Asande Dhlamini
Johannesburg - In what could be seen as a beacon of hope for the country’s township economy in these uncertain times, Gauteng township entrepreneurs are set to benefit from a R300 million fund launched by the Gauteng provincial government, in partnership with the Industrial Development Corporation (IDC) and SA SME Fund
The SMME Crisis Partnership Fund, which was launched on Wednesday in Tembisa, is aimed at reigniting Gauteng’s township-based small, medium and micro-sized enterprises (SMMEs).
More than two million formal and informal small businesses in the country, most of which are township based, have so far had restricted or no access to capital. This has a negative impact on the development of SMMEs, especially under the current economic conditions.
Small businesses also do not qualify for funding from conventional financial institutions due to the stringent conditions set by these institutions, which results in SMMEs being unable to grow their businesses, create jobs or play a positive and meaningful role in the economy.
The SMME Crisis Partnership Fund attempts to address impediments that have previously hindered the development of township SMMEs and restricted their participation in the mainstream economy. This has resulted in elevated poverty and a high unemployment rate in the townships.
The launch of the fund was welcomed by entrepreneurs who run township-based businesses.
One of the launch attendees, Tebogo Mqaba of MQTEBZ, said: “I think the fund is a much-needed initiative for small and up-and-coming businesses, especially from the township that might not have an idea that such interventions are there to assist in sustainable growth.”
Mqaba said he expected that the SMME Crisis Partnership Fund “will have an effect on the development and growth of black businesses. They will have confidence that their businesses will grow and be sustained as there are funds available to assist.”
When asked about challenges that small businesses faced today, Mqaba said compliance and skills were a big challenge for small township businesses. SMMEs lose opportunities because of this.
He said initiatives such as the SMME Crisis Partnership Fund should work hand in hand with organisations such as the Small Enterprise Development Agency (Seda) and the South African Bureau of Standards (SABS) for training and certification of compliance for small businesses to comply and be ready to access such funds and opportunities outside this funding initiative without being frustrated.
A total of six intermediaries have been provided with funding from the SMME Crisis Partnership Fund, including Indlu Living, which was co-founded by Cobus Truter and works closely with micro property developers as well as backyard developers to formalise informal housing and promote property entrepreneurship within Gauteng townships.
Indlu Living provides all-in-one rental management, finance and modern property development solutions.
“We have done over 111 property partnerships resulting in close to a thousand rental apartments. What is amazing about these rental apartments is that they are owned locally and not only create housing but also create sustainable income for the landowners, and not to mention the circular economies that work through the construction work. We are seeing the growth of Tembisa as a whole,” Truter said.
Crede Capital is a company founded by Sandile Sokhela, which offers debt financing to small black-owned township businesses. “The company focuses on SMEs from a working capital perspective. The fund that we run and established is called SME Contract Finance Funding,” Sokhela said.
Gauteng MEC for economic development Parks Tau said the launch of the SMME Crisis Partnership Fund was part of a deliberate approach to reignite the township economy and elevate it to respond to the current needs of society. “For many years now, township property owners have struggled to get flexible and risk-free funding.”
The Gauteng provincial government, IDC and SA SME Fund each contributed R100m towards the SMME Crisis Partnership Fund. The provincial government’s share provides a first loss guarantee, whereby the government will compensate lenders if the borrowers default. This means it will assume the first portion of any losses.
The Gauteng provincial government, IDC and SA SME Fund believe that this model would leverage the government’s underutilised first-loss capital to capture private-sector funding. The model addresses the economic inclusion of township enterprises in Gauteng and provides a blueprint for other provinces to adapt and scale.