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AfricaMoney | August 24, 2017

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South African SMEs to get $80.5m boost

South African SMEs to get $80.5m boost

As part of its corporate plan, South Africa’s Small Enterprise Finance Agency (Sefa) annonced it will give out over R737 million ($80.5 million) to more than 15 000 small firms – most of which are micro enterprises – to create at least 18,000 jobs. Speaking to the National Assembly’s portfolio committee on economic development concerning its corporate plan for 2013/14, Safa’s chief executive, Thakani Makhuvha, said the agency hopes to double lending and the number of business owners financed – with disbursements reaching almost R1.6 billion ($175 million) to over 34 000 small firms; in the next five years.

The Agency is also looking forward to expanding the pilot project it has with the SA Institute of Chartered Accountants in a programme which takes young graduates and trains them on how to assist small businesses, from Gauteng to KwaZulu-Natal and Mpumalanga while rolling out further nine branches or satellite offices per year, which would be co- located within Seda or IDC branch offices, to add to the 11 regional offices it already has.

Sefa lends between R500 ($55) and R5 million ($546,000) to small, micro and medium enterprises through retail finance intermediaries, via banks, using its credit guarantee scheme, and directly to private individuals.

Makhuvha said the cost of Sefa lending finance to business owners is expected to fall from 44c – for every rand disbursed in 2013/14 to 25c for every year lent out in 2017/18.

The Industrial Development Corporation (IDC) has committed over R987 million ($108 million) as a shareholder’s loan to the agency until the end of 2014/15, with an option of a further R400 million capital injection in two years time.

IDC’s chief executive Geoffrey explained that the transaction had been structured as a loan and not a grant because there had to be a chance for the IDC of recouping the loan to ensure that Sefa funds sustainable businesses.

“What we are not planning on doing is that we give funding to Sefa and that they then become reckless,” he said.

Image Source: www.jhu.edu

SOURCE : Ventures Africa

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