Exploring new funding models is crucial because it enables SMMEs to overcome traditional barriers and can provide them with greater access to capital, flexibility in repayment terms and support for sustainable growth and development – unlocking their potential as engines of economic growth, job creation and poverty alleviation, contributing to the overall prosperity and resilience of African economies.
During an engaging speech delivered at a break-out session titled ‘Funding Instruments For SMMEs’, at the GEC+Africa Global Entrepreneurship Congress in Cape Town on the 13th and 14th of March 2024, the Chief Executive Officer of the Small Enterprise Finance Agency (sefa), Mxolisi Matshamba elucidated the significant impact his agency has in nurturing small and medium-sized enterprises (SMMEs) throughout South Africa.
Here are the key highlights from his speech:
- Bridging Financial Gaps: Matshamba emphasized sefa’s significant mandate of providing access to finance to SMMEs. Despite being a comparatively small agency in terms of balance sheet, sefa’s focus is monumental. They primarily target township-based and rural enterprises but also extend support to ventures eyeing the urban landscape.
- Financial Outreach: Last year alone, sefa disbursed finance to approximately 78,000 SMMEs, highlighting its tangible impact on the economy. Their financial products range from direct lending to partnerships with commercial banks through credit guarantees. This approach ensures broader access to capital while mitigating moral hazards associated with direct state lending.
- Microfinance Initiatives: Recognizing the needs of the most vulnerable, sefa engages in microfinance interventions tailored to rural communities. By collaborating with intermediaries, such as local financial institutions, sefa facilitates access to capital for rural entrepreneurs, particularly women engaged in small-scale trading and artisanal activities.
- Crowdfunding and Trade Credit Guarantees: Matshamba unveiled sefa’s forthcoming collaboration with the private sector to introduce crowdfunding initiatives, recognizing the fiscal constraints faced by traditional financing avenues. Additionally, sefa’s innovative trade credit guarantee program supports small manufacturers by ensuring access to crucial inputs on credit terms, thereby alleviating cash flow constraints.
The panel consisted of industry heads including Gary Markson – Head: Coverage Business Banking, African Bank, Mpopi Khupe – Managing Director, Zevoli Growth Partners, Dr Olasupo Olusi – Managing Director, Bank of Industry, Nigeria and Thabo Hleza – Head of Investment Operations, Masisizane Fund.
