S
outh Africa has one of the highest levels of income
inequality in the world with a Gini coefficient that has
remained around 0.65 over the past decade.1
In addition,
South Africa’s unemployment rate, using the narrow definition,
at 26.4% is very high.
2 Much of this has been attributed
to the legacy of apartheid during which the majority of
South Africans were economically marginalised with few economic
opportunities.
Efforts have been made to try to reduce this gap in access to
economic opportunities through regulation such as the Broad
-Based Black Economic Empowerment Act. The New Growth
Path and the National Development Plan also provide a
framework for increasing investment in industrial activity and
highlight key constraints to inclusive growth in the South African
economy.3
In May 2015, South Africa’s Minister of Economic
Development Ebrahim Patel announced that R23 billion
would be put aside over the next five years to support
black industrialists in a strategy to increase investment and
participation.4 While access to capital would be beneficial to
increasing the participation of so-called black industrialists in
the economy, a recent CCRED project on barriers to entry
demonstrates that firms face more challenges than access to
capital when attempting to enter an industry. By using case
studies on the wholesale fuel sector and the entry of a new
brand, Soweto Gold, into the beer industry, the studies show
how structural and strategic barriers to entry could present an
obstacle for entrant firms and ‘black industrialists’. This article
highlights some of these findings.