Cape Town - One of the key issues that inhibit small and medium enterprises (SMEs) from capitalising on their abilities and strengths is the limited availability or lack of risk finance, an issue that has inspired the launch of a R300m fund to assist the manufacturing sector.
And there’s more to come for the other sectors too.
Business Partners Limited, a specialist risk finance company for formal SMEs on Tuesday unveiled a campaign aimed at stimulating entrepreneurship in South Africa – the square peg movement.
As part of the campaign, a series of specialised funds will be launched, each focusing on the upliftment of a particular local industry, starting with the launch of a R300m manufacturing fund.
The Business Partners Manufacturing Fund, a dedicated fund which aims to assist SMEs that operate within the manufacturing sector, was launched with the objective to stimulate the manufacturing sector, an industry that has the potential to create much needed jobs in South Africa.
According to Nazeem Martin, MD of Business Partners Limited, a stimulated manufacturing sector will have a spin off effect on businesses operating within other sectors such as the service industry, and will result in a positive boost for the economy.
He said during the period between 2000 and 2013 the manufacturing sector’s contribution towards South Africa’s GDP shrank from 19% to 15.2%. “This drop should be considered a serious concern in an economy where foreign exchange via exports is vital, and the beneficiation of the country’s rich natural resources could positively contribute towards its growth.”
Manufacturing sector can grow
Martin said the manufacturing sector employs 1.7 million people and has the potential to grow substantially. “Although the larger manufacturers are the dominant players within the sector, SMEs can play an important and deserved role.
SMEs are known for playing a support role to large businesses, but the potential exists to supply the market both locally and internationally with high quality products at competitive prices.”
Fin24's Matthew le Cordeur interviews Martin about the launch of the fund.
The fund would not only offer financial assistance, but also provide the support and mentorship that Business Partners currently offers. “The mentoring and counselling services are aimed at reducing the risks associated with the industry, and as part of this industry information will be shared, forums will be formed and topical matters will be circulated via a web-based library.”
Square pegs in round holes
“We are passionate about funding, supporting and mentoring entrepreneurs, or as we like to call them, square pegs in round holes,” he said.
“We call them square pegs because they are the exceptional few who see the world not for what it is, but for what it could be.
“Starting a business is a brave move, and those individuals that almost always work against the grain and challenge conformity to create wealth for both themselves and the country need to be supported. The campaign therefore reinforces and strengthens our commitment to improving the level of entrepreneurship in the country,” said Martin.
Who can use the fund
The funding offered starts at R500 000 and the maximum amount offered over a five year period is R25m.
The Business Partners Manufacturing Fund will offer finance to manufacturers in the following areas: agri-processing, textiles and clothing production; Information and Communications Technology (ICT), electronics, automotive and chemical, green industries, as well as new innovation and technologies.
“The fund will provide investment that will result in import replacement, such as through the introduction of new products and processes currently not available or performed in South Africa, or an export promotion, such as access to new markets,” he said.
“Other areas which will be considered include a sector that is experiencing cyclical distress, an investment that will drive job creation in downstream industries or provide benefits for other entrepreneurs in the value chain.”