By: Anna Majavu
Small businesses in the North West have told MPs of alleged corruption involving the Small Enterprise Finance Agency (Sefa) and now Parliament’s Small Business Portfolio Committee is demanding answers. This follows committee members conducting an oversight visit to SMMEs in the province in March this year. It found that instead of funding small businesses directly, Sefa was giving the money to private financial “intermediaries” to disburse to the SMMEs.
The committee also found that intermediaries received the money at the prime lending rate (currently 11.25%) plus 3% to 5%, but then charged struggling, tiny spaza shops up to 29% in interest. Now the committee has summoned Sefa and the Department of Small Business Development to answer to the allegations of corruption. In a damning report approved on Wednesday in Parliament, the committee found that the intermediaries “charge double or triple what Sefa charges”.
Some, such as De Novo Medical Solutions and Forward Finance Accelerate, were approved Sefa intermediaries even though they were not registered as lenders with the National Credit Regulator, as required by law. Ezimali Afrika and Intellimatch Financial Services also “qualified as Sefa intermediaries immediately after licencing”, even though Sefa’s policy was that it would only approve intermediaries who had a minimum of two years of lending experience.
The committee said one of the unregistered lenders had loaned Sefa funds to a farm that was not even a local small business, but a subsidiary company of an Australian firm. The farm management refused the parliamentarians access when they tried to visit it. The committee also said it had trouble finding many of the Sefa-funded projects. “Sefa does not even know the exact location of the projects it funded,” reads the report. It seemed that some of the disbursements were scams.
Sefa had given Parliament a list of people it had funded, but when the committee investigated, it found that one North West business owner listed as having received R736,000 was based in the Eastern Cape. She said she had applied for funding during the Covid-19 pandemic but was rejected. She did not receive any money from the agency.
A total of 504 spaza shop owners were listed as having been paid R10,500 each, but they only received R3500, the committee found. Following its findings in North West, the committee said it would now investigate Sefa loans in all the provinces. The committee ordered the Sefa board to probe all the missing money and report to Parliament before 30 June. It has also asked lawyers to investigate Sefa for providing incorrect and misleading information to Parliament, which is legally prohibited.
Committee member and EFF MP, Dumisani Mthenjane, said Sefa should be handed over to the Hawks. “We are being taken for a ride in broad daylight by Sefa. This is organised crime. No wonder wherever we go, people are crying that they are applying (for funds) and are never approved”. ANC MP Faiez Jacobs said that all political parties on the committee were unanimous that they had to “expose this malfeasance”.“It is sad that during Covid-19, people were promised R10,000 to help them and they said they only got R3500. That money must be paid within the next month. While we bring those criminals and corrupters and looters to book, we want consequence management,” Jacobs added.