The Gauteng government has partnered with the Industrial Development Corporation (IDC) and the SA SME Fund to launch an R300-million fund aimed at township businesses. The fund will address the pressing issue of access to finance, which makes it difficult for informal and formal township enterprises to enter new sectors. The SMME Crisis Partnership Fund was launched in Tembisa in Ekurhuleni on Wednesday. The IDC, SA SME Fund and the government have each contributed R100 million to the fund.
The money will be distributed through seven intermediaries, and six have already been identified. One of them is Indlu Living, which provides township property developers with finance, property management software and technical assistance to enable them to build rental property, which is one of the fastest-growing business sectors in townships. The fund will be managed by SA SME Fund on a pro bono basis.
SA SME Fund CEO Ketso Gordhan praised the Gauteng government for being a leader in developing the partnership. “For our country to be prosperous and successful, it is imperative that we ensure that entrepreneurs and small businesses, especially those in the township environment, are economically included,” Gordhan said.
“In addition to igniting township SMMEs, this model facilitates the building of non-bank institutional funders, who have the requisite skills and experience to service this sector, unlike the banks who aren’t as effective in this environment.” The Gauteng Enterprise Propeller (GEP), which promotes, fosters and develops small enterprises, is also involved.
Speaking at the launch, GEP CEO Saki Zamxaka said: “This partnership will help broaden access to funding for township-based SMMEs, particularly as we will be working with implementing partners who already have a pipeline of applicants in the township economy.” Economic Development MEC Parks Tau said that the fund would ignite the township economy and elevate it to respond to society’s current needs.
“For many years township property owners have struggled to get flexible and risk-free funding to build backyard rental flats,” he said. “We are working in partnership with Indlu Living to provide that assistance to property owners.” According to IDC CEO Tshokolo Nchocho the partnership reflected a collective intent of supporting the growth of township economies and SMMEs.
“The fund will enable entrepreneurs to contribute to creating sustainable jobs, increasing economic activity and sustaining livelihoods,” he said. “The IDC will use the learnings from this and other funds and investments to replicate the approach and impact in other provinces.”