Mabuza set to launch SME fund
Businesses in his province to get loans
THE Mpumalanga government is in the process of finalising the establishment of the small and medium entrepreneurs’ (SME) Fund.
Premier David Mabuza said once finalised, the fund would see a capitalised R500-million in joint funding supported by the Mpumalanga Economic Growth Agency (Mega) and Standard Bank for Small, Medium and Micro-sized Enterprises (SMMEs).
“Through this partnership with Standard Bank, we will enhance our capacity to fund the development of SMMEs and cooperatives in townships and rural areas,” said Mabuza in his state of the province address on Friday.
“Notwithstanding delays on this front, we have made strides in the disbursements of funding support to small businesses and cooperatives. To date, the value of loan applications that Mega received stands at R72.7-million. These are at various stages of evaluation.
“Loans totalling an amount of R49.8-million were approved and R6.3-million will benefit women, and R7.4-million will support youth owned enterprises. R36.9-million is directed to rural enterprises and township enterprises will benefit from R2.35-million. The anticipated total number of jobs created through this support is 1 428,” Mabuza said.
Mega board chairman Davies Mculu said the loans totaling R72.7million were in the pipeline. “They are under consideration,” he said.
The agency’s CEO Xola Sithole said the applicants were affected negatively by unstable growth in the economy and they faced a challenge with getting loans paid out.
“The economy is not growing as fast as it should. Even with large companies, [they] are sometimes unable to meet obligations and have to restructure their debts with whoever has lent to them.
“We face a similar situation. With smaller businesses, it is even harder because you do not have the resources to stay afloat during the difficult time in the economy. Our businesses are feeling the pinch. However, we are not very quick to say [they] must shut down and we collect,” Sithole said.
He said the agency was hands on in assisting businesses they funded.
“What is important there is when you have a champion, a committed individual who is dedicated. Our focus in not to become an institution as a bank would ordinarily do. We go for targeted groups of people without the ability to secure the funding.
“We work in partnership with the banks but we go to the areas which are harder for commerciallyminded people because we are a development finance institution,” said Sithole.
In his speech, Mabuza said 130 000 net jobs had been created over the past five years, “achieving approximately 36% of our annual job creation target due to lacklustre economic growth”.
“More could have been achieved if it were not for the substantial fluctuation in global commodity prices, which was further compounded by the drought we experienced over the past two years. The mining industry shed 23 000 jobs over the same period.
“Over the past five years, 77 000 jobs were created in the province and government services, making the public sector the biggest contributor to employment,” he said.