The government has announced a R340 million fund to support small and medium-sized businesses with funding, particularly in the manufacturing and green economy sectors.

The Department of Trade, Industry and Competition (the dtic) yesterday launched the Equity Equivalent Investment Programme (EEIP), in partnership with international financial services firm, JP Morgan.

The deployment of JP Morgan’s initial R300m through the fund and R40m through grants.

The fund is expected to result in R2 billion worth of financing transactions, and create a minimum of 1 000 jobs over the eight-year period.

The dtic Minister Ebrahim Patel said JP Morgan was the first international bank to undertake an EEIP programme.

Patel said the EEIP was part of the government’s broad-based black economic empowerment framework, which allowed multinational corporations that were unable to sell an equity stake to contribute positively to South Africa’s economic development.

He said the Codes of Good Practice made provisions for the recognition of contributions in lieu of a direct sale of equity, adopting the full benefits which will be 25 points on the BEE scorecard.

“The value of the contributions are measured against 25 percent of the value of the multinational’s local operations or 4 percent of the local revenue of its operations over the measurement period,” Patel said.

“To boost manufacturing in particular is timely as one of the key lessons of the Covid-19 pandemic has been the value of countries having domestic industrial capabilities.”

The EEIP programme will see the creation of Abadali Fund, Black Business Fund, and Abadali Grant to support SMMEs in growth sectors.

It will be overseen by JP Morgan and will be administered by Masakhe Partners.

Patel said the funding would facilitate an injection into SMEs who face critical funding challenges or those who do not meet the traditional underwriting criteria of commercial banks.

Short-term finance will be provided to businesses with minimal or no initial revenue, with capital requirement of at least R250 000 over one to 12 months.

The fund will have seven days turnaround time from application to payment.

Medium- to long-term finance will be offered at significantly subsidised rates to businesses with revenue starting from R1 million that require funding for two to five years.

The terms on which the funding will be extended are concessional, including limited security requirements and loan repayment payment holidays that respond to the life stages of SMEs.

JP Morgan’s joint senior country officer Kevin Latter said a strong partnership between the government and business was critical in post Covid-19 economic recovery efforts.

“The South African private sector has great capacity to multiply impact through partnerships, as we are aiming to do with the dtic,” Latter said.

“Now is the time to reinforce and increase our commitment to equality and inclusive growth and work harder across our business.”

Editor@tech-talk.co.za

Total page views: 70 Viewers today: 2 Total site views: 710074
0
0
error: Content is protected