Black Industrialist Projects

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Black Industrialist Projects

The DTI announced in October last year (2018) that it has so far financed 128 projects, surpassing its original goal of supporting 100 black industrialists, resulting in an investment of R11.1 billion.

These are estimated to result in the retention of almost 8,000 baseline jobs and the creation of 9,459 new jobs.

I wrote a blog last year on the 7 Facts of The Black Industrialist Scheme, the biggest question we still get is around the eligibility of the application based on the requirement for a R30 million project size so let’s unpack this.

The project size refers to the

  1. Capital expenditure for machinery, tools, equipment, commercial vehicles and buildings
  2. Operating expenditure for salaries, rent, raw materials and other working capital requirements

Often a business owner will have their primary machine in mind and state that they’re looking to raise R10 million for a specific piece of equipment, not taking into account all the other factors of setting up a well-capitalised industrial plant.

The rule of thumb is to multiply the equipment investment by 3 to 5 times the value to get to an estimate project size. So, the business would need R10 million x 3 = R30 million (or up to R50 million).

Over and above this, the concern centres around the time to access the finance. It is true that the process of unlocking these grant funds can be long, however, a project of this size will take anywhere from 6 months to 24 months to operationalise and generate revenues once the finance is secured. This is simply the nature of large-scale industrial projects irrespective of where the capital is raised.

While a R30 million project is often seen to be relatively large, these are businesses which are able to contribute meaningfully to job creation and reindustrialising South Africa, which is what the country needs to grow.

By |2019-03-12T11:37:26+02:00Mar 12th, 2019|Black Industrialist, Capital Raising|0 Comments

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