Microfinance bodies merge into single fund.
A new umbrella microfinance agency, which will fall under the Industrial Development Corporation (IDC), will use the new Postbank facilities at post offices around the country to fast-track loans to small businesses.
Announcing the establishment of the SA Finance Enterprise Agency (Safea) in Parliament yesterday, Economic Development Minister Ebrahim Patel said the aim was to encourage start-up businesses through the amalgamation of SA Microfinance Apex Fund, Khula Enterprise Finance, and the IDC’s small-business lending book.
The amalgamation of the agencies would lead to administrative savings of about R20 million a year, Patel said. This saving would be fed into supporting finance products for small businesses.
The cabinet, including Finance Minister Pravin Gordhan, had been fully supportive of the project, reported Patel, in the presence of IDC chief executive Geoffrey Qhena and senior IDC and Economic Development Department staff.
Patel did not divulge the extent of the loan book but it is understood to be in the region of R3 billion.
“Cabinet was quite clear, we needed to speed up implementation (of the new agency) so that staff are not distracted with a lengthy process of bringing together three lending programmes. A new agency could rapidly take up the challenges of expanding enterprises and growing jobs,” he said.
The focus would be on including small businesses in the large infrastructure projects spearheaded by Eskom and Transnet. “The IDC can bring… small businesses into the mega projects that it finances,” Patel said.
President Jacob Zuma announced the intention to create one agency in his State of the Nation speech in February.
Patel said that the business of the agency would be to focus on investing in small businesses that support the productive sectors, including small-scale manufacturing, agro-processing, infrastructure development, mining support services, the green economy and tourism.
The minister said that falling under the wing of the IDC, the agency would be able to leverage the power of its balance sheet and tap into its experience in managing a loan book.
IDC chairwoman Monhla Hlahla said people who grew up in the townships would know that many entrepreneurs were scared to growth their businesses. “They would rather start another enterprise than enter into the formal sector,” she said. The new entity would “walk with them in the path of growth into larger entities”.
Source: Business Report