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The Department of Trade, Industry and Competition (dtic) and JP Morgan have launched a R340 million investment programme to support small businesses.
Announced on 17 August, the programme aims to provide short and long-term financing in the industrial and green economy sectors.
“South Africa needs more jobs for young people and deeper levels of industrialisation,” Minister Ebrahim Patel said in a statement.
The programme will provide short-term financing to businesses with minimal to no initial revenue.
“This transaction will give a boost to the country’s localisation efforts, creating employment and helping to strengthen economic output.”
JP Morgan will be the first international investment bank in South Africa to launch a dtic-approved Equity Equivalent Investment Programme (EEIP).
JP Morgan promotes economic growth in South Africa’s in-demand sectors
The Abadali EEIP will consist of the Abadali Fund, a black business growth fund, and the Abadali Grant.
JP Morgan will provide R300 million through the Fund and R40 million through the Grant.
The programme will provide short-term financing to businesses with minimal to no initial revenue. They must have a capital requirement of at least R250 000 over one to 12 months.
It will also provide medium to long-term finance at subsidised rates to businesses with revenue starting from R1 million. It will consider businesses that require funding for two to five years and that are majority black-owned.
Meanwhile, the Abadali Grant will provide grants to developing black enterprises. It will focus on supporting entrepreneurship and advancing jobs and skills in in-demand sectors.
JP Morgan and the dtic expect the programme to generate R2 billion worth of financing transactions and create 1 000 jobs over an eight-year period.
“The South African private sector has great capacity to multiply impact through partnerships, as we are aiming to do with the dtic,” JP Morgan Senior Country Officer, Kevin Latter said.
“Although the current growth rate in South Africa is low and the impediments in the economy well known, now is the time to reinforce and increase our commitment to equality and inclusive growth and work harder across our business to better serve our people, our clients and the communities of South Africa.”
Featured image: Cytonn Photography via Unsplash