Viable and Effective Public-Private Partnerships Established
Huge strides were made in building solid Private-Public Partnerships (PPPs). In 2016/17, an R8.8 million youth employment programme through Coca Cola Beverages South Africa (CCBSA)’ Bizniz in A Box was launched. The first launch was in Welkom in the Free State, where an estimated 26 youths each received a loan of R80 000 to secure a containerized retail and services business. The collaboration with CCBSA ensures that the targeted youth are trained in business practices and receive ongoing mentoring for a period of three years.
An additional 50 youths from The Royal Bafokeng community will also benefit from the programme. Depending on the overall success of this initial facility, sefa and CCBSA may roll out the programme countrywide. In answer to the need to dedicate focus to underserved priority provinces the Wholesale Lending – Microfinance unit targeted the Northern Cape, North West, Free State, Eastern Cape and KwaZulu-Natal for approval and implementation of development and finance solutions with strategic partners.
sefa partnered with Siza Capital which in the 2016/17 financial year disbursed R12.8 million of its revolving facility to microenterprises participating in the Abengoa Supply Chain in Pofadder, Northern Cape.
A R24.5 million facility was approved for support of informal sector players in the Eastern Cape trained through a partnership with the Department of Small Business Development and Wholesale & Retail Seta. In the 2017/18 financial year approved
projects will be implemented, expanded and replicated with existing strategic partners.
Reaching out to micro-entrepreneurs
sefa’s ability to lend directly to end users in the informal and microenterprise sector does not signal the end of its relationships with Microfinance Intermediaries (MFIs). Significant facilities have been approved for a number of MFIs across the country. Among these MFIs are: The Small Enterprise Foundation (SEF) and Phakamani Foundation (Phakamani) accessing revolving facilities of R30 million and R50 million respectively.
These MFIs collaborate with sefa and other international and local funders to provide credit to informal businesses and microenterprises in a number of rural provinces of South Africa. sefa and SEF established a strategic relationship in June 2005 when a facility of R9.6 million was approved. At the time, SEF had over 27 500 clients. Over the last 12 years, and after a number of approved facilities, SEF has grown its book to over R350 million with almost 157 000 clients. While it is not only sefa funding that has made SEF grow this significantly, it is nevertheless noteworthy that the size of the current facility is a revolving R30 million.
Through the activities of SEF, sefa has a strong informal business and microenterprise footprint in Limpopo, Mpumalanga, Eastern Cape and the North West. The strategic relationship between sefa and Phakamani was established September 2010, with a R3.5 million term loan. At the time Phakamani had only 915 active clients. In the short space of a little over six years, Phakamani has grown its client numbers to over 20 000 and has a revolving facility of R50 million with sefa. Its operations in Mpumalanga have made sefa a visible supplier of on-lending capital for the benefit of informal businesses and microenterprises. The current R50 million revolving facility will see
Phakamani expand its credit offering in KwaZulu-Natal.
Durban Fresh Produce Market Client ( Microfinance)
Mr Isaac Siphiwe Sithole of KwaXimba, in Durban, has a fruit and vegetable business which he operates from a stall at the Berea rail station. Mr Sithole, a regular buyer at the Durban Fresh Produce Market qualified for a R2 000 loan in January 2017. He managed to improve his fruit and vegetable business by adding other items which were not in his selling basket.
When visited by the sefa staff, he said, excitedly, “isefa ingenzele kahle kakhulu (sefa helped me tremendously)”. He went on to say, “ sefa did not only assist me with money to buy stock for my business but also assisted me to manage my finances properly. I believe I received a business management course for free!” The fruit and vegetable business is the only source of income forMr Sithole and his family. His day always starts before dawn, stocking up at the market. He then rushes to his operating stall. He targets the passengers who commute to and from the Berea station.
New Partnerships Formed
Inyosi Capital (Pty) Ltd
Enterprise and Supplier Development (ESD) is a global movement that has proven its ability to stimulate economies, diversify supplier chains and create jobs. The spirit of ESD is embodied in the growth of small and medium-sized businesses through the provision of finance and support. This support can help these businesses to overcome obstacles and increase their competitiveness in the market, with the end result being job creation and poverty alleviation.
sefa has partnered with Inyosi Capital (Pty) Ltd in the Western Cape to provide financial support to SMMEs who are participating in the ESD programmes of various corporates. The partnership involves a R30 million sefa investment in Inyosi Capital. This capital injection is expected to unlock at least R60 million from the private sector’s participating corporates through their ESD programmes. Under this partnership, Inyosi Capital will provide an online portal through which SMEs can access available opportunities. The portal will also enable corporates to access a bigger pool of suppliers. The benefits of this partnership are expected to reach at least 42SMEs. Over 90 job opportunities over a two year period are also expected.
Chris Hani Co-operative Development Centre (Lukhanji Masisebenzisane Secondary Co-operative).In its continued efforts to support and empower co-operatives, sefa took a bold step in December 2015 when it embarked on a pilot to provide both credit and education to Lukhanji Masisebenzisane Secondary Co-operative in the Chris Hani District Municipality. In this strategic partnership with the Chris Hani Co-operative Development Centre (CHCDC).
sefa committed an amount of R4 680 506 to fund the Secondary Co-operative as an incubation site for a total of five Primary Co-operatives involved in commercial vegetable production under multi-span greenhouses (hydroponics). The CHCDC, on the other hand, provided the much needed technical support to set up the greenhouses, provide market access, and post-investment support to the Co-operative.
