R1 billion allocated to new SME Fund

Deputy president Cyril Ramaphosa says R1 billion will be allocated to the newly announced fund for Small and Medium Enterprises (SMEs) as government makes a push to empower small businesses, especially those in the townships.

The deputy president said this when he fielded oral questions in the National Council of Provinces in Cape Town on Wednesday.

“As was announced in the [Medium Term Budget Policy Statement] by the Minister of Finance last week, a new fund for small business and innovation will be established which will be allocated R1 billion in 2019/20.

“The National Informal Business Upliftment Strategy is also available to help township enterprises upgrade their business activities,” he said.

The deputy president said this when responding to a question from ANC NCOP MP from the Eastern Cape, Mandla Rayi, who had asked whether government has developed a nationally coordinated assistance to young entrepreneurs with business initiatives.

The member also asked whether government would develop a national township growth strategy in order to curb the increase in unemployment in townships.

The deputy president said, in his response, that government provides financial support to youth-owned businesses through the Small Enterprise Finance Agency (SEFA), the National Empowerment Fund and the Industrial Development Corporation (IDC).

He said over the past financial year, the IDC approved R2.3 billion funding to youth empowered businesses, which are those with more than 25% youth equity ownership.

“Last year, SEFA reported that it approved funding of R222 million to over 10,000 youth-owned businesses showing that the focus is on helping to empower youth-owned businesses.

“Much is being done to empower the youth and also to develop township enterprises.

“However, given the legacy of apartheid planning and the dire extent of youth unemployment, there is still much that needs to be done and what also needs to be done is to improve the business skills, the entrepreneurial knowledge of young people in the townships, in the rural areas and we are embarking on a number of other initiatives of setting up incubation centres that are going to help young people to become more proficient,” he said.

Interventions to support township entrepreneurs

The Deputy president said, meanwhile, that many township entrepreneurs were and are still excluded and restricted from opportunities in the major commercial centres of the country having being relegated to being small business players in the townships and in the rural areas.

He said township entrepreneurs have not yet really found opportunities that can truly empower them.

To this end, government is determined to reverse this, the deputy president said.

“We are already implementing key elements of a strategy to boost township enterprises, to increase the involvement of South Africans in the economy as well as to expand opportunities for our people through SEFA.

“Many small businesses located in our townships have already received loans and industrial funding to enable them to entire new markets and also to expand their businesses and to expand their operations,” he said.

The deputy president said last year, disbursements from SEFA totalled around R1 billion and this was targeted towards township businesses as well as rural businesses.

The deputy president also said that through the Competition Commission’s market inquiry into the grocery retail sector, government is looking specifically at the competition spaza shops face from larger malls and the factors that may limit growth of the township grocery retail market.

“The actions against cartels and monopolies are further means and ways of opening space for township enterprises. It was through the complaints that were raised by township shop owners that the investigation into the bread cartel was launched.”

Read: Mastercard brings card payments to 15,000 SMEs in South Africa

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R1 billion allocated to new SME Fund