A veteran businessman has gone to the Pretoria high court in an attempt to compel Minister of Trade and Industry Ebrahim Patel and his department to fund emerging micro businesses across South Africa.
The entrepreneur, Ephraim Mahlalela, a lay preacher and qualified accountant, says failure by Patel and the department of trade, industry and competition (DTIC) to fund micro business amounted to negligence, which contributed to slow economic growth in South Africa. He also wants the court to find the failure to be negligence contributing to unemployment and to be declared discriminatory, unlawful, unconstitutional and invalid.
In the court documents, Mahlalela said Patel, who is respondent number one, and his department, which is cited as respondent number two, were discriminating against him as a start-up.
“Respondents 1 and 2 restrict incentive grants to those with operating businesses only, not startups,” he said in court papers filed in November.
“Myself and 27 fellow black startups are excluded from any grants. Black people have no capital.
“DTIC grants can be capital for entry-level factories if grant funding is placed into a trust account, a trustee for the account is appointed, and a project manager is appointed to implement the rollout of the programmes for startup factories,” said Mahlalela.
“The capital requested herein is not deposited into applicants’ bank accounts but only into a trust account to establish the factories, and the startups do not touch it until the operations have started.
“The DTIC refused to consider the business plans and the proposals in their pursuit of unfair discrimination.”
Mahlalela said his firm, Admin Industrial, was a start-up working with other like-minded startups to facilitate industrialisation for black people.
He stated that the business failure rate was at 72% as a result of the government’s failure to fund start-ups.
Mahlalela said he had sent the respondents an email on December 22, 2022, declaring a dispute. However, they did not respond.
“The first cause of action is discrimination, that the respondents discriminate against me and other startups in that the DTIC provides grants to operating businesses only. Those who want to start factories but don’t have capital are not considered,” he said.
“The respondent receives about R3-billion treasury allocation a year, enough to spur industrialisation,” he said.
He further said the Mnotho Industrial Programme, which starts with 27 factories and three support businesses, only needed R166-million once off and would expand on its own.
“Instead of seeding new businesses, the respondents sit back with the funds and say, ‘invest your own capital first; the incentive is post-investment’.
“This slows business germination contributing to low economic growth and unemployment,” he said.
Patel and the department rejected recommendations from the Presidential Black Economic Empowerment Advisor Council, the South African Human Rights Commission, the South African Communist Party and the Office of the Presidency, among others, to fund the start-ups, he said.
He pleaded with the court to rescind the decision.
