By: Anna Majavu
The government has pumped R66 billion of financing through its various entities into the township economy since 2003, with over 1000 entities receiving the funds. But “what we have in our kitty is not near enough”, the Department of Trade, Industry and Competition’s acting director-general Malebo Mabitje-Thompson told the Parliamentary Portfolio Committee on Trade and Industry on Wednesday.
The bulk of the money went to township enterprises in Gauteng, which received 36% of the funds. Township businesses in the Eastern Cape received 15%, Limpopo 13%, KwaZulu-Natal 11%, Mpumalanga and Western Cape 8%, Northern Cape 4%, North West 3%, and Free State 2%. Some of the township businesses supported produce castor oil, steel products, and other machinery, manufacturing fabric, groceries and beauty products, and even farm pigs.
Mabitje-Thompson said one of the success stories was Toronto Coal which produces eco-friendly charcoal from alien vegetation. Situated near Embekweni township in the Western Cape and funded through the Industrial Development Corporation’s (IDC) Black Industrialist Scheme, the company employs 85 people and has already secured buyers overseas for 100% of their product.
Other successful businesses are the FX Group in Lothair township in Ermelo, Mpumalanga, which is the only factory in the area. Funded with R500-million from the IDC, the company produces wood products and has created 210 jobs. Mapitje-Thompson also mentioned Pavati Plastics of Thembisa, which received R29-million in funding to produce eco-friendly plastic raw materials. Pavati currently employed 44 people mainly from Thembisa, and planned to hire another 50 workers, she said.
The nine-year-old ATL Blow Moulders of Soweto is a black women-owned business that employs 73 workers from the Jackson and Slakfontein shack settlements. The company had grown by 23% annually on average since it set up shop manufacturing plastic bottles for dishwashing liquid and other chemicals. The 70% community-owned TMM Forestry company in Manguzi in northern KwaZulu-Natal received R23.5-million to plant tea trees and install a distillation plant to make tea tree oil.
However, ANC MP Simanga Mbuyane said the concentration of funds in Gauteng posed a serious threat to the sustainability of SMMEs in the rest of the country. “That industrial financing is skewed towards the metropolitan provinces. Most of the poorest of the poor reside in rural areas. It does not address the mandate of inclusive growth” said Mbuyane. Mabitje-Thompson said it was a model that the IDC would expand to the Eastern Cape, KwaZulu-Natal and Free State, and after that, to the country’s remaining provinces.
“We have seen that where there is a targeted effort in developing a sector or a locality and that is done in a way that the funds flow more directly to the beneficiary enterprises, that does lead to growth and it changes the outcomes of that locality in a very positive way,” Mabitje-Thompson said. She told the committee that smaller amounts of funding, like R1.5 million, had enabled SMEs to set up small textile factories and recycling plants in townships. Speaking at the same meeting, National Empowerment Fund CEO Philisiwe Mthethwa announced a new R500-million fund for SMMEs, yet to be launched. The funds will come from the Development Bank of South Africa and the NEF will be the implementing agency. “It will allow us to cover additional areas that we have not been able to cover previously”, she said.