Bongani Mdakane | 9th Jul 2023
The Black Business Council (BBC) is urging financial institutions such as major commercial and development banks to reconsider their lending criteria and give preference to black-owned businesses operating in the mining sector.
The emphasis, said the BBC, should be placed on coal and logistics sectors, arguing that energy transition could not be done at the expense of closing coal power stations and abandoning those coal towns as white elephants.
The council said the rationale for this was based on a lived experience of many black businesses in these sectors finding it difficult to access funding due to criteria prohibitive to black-owned businesses expanding their businesses.
Speaking to Sunday World, BBC president Elias Monage said an application lodged in April by his organisation with the Competition Commission alleging collusion bears testimony to white business being opposed to the country’s transformational agenda – hence the refusal by banks to fund black businesses.
“The BBC takes note of white businesses which are funding NGOs to oppose transformation agenda and spread a negative narrative against black empowerment. The Preferential Procurement Bill that is before parliament must include a provision for Africans, particularly black women, youth, people living with disabilities, to be given 40% of the value of the project as part of addressing the imbalances of the past.
“We remain resolute and firm that t parliament must seriously address empowerment category within the bill before it becomes law,” said Monage.
In February, the council lodged a complaint with the commission, raising concerns about big banks failing to fund black-owned businesses.
Monage said no response had been received regarding their complaint from the commission.
“We are disappointed as we view this issue as a critical matter that needs the urgent attention the commission.
“We will be meeting with our lawyers to plan a way forward to deal with the matter as this creates more challenges for black-owned business to be sustainable, and to survive current economic challenges faced by business,” said Monage.
In its complaint of February, the organisation outlined difficulties and challenges affecting black businesses, and the failure of businesses to access funding from major banks in the country – and a decision that banks would not fund coal mining in South Africa.
Monage said: “The timing and communication of the decision of the banks raises a suspicion that they may have coordinated or colluded in contravention of section 4(1)(b), alternatively 4(1)(a) of the Competition Act. 3.
“The banks are individually and collectively dominant in the market for business funding. The refusal of banks to fund coal may also constitute abuse of dominance in contravention of various subsections of section 8 of the Competition Act, including exclusionary conduct against junior and emerging black miners, who are in early stages of entry into coal mining (large mining groups are predominantly exiting or have exited the market), by refusing to supply an essential facility, namely business funding to junior and emerging black miners.”
The council said the effect of this “has been too substantial to lessen competition in the market, in that coal has been made to be uncompetitive against other energy sources”.
“The conduct of the banks also has the effect of raising the price of electricity paid by consumers in South Africa … thereby harming the public interest objectives of the Competition Act. 6.
“The BBC requests the Competition Commission to investigate the conduct of these banks and decide if the Competition Act was transgressed.”
Commission spokesperson Siyabulela Makunga said: “The commission has received a complaint from BBC. The issues raised in the complaint are being investigated. The commission has been engaging on the matter with the BBC executive, and we prefer exhausting these engagements before making public comments.”
‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.