The National Empowerment Fund (NEF) will become a wholly-owned subsidiary of the Industrial Development Corporation (IDC) in a move designed to better meet the considerable demand for funding by black entrepreneurs.

The two entities were identified by government as central in implementing radical economic transformation and development policies, particularly considering renewed efforts to develop black industrialists. The merger will promote increased broad-based black economic empowerment, with a specific focus on promoting black industrialists.

The decision is also in line with government policy to consolidate South Africa’s development finance institutions (DFIs) to provide effective support to emerging and existing black entrepreneurs and, thereby, enhance efficient service delivery.

The departments of trade and industry and economic development will appoint a technical team to drive the process expeditiously. Trade and Industry Minister Dr Rob Davies would also continue to provide legislative and policy guidance to the NEF.

The departments are confident that the integration of these two leading DFIs will enhance the country’s developmental aspirations as outlined by President Jacob Zuma in his State of the Nation Address. In doing so they will “open up the economy to new players, give black South Africans opportunities in the economy and . . . help make the economy more dynamic, competitive and inclusive. This is our vision of radical economic transformation.”

IDC, NEF IMPACT
Over the last 75 years, the IDC has been instrumental in implementing the country’s industrial policy and establishing key industries, particularly in the manufacturing sector: petrochemicals, mineral beneficiation, fabricated metals, agroprocessing and clothing and textiles.

For the financial year ended March 31, 2016, the corporation reported R14.5-billion in approvals, including R11.4-billion in disbursements. In the same period, the IDC approved R4.9-billion for black-empowered companies, R2.9-billion of which was for black industrialists.

The NEF was capitalised in 2005 by government to the value of R2.4-billion, all of which had been fully disbursed by 2010. Since then, the NEF has been self-financed from loan repayments, dividends and interests from its investments and proceeds from the sale, in 2007, of its stake in MTN through the NEF Asonge share scheme.

To date, the NEF has approved over R8.5-billion of transactions to 839 black-owned companies countrywide, which have supported more than 89 900 jobs.

Both DFIs have developed formidable human capital and possess the skills necessary for meaningful impact in driving economic growth and transformation across industries and the country.