Study estimates $45 billion funding gap for Black-owned businesses in South Africa — TimesLIVE

In South Africa, businesses owned and managed by Black people face a funding gap of $45 billion, while their access to capital is now worse than it was before the introduction of the B-BBEE policy around 20 years ago. This is stated in a study reported by TimesLIVE.

The study was commissioned by the British development finance institution British International Investment and Swedfund. It found that such companies are mainly concentrated in the small-business segment and often cannot grow from small and medium-sized enterprises into larger established companies.

Barriers to growth

The study's authors noted that the problem in South Africa proved more acute than in Nigeria, Kenya, Côte d’Ivoire and Senegal. Among the factors, they cited historical and structural circumstances, including apartheid's lasting impact on business ownership structures and access to capital.

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The report also points to unintended consequences of the B-BBEE policy, introduced to overcome structural inequality. In particular, Black business founders from other countries operating in South Africa are generally unable to use its mechanisms, even though their companies are Black-owned and Black-managed. Some South African companies also face a perception that their success is explained primarily by support under the policy rather than commercial competitiveness.

Proposals for a fund

Black Business Council CEO Kganki Matabane said that B-BBEE remains a suitable policy for transforming South Africa's economy. At the same time, he said, the country needs a transformation fund that would complement legislative mechanisms and provide affordable financing to companies capable of growing, innovating and competing across different sectors.

Matabane stressed that policy and legislation are insufficient without targeted financial support and long-term investment in Black-owned enterprises. Cyril Ramaphosa's Presidential Economic Advisory Council member Kuben Naidoo previously proposed a voluntary 5% corporate tax surcharge in exchange for a BEE compliance certificate. Under his model, a company due to pay 100 rand in corporate tax would voluntarily pay 105 rand.