In 2016, Nhlanhla Dlamini decided to start a business manufacturing pet foods after seeing a gap in home-grown products that could be exported to international markets. He founded Maneli Pets, which has set an ambitious target of creating 1,000 jobs.
Dlamini — who has a background in management consulting — is a recipient of funding via the government's black industrialists' programme, established eight years ago to provide funding and other forms of support to black-owned firms seeking to scale-up and compete with established players.
“South Africa has some of the best meat and we also have unique protein. It felt like a good opportunity to enter this market and no-one was exporting [locally produced] pet food and treats to the rest of the world, so I set out to do that,” he told Business Times at the Black Industrialists and Exporters Conference held at the Sandton Convention Centre last week.
Over the last 13 years, the department of trade, industry & competition (DTIC) — through the Industrial Development Corporation (IDC) and the National Empowerment Fund (NEF) — has advanced more than R100bn in loans and grants to 1,714 black-owned companies as part of the programme.
The department defines black industrialists as those running entities that are majority black-owned. Companies that are black-controlled also qualify under the programme. The department says this differs from “black empowered” companies, which refers to firms in which black South Africans have a shareholding above 25% but do not have majority control or ownership. The industrial sectors covered are manufacturing, mining, agriculture and a range of productive services such as ICT and logistics.
Maneli Pets is one of two companies exporting to Europe and Asia, and it is the only company selling locally manufactured pet food to North America
Maneli Pets received a R12.5m grant from the department in 2016. The IDC granted them a loan which enabled the company to set up a manufacturing facility in the east of Johannesburg. Dlamini said he and other equity partners also put in their own money.
Apart from seeing a gap in the pet food market, his other motivation for going the entrepreneurial route was to create jobs.
Today, Maneli Pets is one of two companies exporting to Europe and Asia, and it is the only company selling locally manufactured pet food to North America.
He employs 30 people, but this is down from a peak of 190 before Covid struck. Dlamini said 85% of the business is exports and that was wiped out when the pandemic hit. However, he is confident that Maneli Pets can add jobs as the business adds clients locally and internationally.
Dlamini ran the business solo for nine months, then later, through an angel investment, added one more person.
Today Maneli Pets boasts Checkers, Absolute Pets and Woolworths among its clients locally.
Though the application process was long and onerous, Dlamini said, “the funding support was meaningful and helped us get through the first few years”.
“Beyond the initial funding, we also applied to other agencies such as the Small Enterprise Development Agency (Seda) for small grants to help the company grow.”
Andrew Lebitsa, CEO and director of No 1 Hair Industry, which produces synthetic hair used for braids and other forms of plaiting, is another recipient of a grant from the department and a loan from the IDC, which helped him to set up a factory.
He started the business in 2019 but Covid derailed production as machines were stuck at ports for months due to businesses being shut down by the imposition of lockdowns around the world.
The company employs 60 people but plans to increase this to 150 “when we operate at full capacity. We are still trying to build our client base”, he said.
It supplies wholesalers and is in discussions with retailers to stock its products.
Lebitsa commended the DTIC, saying they “practise what they preach”. He said the department helped him expose the business to trade fairs outside the country, but he would like to see more non-financial support for small businesses.
Speaking at the black industrialists' conference, Steve Seaka, managing executive for the public sector at Absa Corporate & Investment Bank, said a common request from entrepreneurs is, “help me to start, help me to maintain my business and help me grow my business”.
Because red tape and tedious funding application processes remain a huge inconvenience for entrepreneurs, Seaka has suggested creating one template that will consolidate the entire funding application process. It could be used across funding institutions for a faster turnaround time.
“In other markets, they call it a certificate of competence. If someone [from another institution] has checked it, the next person to check it should not take much time on it. We need to have a workshop around one template to reduce time for entrepreneurs.”
Ebrahim Patel, minister of trade, industry & competition, said there was scope to improve on the turnaround time for funding, and room to cut more red tape.
“I want to see demonstrable ways to cut red tape and improve turnaround times because markets don’t stand still when a business plan is developed and funding is required. If you wait too long opportunities may disappear. While funding agencies want to be thorough because loans have to be repaid ... we want to transform and scale up technical expertise to do this faster,” he said.
Sometimes entrepreneurs may also not be aware of what is required. “There is a job to do. We need more communications workshops to educate potential industrialists so they are aware of what is required to speed up the processes that can help with the turnaround time.”
Patel said a survey had shown that while in the past entrepreneurs would have cited business financing as a key challenge, now it was access to markets and getting orders for their products. “As financing programmes begin to work, black industrialists focus more on market access.”
He said pledges taken at the conference by big businesses to procure from black industrialists and partner them would help beneficiaries of the programme get regular orders. This in turn would see financiers supporting these black-owned businesses as they demonstrate demand for their products.
“This is the innovation we have introduced at this second conference,” Patel added.
Of the beneficiaries of the black industrialists' programme, the IDC funded 410 and the NEF 510. The rest were assisted by the DTIC and partner funders such as industry associations that put aside money for small entities operating in their sectors.
Regulatory processes, such as the Competition Commission’s condition that big firms engaged in mergers invest in the development of black-owned enterprises in their field, have also helped. According to the dtic, 282,000 direct jobs have been created by black industrialists.
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