peripheral to the industrial economy; they must form part of its mainstream. Yet at the current pace and structure of financing, this aspiration borders on the impossible. The thresholds are too high, the pathways too narrow and the support too limited.

To speak of industrialisation while the majority remain locked out of its value chain is to mistake concentration for progress. An economy cannot claim transformation when its productive base remains structurally out of reach for those it was meant to empower. A developmental state must be judged not only by how much it invests but also by whom it empowers.

The question is no longer whether the system functions. The question is whether it serves the many or preserves the advantage of the few. The answer demands reform. And reform demands honesty.