Mentoring for growth
Are you a black entrepreneur wanting to start a new business? Or would you like to grow your existing business? If the answer to these questions is yes, then the National Empowerment Fund (NEF) is ready to help you. Established by the NEF Act of 1998, the fund’s mandate is to drive and promote black economic empowerment through financial and nonfinancial support.
The NEF funds projects from R250 000 to R75 million for black entrepreneurs, but more than that it also provides nonfinancial support to prospective and active black entrepreneurs because of the need to meet challenges such as limited business management skills, including financial, marketing and technical expertise, as well as poor quality business plans. Globally, 30% of start-ups fail in the first two years, while less than 50% survive beyond four years.
In response to these constraints the fund’s online business plan tool, launched in 2009, is available for free to the public on the NEF’s website. The tool is designed to assist applicants in initiating, improving and refining the quality of their business plans, including the completion of financial projections through an interactive, step-by-step, questionand-answer process.
Through its post-investment business unit, the NEF monitors the performance of its growing number of investees for risk and provides ongoing business support when required, which includes free mentorship and business coaching to its existing clients. These business mentors are deployed throughout the country and possess a wide spectrum of business expertise.
“As a development finance institution the NEF is passionate about building an economically empowered nation by driving radical economic transformation through the provision of financial and nonfinancial business support to black entrepreneurs, as well as by growing black industrialists across key sectors of the economy,” says NEF chief executive Philisiwe Mthethwa.
Here’s what the NEF funds
On average, the NEF’s business loans are repayable over four to seven years, and up to 10 years where marked with an asterisk (*):
Entrepreneurship finance for starting a new business: R250 000 to R10 million;
Procurement finance for tenders and contracts: R250 000 to R10 million;
Franchise finance for preapproved franchise licences: R250 000 to R10 million; Acquisition finance for black investors acquiring a stake in medium to large companies: R2 million to R75 million;
Women empowerment fund for ownership, management and control across all economic sectors: R250 000 to R75 million;
Expansion capital for growing an existing business: R250 000 to R75 million;
Project finance participation in greenfield projects: R5 million to R75 million*;
Capital markets listing on the JSE or its junior AltX markets: R2 million to R75 million;
Liquidity and warehousing – the NEF has black facilitator status, which can help black shareholders and companies wishing to sell a stake while keeping the shareholding black: R2 million to R75 million;
Rural and community development fund for agriprocessing, tourism, mining and beneficiation, manufacturing: R1 million to R50 million*; and
Strategic projects fund and venture capital fund, investing in early-stage projects for the purpose of developing strategic industrial capacity in poverty nodes, renewable energy, business process outsourcing, tourism, manufacturing, mining and mineral beneficiation: R1 million to R75 million*.
NEF funding criteria
Applications are assessed in terms of the following criteria:
Commercial viability of the business case being presented; The business must comply with all relevant laws and regulations;
There must be operational involvement by black people at managerial and board level;
Minimum percentage of black ownership or interest of 50.1% is a requirement except for strategic projects, rural and community development as well as equity acquisition transactions; Meaningful black women participation is critical; The business must be able to repay NEF funding; The business must create a reasonable number of jobs;
Geographic location of the business is important with the focus on rural or economically depressed areas;
Rural and community development projects must have meaningful participation by communities; and
Possibility of co-funding with private or public sector institutions is encouraged in larger projects. This project is reported by City Press and supported by the NEF
Thanks to the dynamic women at Comberero, wet cement can now be pumped where it’s needed