The City of Ekurhuleni, in collaboration with the National Empowerment Fund, has launched a multi-million fund it believes will “boost and propel” entrepreneurs in the region to significantly scale up their businesses.
Speaking at the launch of the Ekhurhuleni Community Enterprise Development Fund (ECEDF) at the Kwa Thema Business Hub Friday, Nkosingipile Xhakaza, the city’s MMC for Economic Development and ICT, said the Fund was anchored on the metro’s ten-point economic plan which includes, the revitalisation of manufacturing; the creation of an aerotropolis anchored at OR Tambo International Airport; improved public transport; and the rapid release of land for development purposes.
The city recently released 156 farms for agriculture and agro processing development purposes.
The ECEDF includes the Fetola Fund, launched in partnership with the National Empowerment Fund (NEF), which will see the City and the NEF contribute R50 million per year each for the next three years to yield a total of R300 million. The fund will be administered by the NEF.
The Fetola Fund is one of four investment funds approved in October 2019 by the Ekurhuleni Metro to form the ECEDF.
The other funds are the Phanda Fund, aimed at individual entrepreneurs, the Ximilani Fund aimed at business organisations and chambers with a funding bracket of between R50 000 and R1,5 million as well as the Fetola A fund in partnership with the NEF and the Fetola B which will match rand for rand other private sector Enterprise Development initiatives in Ekurhuleni.
‘Fetola’ is the SeTswana word for transformation “and what we are seeking is to achieve inclusive growth so that black entrepreneurs in the townships, in the cities and in rural communities can also become integral to the country’s economy,” explained NEF CEO Philisiwe Mthethwa.
Mthethwa says the aim of the fund is to stimulate the participation of black businesses within Ekurhuleni, provide financial support for potential suppliers to the City and finally create black industrialists within the region.
Applicants will need to meet the NEF’s eligibility criteria, which includes being majority black owned and have a business idea of proven viability. They will be assessed on the NEF’s established due diligence and adjudication processes.
Mthethwa noted that the fund, which has been a year in planning is part of the NEF’s continued strategy to build partnership and leverage alternative sources of funding and has thus far seen the NEF leverage R8,8 billion worth of funding from other sources over the past ten years for the benefit of black owned businesses.
Caiphus Chauke, the Head of Department at the Economic Development department in the Metro says the City has committed R120 million a year over the next three years to the ECEDF.
Of this, R50 million a year will go towards the Fetola Fund and be matched by the NEF.
The Phanda Fund will receive about R40 million a year while Ximilani will be allocated R30 million.
The closing dates for the Phanda and Ximilani Funds is 31 January 2020.
Ekurhuleni mayor Mzwandile Masina said the fund’s ultimate goal should be to help black entrepreneurs to access opportunities such as the freight and logistics hub that the city is building around the OR Tambo International Airport as part of the aerotropolis.
“Blacks must be producers and not just consumers of goods” said Masina, who added that only entrepreneurs can help the country overcome its unemployment challenge.
He told delegates that the city and the NEF will ensure that the fund’s application and adjudication process will be “transparent, open and fair.”
National Youth Development Agency (NYDA) executive chairman Sifiso Mtsweni told the gathered audience that the initiative by Ekurhuleni and NEF must be applauded as it would benefit young entrepreneurs in the area.
He urged government and funders not to use lack of experience to disadvantage young entrepreneurs and noted that the NYDA pays experienced mentors to help young entrepreneurs to navigate business.
Minister of Small Business Development Khumbudzo Ntshavheni told delegates that her department’s mission was to transform the economy and make it more inclusive and the three biggest challenges that small businesses face were access to funding, access to business support and market access, noting that the latter is probably most critical.
“Without market access, a business cannot grow. That is the biggest challenge,” said the minister.
The ECED Fund has been grouped into three funding options:
– The Phanda Fund aims to support the development of community enterprises in the form of individual entrepreneurs, small, micro and medium enterprises, cooperatives, and informal traders located within the City of Ekurhuleni. This focuses on the township economy, industrialization, business services, environmental services and human development. The thresholds for this fund are from R50 000 to R1.5 million.
– The Ximilani Fund is designed to syndicate with registered organizations, organised business formations, associations and/or chambers of commerce located within the City. The funding thresholds for this fund range from R50 000 to R1.5 million.
– The Fetola A Fund seeks to partner on a 50-50 cost and risk sharing basis with development finance institutions, state-owned enterprises, corporate social investment partners, enterprise and supplier development, and private funds. Ideal partners are those organisations that exist for the sole purpose of developing black businesses. The funding range for this is from R100 000 to R6 million.
– The Fetola B Fund is a soft loan that is exclusively reserved for Ekurhuleni-based entrepreneurs. The minimum application is R250 000. This Fund is aimed at black-owned businesses, individual entrepreneurs, small, micro and medium enterprises as well as potential industrialists and will be administered by the NEF.
