Remember, at election times, choose, support and vote for the party to best influence the country’s economy and business environment.
SMALL-scale enterprises could now enjoy better access to financial services and low financing costs following the signing of a co-operation agreement between state-owned developmental funding agency Khula Enterprise Finance and the Banking Association of SA (Basa).
Small businesses in the country are regarded as the main contributors to job creation, something that SA — with an unemployment rate of 25% by some measures — is working hard to encourage.
Khula and Basa said they would endeavour to facilitate the formation of a credit bureau for small and medium enterprises, the first of its kind in Africa, and would provide access to an information portal for small businesses.
They would also conduct research, facilitate skills transfer, assist in the development of a national mentorship programme and promote financial literacy.
In April, Economic Development Minister Ebrahim Patel told Parliament Khula was to become a wholly owned subsidiary of the Industrial Development Corporation (IDC) with a budget of R2,8bn this year. It would incorporate the South African Micro Finance Apex Fund as well as the IDC’s small business loan book.
Khula is SA’s main small business financing vehicle but has been hampered by underfunding and, until recently, its restriction to wholesale financing. Its agreement with Basa comes at a time when banks are often seen as doing too little to finance small business development.
Basa MD Cas Coovadia, however, said statistics showed that the sector provided 95% of funding for small businesses. The proposed credit bureau could change how the banks look at risk in the market, he said.
“The (small business) credit bureau initiative will assist banks to access reliable information on the day-to-day transactions of the business and not just the individual.”
The role and mandate of the publicly funded Khula should be to develop markets, allowing the private sector to come in with funding, Mr Coovadia said.
He said there was a need to develop more risk-appropriate evaluation models and products tailored to small business development.
“Here we are talking about a very focused, on-the-ground, issues-based collaboration. The first thing we need to do is to sit down and have an assessment of what we have been doing independently and agree on what we see as each other’s role,” Mr Coovadia said.
Johannesburg – The National Empowerment Fund (NEF) launched an enterprise development fund in aid of small and medium companies on Wednesday.
The development would help speed up black economic empowerment in the private sector, NEF board of trustees chairperson Ronnie Ntuli.
NEF CEO Philisiwe Buthelezi said this entailed private sector businesses making contributions to the NEF’s enterprise development fund. The NEF would use this money to co-finance the NEF’s investments in enterprise development beneficiaries. It would help make these businesses sustainable and financially independent.
For a company to obtain the maximum of 15 points on enterprise development it should contribute 3% of its net profit after tax.
“The minimum contribution a measured entity may make into the NEF enterprise development fund is R5m.”
Looking exclusively at the 3% net profit after tax of the top 40 JSE-listed companies collectively, the potential resources available for enterprise development exceed R5.3bn.
Buthelezi said for every transaction that qualified for enterprise development funding, the NEF would co-invest on a 60:40 ratio, with the fund carrying up to a maximum of 40% of the risk.
The NEF said for five years from the time of contribution, the companies would enjoy their newly improved BEE scorecard ratings. The benefits would fall away on year six, after which the company had to contribute again to maintain the enterprise development points on the scorecard.
However, the draft law proposes to open the incentive so that all taxpaying entities can benefit from deductions, and to remove the R750000-a-year threshold for deductions. It also proposes to lift the turnover threshold of those small businesses that can qualify for investments from a venture capital company from R10m to R20m, and from R100m to R300m for a junior mining company. It also proposes to allow investors to take controlling stakes in the qualifying venture capital fund they invest in.
Anglo American (AGL), one of the world’s five largest resources groups, on Thursday said it was committed to creating and sustaining 25,000 jobs by 2015. This it would do through up to 1,500 new businesses.
Speaking at Anglo American’s local procurement and enterprise development trade fair, Chief Executive Cynthia Carroll said Anglo’s enterprise development arm, Zimele, has already invested some 467 million rand in 845 local businesses, which together employ about 16,000 people, and generate a turnover of more than 1.8 billion rand.
She also said Anglo’s commitment to developing new businesses supported the country’s vision of creating economic opportunities for black South Africans.
Anglo’s procurement spend with black empowered business in the past 10 years has increased from 911 million rand to 21 billion rand.
This makes up more than 40% of the group’s total available procurement spend to historically disadvantaged South Africans.
Department of Mineral Resources deputy minister Godfrey Oliphant said a recent study showed that South Africa’s youth would rather be entrepreneurs than be employed.
“It could be argued that lack of employment has encouraged the youth to look for alternative means to support themselves,” Oliphant said.
He said over 70% of the youth, particularly the black youth, consider running their own businesses, but they recognised that they needed experience.
He encouraged big business to get youth more involved in entrepreneurship. – I-Net Bridge