R200m available to help black business beat Covid-19 challenges
In an effort to help fight the Covid-19 outbreak, the National Empowerment Fund (NEF) has set aside R200m for black business.
More than 100 companies have already applied and their applications are being processed.
Black entrepreneurs can apply for funding of between R500,000 and R10m in concessionary loans to purchase machinery, equipment and raw materials and to fund other working capital requirements for the manufacture and supply of medical masks, sanitisers, dispensers and related healthcare products.
This comes as a number of companies supplying government and hospitals are scrambling to supply enough sanitisers, masks and gloves.
NEF spokesperson Moemise Motsepe said entrepreneurs will be accorded a 12-month repayment holiday to help their businesses stabilise.
Motsepe said the fund had received over 30 applications for equipment and working capital valued at more than R149m.
“The loans will be offered at 0% interest for the first year and thereafter at 2.5% per annum. The loans will be repayable over a maximum term of 60 months,” he said.
Motsepe said they have dedicated teams of seasoned investment professionals to help expedite approval for eligible black entrepreneurs and to ensure a two-week turnaround from application to disbursement, following receipt of all relevant documents for commercially viable applications.
He said the NEF targeted entrepreneurs from businesses that are already registered as suppliers with retailers and other institutions in good standing.
Motsepe said the fund will not be used to service any debt or help settle monies owed.
He said companies that qualify must:
- be legally registered;
- be a taxpayer in good standing, with a valid tax clearance certificate at assessment as well as before the loan is disbursed;
- be a current and registered supplier with retailers and other institutions in good standing or have a purchase order/contract/letter of intent;
- require working capital or funds to purchase machinery and equipment; and
- have greater than 50% black shareholding and management control in the day-to-day running of the operation and requisite expertise in the sector.
In line with the NEF’s transformation mandate, Motsepe said preference will be given to applications that demonstrate meaningful black women ownership, management and control.
Last week President Cyril Ramaphosa announced a Solidarity Response Fund, which was kickstarted by donations of R1bn each from the Rupert and Oppenheimer families.
The Motsepe family and associates last week also joined the Rupert and Oppenheimer families by donating R1bn to South African business to deal with the losses caused by Covid-19 and the subsequent government lockdown.
Trade and industry minister Ebrahim Patel said this week that the government had made available an initial R150m as seed funding and a number of other businesses have contacted the department about contributing to the fund.
Ramaphosa said the fund, which will be managed privately, started to solicit donations the day after his announcement.
Johann Rupert tops the 2020 Bloomberg Billionaires Index as the richest South African. The index features the 500 richest people in the world. South Africa has three representatives, including Rupert, who is ranked number 242 in the world with a net worth of $7.38bn (R131.91bn).
Second is Nicky Oppenheimer at number 243. He sold his family’s 40% stake in De Beers, the world’s biggest diamond producer, to mining company Anglo American in 2012 for $5.2bn (R92.95bn) in cash. He maintains private equity investments in Africa, Asia, the US and UK through Stockdale Street in London and Johannesburg-based Tana Africa Capital.
Patrice Motsepe is one of the world’s 1,000 richest people. His net worth is estimated at $2.6bn (R46.47bn).
The Muslim Community of South Africa has already donated R1m to help the fund achieve its goals of aiding the poor and vulnerable during the 21-day lockdown.
Standard Bank initially announced that small businesses and students would be afforded a three-month debt repayment holiday. The bank further announced relief measures to personal account customers aimed at easing the financial burden of customers earning R7,500 or less.
Furthermore, the banking sector has collectively decided to waive Saswitch fees during the lockdown. This means that a customer can use any ATM, including those offered by competing banks, without any extra fees.
Nedbank has also jumped on the bandwagon, stating that it will offer all clients “individual solutions to cash-flow challenges” due to the coronavirus.
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