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A recently-launched fund is offering qualifying small and medium-sized enterprises (SMEs) in the agro-processing and manufacturing sectors access to much needed debt funding.
The South African SME Debt Fund – a partnership between Sanlam Investments and the Eskom Pension and Provident Fund (EPPF) – was launched in the second quarter of 2022 with initial capital of R400 million to help SMEs in these sectors reach their full potential.
Eligible businesses should have a three-year track record, high-growth potential and stable business strategies, among other factors. The fund is focused primarily on supporting black-owned businesses, however, all eligible applications will be considered.
SMEs – and in particular those in the agro-processing and manufacturing sectors – have been recognised as strategic priorities in a number of key government plans. But accessing funding remains tough.
For the past 12 years, Vukile Themba-Mketo, portfolio manager at Sanlam Investments, together with her team, has run a number of debt funds aimed at offering smaller businesses access to funding to help them grow and thrive. “We don’t want to see SMEs – with all the hope they offer for growth and employment – left behind because they can’t access capital.”
Shafeeq Abrahams, chief executive and principal officer at the EPPF, explains that the focus on these sectors is largely driven by their massive potential to employ so many people, creating a multiplier effect that strengthens the economy.
“With South Africa’s current unemployment rate at 35.3% in the fourth quarter of 2021, we need to do better as a nation. We need to reduce our reliance on imports, spur the growth of the economy and ensure food security for all. At the same time, we must provide the required investment returns to enable the fund to pay benefits to its members.”
Do you qualify?
Earmarked for businesses in the agro-processing and manufacturing sectors, the funding is aimed at SMEs with a three-year track record, high growth potential and stable business strategies. The loans are priced at a maximum interest rate of prime, with an equity upside to yield a further 5% return. They can be repaid within a maximum period of 60 months.
The debt fund will prioritise businesses that have been in existence for at least three years and have shown signs of profitability before the Covid-19 pandemic.