The news of the National Empowerment Fund’s (NEF) R34,1 million loan to a luxury clothing store in Hyde Park, Johannesburg, called Luminance, has emotions running high. I have a great deal of respect for Khanyi Dhlomo as a businesswoman and leader. She has worked hard to get where she is and has earned her stripes. There is nothing wrong with people like her receiving a boost to advance their businesses.
However, I believe a clear line has to be drawn between empowerment and enrichment. A few months after the NEF awarded Ndalo Luxury Ventures the loan to open Luminance, the organisation announced it was broke and stopped granting funding, with immediate effect. The NEF’s mandate is to promote empowerment through investment in various sectors of the economy rather than a single enterprise whose main activity is importing luxury goods. It is estimated that more than 150 businesses that had pinned their hopes on funding from the NEF had their dreams dashed when the organisation announced that it had run out of money.
My question is: how many applications were turned down in favour of this boutique?
Is South Africa so desperate to transform the retail clothing sector that the NEF needs to spend its last funds on financing wealthy individuals for luxury shops that cater for the super-rich? Perhaps I would not be so outraged if it were not for the fact that there is now no money available to support businesses that could have boosted the local economy in a far more equitable way.
But in all fairness, considering that the NEF obviously knew that it was running out of money, would Luminance have been funded merely based on its ownership? This is the second time in less than a year that Dhlomo is the beneficiary of empowerment funds. The first was a loan for Gauteng’s newest radio station, Power FM, in which she is a shareholder. My take on the situation is that the NEF is there to help people who really need assistance. If the owners of Luminance had had a viable business plan and were already prepared to put up R15 million of their own money, they could surely have raised the balance needed from a commercial bank – especially considering Dhlomo’s reputation as a businesswoman.
Badly skewed priorities
I believe there is something seriously wrong when a poorly-resourced country like South Africa prioritises a boutique over the needs of millions of ordinary folk who are still marginalised by commercial banks. Ask any emerging farmer how hard it is to obtain funding from government funding institutions, let alone commercial banks. Some wait years for empowerment deals like these. But it seems that if you wish to launch a fashionable shop in one of Johannesburg’s most elegant malls, you don’t have to wait.
Incidentally, if you want to hear a detailed description of this super-stylish boutique, why not ask Gauteng premier Nomvula Mokonyane?
She has already paid it a visit.