National Empowerment Fund's money disappearing into a well of race-based projects

The National Empowerment Fund's (NEF) unilateral support of black business enterprises is increasingly allowing money to disappear into a bottomless pit of waste, adv. Anton Alberts, the Freedom Front Plus' parliamentary spokesperson on trade and industry says.

According to reports it appears that the NEF had written off R290 million due to non-performing loans in the past financial year. The amount of the debt write-off in the previous financial year was R105 million. A large portion of these loans were made to the building industry (see Sapa article).

Adv. Alberts said the fund should be used to assist all people in South Africa, regardless of race.

In addition, it is also an obvious waste to merely give people, with no knowledge or competence in the field of business, money.

"What happened here, as is the case with land reform programmes, undeniably proves that people are not being empowered by merely receiving money in their bank accounts.

"There should be a mentorship in the process. People should be taught how to use the money prudently to allow their businesses to grow to become profitable. Without this, it is like throwing money into a bottomless pit," Adv. Alberts said.

He said the fact that about 18,6% of the NEF's total loan portfolio and 20% of its total investment portfolio had to be written off in comparison to its objective of 15%, as well as the fact that the fund had asked government for a recapitalisation, points to a comprehensive crisis in the NEF.

"The NEF is used as part of the government's Black Economic Empowerment (BEE) policy to advantage a mainly selected group of already wealthy black people while ordinary business people, black as well as white, who really need it, do not gain any advantage from the fund.

A good example of this is the NEF's awarding of more than R34 million to the black business woman Khanyi Dhlomo, for the financing of her exclusive boutique Luminance in Hyde Park, Johannesburg.

"BEE and the abuse of the fund do not hold any advantages for ordinary South Africans. It actually accomplishes the opposite by impoverishing brown and white people at the expense of cadre-deployment.

Statement issued by Adv. Anton Alberts, FF Plus parliamentary spokesperson: Trade and Industry, September 27 2013

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