Davies defends NEF loan to luxury store
Trade and Industry Minister said that future loans would focus more on production.
CAPE TOWN - Trade and Industry Minister Rob Davies says he's satisfied features of the National Empowerment Fund (NEF)'s loan to Ndalo Luxury Ventures were in line with the agency's mandate.
The R34 million loan raised eyebrows because it was used to open a high-end fashion store in Johannesburg.
The Luminance store, co-owned by businesswoman Khanyi Dhlomo, stocks an array of luxury international brands as well as locally-produced products.
Davies says while he's comfortable with the decision, in the future, government money should be spent on supporting the productive sectors of the economy.
Davies issued a new directive as a result of the deal, asking what lessons can be taken from it.
He has instructed agencies to ensure future transactions are geared at stimulating production activities in the country.
"It must be aligned with our broader policies of supporting value-added productive activity in the country, that's what we're saying; job creation and all of those things."
He says, generally, government funds should not be spent on finished goods and services.
Over 70 percent of the store's collection is manufactured locally, the balance are imported from Italy.
The store stocks a range of luxury brands including Givenchy and Giorgio Armani.
Meanwhile, the Chamber of Commerce and Industry (Sacci) has commended Davies for his swift response to the controversy.
Sacci's Neren Rau said, "Empowerment funding is a particularly thorny issue but any government funding needs to be directed to support local businesses."