The pilot saw the completion of the construction of the greenhouses and beginning of operations. Production commenced in March 2017 on the Lukhanji Co-operative site, with Swiss chard and sugarloaf planted, which often has been a substitute for spinach in South Africa. About two thirds of the greenhouse were utilized to plant 11 000 sugarloaf and 7 550 Swiss chard, totaling 18 550 plants. The first harvest was recently sold to off-takers in Cape Town (1 040 bunches) and Johannesburg (1 000 bunches).
The next step is to finalise the planting schedule and ensure that production is undertaken at full scale. Efforts to commence production at the Masisebenzisane Co-operative site were thwarted by gusty winds in Cala, which collapsed the constructed tunnels. The CHCDC is assessing damages and plans to resuscitate the project.
Credit Guarantee Scheme
Transaction Capital Business Solutions
KCG provided a R50 million indemnity cover facility to Transaction Capital Business Solutions to service the SME market that lacks sufficient collateral to support lending applications. Furthermore, smaller and more recently established black-owned businesses usually have client concentration issues and/or provide products/ services to the public sector. Transaction Capital Business Solutions sees a significant opportunity to assist black SMMEs with much-needed purchase order finance. This in a milieu where there is a substantial focus on supplier development with very limited financial assistance being available.
Transaction Capital Business Solutions provides the following products:
Purchase Order Financing
Term Loan Finance
Property-backed Loan Finance
The KCG indemnity cover facility will assist Transaction Capital Business Solutions to provide more flexible financial assistance to the predominantly underserviced SME market, thereby helping these businesses to sustain themselves in the short term, grow and ultimately create more employment opportunities.
Riko Fishing (Pty) Ltd
"Our love for the ocean and fishing is evident in the wealth of product knowledge and expertise. This respect for the sea
ensures that concern for the environment and sustainability are an integral part of the company’s ethos." Riko Fishing is dedicated to prawn trawling off the South Coast of KwaZulu-Natal. The acquisition of a sea vessel, MVOcean Spray, has enabled the company to complete the value chain of seafood wholesale and distribution.
A related party of Riko Fishing that was already in existence when the company purchased the MV Ocean Spray in July 2016 serves as an outlet for its entire catch. The local harvesting of seafood products replaces goods which were previously imported thus
contributing to the GDP. The R2.7 million facility approved through enabled Riko Fishing to refurbish the vessel to the extent where it was operational and adhering to safety standards relating to the rigorously governed industry.
The owners’ focus and strategic involvement ensure that business is always done with precision. Values are regarded as key at Riko Fishing which is evident in management’s endeavors to empower and support its employees.
Amavulandlela Funding Scheme
Mahlaku a Mosebo Contractors CC
Mahlaku a Mosebo Contractors CC is wholly owned by Ms. Makgato Chaba a black woman with rheumatoid arthritis which has led to her physical disability. The Polokwane-based construction company commenced its operations which include building construction, civil works and mining related activities in the early 2000s. The owner, Ms. Chaba was born and bred in Limpopo province which gives her competitive advantage in her market space. Prior to venturing into entrepreneurship, Ms. Chaba was a teacher – a profession she held for a period of 10 years since 1991.
Her tenure as a teacher saw her furthering her studies and obtaining a Masters Degree in Curriculum Studies from the University of Venda. That is the drive and attitude that has seen her steering Mahlaku a Mosebo into the soaring heights it is today. Life presented her with a setback when she was diagnosed with multiple joints rheumatoid arthritis ailment in 2001. However, the chronic and progressive disease which often causes deformation of joints did not get in her way of being a successful entrepreneur.
Since inception, her business venture has successfully executed various building construction projects obtained from private and public institutions in and around Limpopo.In 2016, Ms. Chaba wanted to expand her multipronged business and needed funding. She approached the IDC’s office in Polokwane who redirected her to sefa. Mahlaku a Mosebo’s loan application of R4.3 million was approved to be repaid over a five-month period with a two-month capital and interest moratorium at an interest of 7% in 2016.
The loan of which R1.5 million has been disbursed by year-end, was granted at a reduced interest rate because this company is a beneficiary of the Amavulandlela Funding Scheme – a scheme specifically designed to support entrepreneurs with physical disabilities. The loan was used to purchase raw materials and the provision of working capital to service a contract awarded to Mahlaku a Mosebo by the Co-operative Governance, Human Settlements and Traditional Affairs (CoGHSTA) for the construction of low-cost houses in Mogalakwena Municipality. The project has immensely contributed to the livelihood of the poorest of the poor in the rural area of Mogalakwena with the employment creation and the provision of housing. The housing project created at least a total of 110 employment opportunities made up of 23 and 87 females and males respectively.
The establishment of a building construction business owned by Ms. Chaba, has shown courage and determination in a male-dominated industry in South Africa. sefa is proud to be associated with this close corporation