R50 million allocated to benefit SMMEs
Local SMMEs have gained some leverage for their businesses as the Steve Tshwete Local Municipality (STLM), in partnership with the National Empowerment Fund (NEF), injected R50 million in the Enterprise and Supplier Development (ESD) Fund.
The municipality is set to provide R20 million and the NEF the remaining R30 million for eligible black-owned and managed businesses in the municipality. Adv Bheki Khenisa, the municipal manager, said the initiative was part of the municipality’s interventions against Covid-19.
“As a post-Covid-19 response, one of the things we identified was that people had lost their jobs. We needed to come up with a counter-cyclical investment method that included infrastructure development,” he said.
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“So we went big on infrastructure, which absorbed a lot of people workwise. But then we also realised that most local entrepreneurs who get contracts to do the work do not have start-up capital. So we decided to partner with the NEF to assist in reducing the high cost of capital,” Khenisa said.
The ESD fund will invest a minimum of R250 000 per SMME for a maximum duration of five years. The municipality portion will be limited to a maximum of R5 million per transaction.
The NEF will contribute a minimum of 60% of the funding requirement for each qualifying transaction and the balance of 40% will come from STLM contributions.
The NEF divisional executive, Setlakalane Molepo, said his institution will assist the municipality to accelerate broadbased black economic empowerment in the municipality.
“This is to identify fundable businesses and to provide them a range of support interventions, including mentorship, to enhance the chances of success,” he said.
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“Loans are repayable at prime rate to be determined by NEF investment committees. The municipal contribution will incur a fixed interest rate of 5%,” Molepo said.
STLM’s executive mayor, Cllr Diphale Motsepe, said the partnership was proof of their delivery to the commitment to grow and support small business.
“Our strategic planning lekgotla earlier this year resolved that we would ensure continuous support to emerging and existing SMMEs and cooperatives in order to contribute to job creation. We further made a bold commitment to implement enterprise development in partnership with the private sector,” he said.
