OVERVIEW
Development finance and SMME support A new fund aims to make R5-billion available at a fair price.
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new fund for SMMEs was launched in 2020 with the aim of providing capital at a fair price. Former SA Post Office CEO Mark Barnes, who previously worked in investment banking and private equity, is heading the Kisby Investment Fund. Partners in the fund are Arena Holdings (media), 4AX Africa Exchange, 4AX Debt Services and Rainfin (online credit). Barnes told Business Day that the fund would be compensated for the risk in supporting companies that have to “hunt around in the overpriced debt market” by taking equity in the firm. Kisby is aiming for a R5-billion fund to support companies in the R10-million to R1-billion revenue bracket. Funding is available for technology start-ups in many forms but getting funding early in the process can be difficult because the concept is not proven. For asset management company Futuregrowth, ring-fencing some funding for allocation to early-stage development is a way of ensuring that potential is not overlooked. The company has put 10% of its development equity fund (or R280-million) into businesses such as payment devices ( Yoco), infrastructure platform (Rubicon), fintech (LifeCheq) and an app for domestic workers (SweepSouth). Data company 5M2T (5Minutes2Town) has started offering sophisticated information about the township market. From how many spazas in Soweto have refrigeration units (4 700) to brand loyalty, 5M2T covers 60 000 spazas, salons, barbers and other informal trade outlets an “in-market audit”. This allows for better ordering and planning for suppliers and logistics operators. The Covid-19 lockdown had a severe impact on many small businesses. A survey conducted by risk finance company Business Partners Limited found that 95% of SMME respondents thought they would not survive without help. The company’s packages in response included a Repayment Relief Programme and a Financial Assistance Programme capitalised at R100-million. Most big companies in South Africa have two main programmes to support SMMES: enterprise development (ED) and
ONLINE RESOURCES National Department of Small Business Development: www.dsbd.gov.za National Small Business Chamber: www.nsbc.org.za Small Enterprise Development Agency: www.seda.co.za South African SME Finance Association: www.sasfa.net SOUTH AFRICAN BUSINESS 2021
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SECTOR INSIGHT Futuregrowth has a focus on early stage start-ups. local supplier development (or procurement). Venetia Mine in northern Limpopo, a De Beers Group mine, has more than 50 SMMEs enrolled in incubation programmes and 34 locallyowned companies are doing business with the mine. The National Department of Small Business Development (DSBD) has several programmes to assist SMMEs and cooperatives. The Small Enterprise Development Agency (Seda), a subsidiary of the DSDB, has 42 incubation centres in South Africa under its Seda Technology Programme (STP). The National Department of Trade, Industry and Competition (the dtic) is trying to stimulate township and rural economies. Programmes include the Enterprise Investment Programme (EIP). The South African SME Finance Association (SASFA) is a national, self-regulating body for alternative finance companies. ■
