Cash-flush NEF seeking black entrepreneurs

2014-05-02 17:04

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The National Empowerment Fund (NEF) says it has R950m in cash at its disposal to approve new projects for black entrepreneurs.

According to the acting chair of the NEF’s board of trustees, Rakesh Garach, the NEF had been in talks with the Department of Trade and Industry and National Treasury and had to declare a temporary moratorium on all new applications.

“This, we believe, was a prudent decision because it was aimed at curtailing the erosion of available resources in light of uncertainty at the time regarding the prospects for recapitalisation. Now that we are confident and certain that new capital is on the horizon, the NEF is comfortable to reopen funding for new transactions in order to meet the huge demand for development finance by black business,” said Garach.

The NEF was capitalised in 2005 by government to the tune of R2.4bn, all of which was fully distributed by 2010, as planned, according to chief executive of the NEF, Philisiwe Mthethwa.

Since then, the NEF has been self-financed with proceeds from dividends and interests from its investments and proceeds from the sale in 2007 through the Asonge Share Scheme of a portion of the NEF’s holding in the MTN Group.

Additional capital was generated from loan repayments, which are still being collected in the normal course, said Mthethwa. Since its inception, Mthethwa said the NEF has approved over R5.48bn worth of transactions for 546 black companies “and over the years, R2bn has been repaid and reinvested. While the NEF’s cash position as at March 2014 is R1.48bn, R529m of that related to undrawn commitments,” she said.

The NEF was a patient capital lender with funding horizons of up to 7 years for some products, and up to 10 years in the case of both rural and industrial development transactions, she said.

The fund was criticised last year when it provided a R34m loan to businesswoman Khanyi Dhlomo for her Hyde Park luxury boutique Luminance and experienced cash flow problems.

But Garach is confident of the fund’s capacity. “The board has every confidence in management’s ability to return the NEF to its peak as a high-performing organisation that does its work with diligence and integrity.”

But he said the task of inclusive economic growth was not for government alone and urged the private sector to go beyond the tick-box approach by making real and meaningful contributions in terms of preferential procurement, enterprise development, employment equity and social development.

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