MARKET concentration and economic exclusion are two massive obstacles to would-be entrants to business, Economic Development Minister Ebrahim Patel said.
Patel would crack the whip in a bid to level the playing fields for such hopefuls, he promised a gathering of the Progressive Business Forum on the sidelines of the ANC’s elective conference in Johannesburg yesterday.
“A number of markets are highly concentrated, such as manufacturing, construction, pharmaceuticals, transport and mining,” he said. He insisted a few companies dominated particular economic sectors, resulting in lower economic growth for the country.
“In a small economy like SA’s it is easy to dominate markets. We are left with no option but to introduce the decentralisation of markets in order to open up opportunities for black people by increasing the number of enterprises competing,” he said.
Patel said the cost of not dealing with economic exclusion was high. “We are going to expand the powers and the mandate of the Competition Commission, to check abuse of market dominance where major players undermine others.” He said guilty parties would be made to come with remedies that would benefit micro enterprises and black-owned businesses.
Patel gave an example of a company, Coca-Cola, which had agreed to increase black participation to 30%, from 7%, along its value chain.
“Another example is where two BEE players own 30% of a bottling plant for Appletiser. One shareholder worked for years as a cleaner. This is what we want to see happening on a greater scale by opening doors for new players,” he said.
He said penalties imposed on companies such as ArcelorMittal and construction firms should go into a fund which will be used for enhancement and development of new black players.
“When we engage corporate SA it must recognise there is a need for change and to force the pace of transformation,” he said. Patel said Murray&Roberts had sold 100% of its business to a black consortium. “We want to see more of this,” Patel said.
George Mofokeng, CEO of the Black Business Council, said there needed to be more efficient ways to address transformation. “Investigations must not drag on. We can’t wait five to 10 years to investigate market concentration.
“Already there are machines that are replacing bricklayers. We can’t wait forever for people to be included in the economy,” he said.