- Ubank signed a partnership agreement with the Black Business Council in May to establish a R1 billion fund for rural and township businesses.
- The bank secured commitments from development finance institutions and government to support its fund.
- The BBC has urged government and financial institutions to reform the way they engage with SMMEs.
Ubank CEO Luthando Vutula said on Friday afternoon that the bank secured commitments from development finance institutions and government to support it as it established its fund to support businesses based in townships and rural areas.
Vutula said he was doubly committed to supporting these businesses during the Covid-19 pandemic. Ubank signed a partnership agreement with the Black Business Council in May to establish the R1 billion fund in support of businesses and entrepreneurs in the township and rural economy.
The township and rural economy fund aims to support businesses with patient capital and blended financing solutions with funding that ranges from a minimum of R50 000 to a maximum of R20 million.
Speaking to Shawn Theunissen on a virtual panel for Entrepreneurship: To The Point, Vutula said while Ubank was quick to announce the partnership with the BBC, the bank secured commitments from various strategic partners to provide the funding to assist township and rural businesses.
"The R500 million per annum for the next four years as BBC has the ability to raise money. We chose our partners carefully here. For every rand that we put in they will go and rally for another rand so that it is R500 million each year," said Vutula.
Vutula said government at different spheres was an effective partner in the funding drive. He said the Eastern Cape government already committed to give R200 million in patient capital which will go to entrepreneurs in strategic sectors in the province.
"We have really gone to government in the main. There are certain provinces that have come to us and committing to put money in. Government, the reality is, will come with funds which will make it easier for entrepreneurs," Vutula said.
However, Vutula said while the bank would like to assist rural and township businesses with financing, Ubank was not keen on an immediate foray into financing businesses in tourism and property because of the risk factor and the impact that the coronavirus had on these sectors.
Tilson Manyoni head of policy of BBC called the agreement a major milestone for BBC. Manyoni said the agreement repositioned BBC as a policy advocacy organisation and allowed it to become an implementing partner.
"It will ensure that our country is transformed, develop the township and Rural Economy as well as building a new cohort of black industrialists and black businesses. We are now bringing Policy Advocacy to implementation," said Manyoni.
Black Business Council leader and chair of Zungu Investments, Sandile Zungu urged government as well as financial institutions to reform the way they engage with SMMEs, especially those based in township areas.
He said these business' lack of representation in the corporate tax base left them exposed to Covid-19 without much protection from government’s relief package.