South Africa To Fund 100,000 Enterprising SMEs In Current Financial Year
South Africa has the highest youth unemployment rate in the world. Talks have been ongoing for a while on how the unemployment crisis will be tackled, it is, however, not clear how the government intends to solve the menace. In as much as the government and corporates would help curb the crisis, SMEs, when given the much-needed support, would provide more jobs.
In a move that will help curb the menace, Small Business Development Minister Khumbudzo Ntshavheni recently revealed that Small Enterprise Finance Agency would adjust its funding mechanisms for SMEs who will, in turn, provide job opportunities.
The country plans to leverage on SMEs to create more jobs to be taken up by the youth who are mostly unemployed.
Ntshavheni noted that SMMEs ought to have access to funds and other resources for them to flourish. She further stated that her department would blend SEFA’s finance model to mix grants and loans. This would ease access to finance by SMEs, she noted.
“SEFA will cooperate with other agents of the state to facilitate this. This will be available in the 2019-20 financial year. Grant portion will be up to ZAR 2.5 Mn per enterprise. The first beneficiaries will be 100 000 young entrepreneurs who will be funded in the current financial year,” said Ntshavheni.
The investments in the form of grants and loans will be available for SMEs spread across all the provinces, but priority would be given to young entrepreneurs both those in towns and rural areas. The preference would also be given to those who have shown the potential to offer jobs.
“Beneficiaries will come from all provinces, and township and rural entrepreneurs will be prioritised. The first beneficiaries will be announced in August but to qualify, they must be demonstrably able to provide a minimum of ten jobs each,” Ntshavheni said.
Ntshavheni said Small Enterprise Development Agency would increase the number of incubators in townships and rural areas adding that an index would be developed to monitor SMEs well-being nationally.
“We will have eight more incubation centers in Mpumalanga, the Northern Cape, the Free State, and Limpopo Province. The incubation period will be increased to five years,” she said.
Notably, the minister also pointed out that mechanisms to address late payment to SMMEs by the government would be developed.
It is no doubt that SMMEs play a crucial role in spurring economic growth and job creation. South Africa is currently leveraging on these small and medium-sized firms to attain ideal annual growth target of 5 percent by 2030.
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