Small and Medium Enterprises (SMEs) are very important for inclusive economic growth and development in South Africa. According to the World Bank, SMEs contribute to 40% of national income (GDP) and 60% of total employment in developing countries. Keeping this in mind, President Cyril Ramaphosa has taken this initiative to set up a fund directed by the leading businessmen in the country to invest in potential startups and SMEs. The goal is to mentor and fund these SMEs with a turnover between R20 million ($1.40 million) and R500 million ($35.23 million).
In order to evoke the country’s entrepreneurial spirit, these funding companies are working day and night to address the pressing challenges to the country’s economic growth by providing the much-needed capital.
A few notable funding organizations working for the betterment are mentioned below:
SA SME Fund:
It’s managed by an executive management team with an independent board of directors, the fund is a registered standalone investment vehicle. An independent investment committee is established to assess prospective investments into opportunities and funds. The company gives investments to recognized fund managers- venture capital funds or growth equity funds – that invest directly in SMEs that have the potential to grow and generate employment in South Africa.
National Youth Development Agency (NYDA):
The agency offers business opportunities to young entrepreneurs of South Africa and encourage them to establish and grow sustainable businesses. They follow the microfinance model for providing grants that is a huge advantage. These driven youngsters are not obliged to pay back any interest or funding they have received from the agency hence saving them from being trapped in a vicious cycle of repayments. Around 500 small businesses are expected to benefit from the NYDA Grant Programme every year.
National Empowerment Fund (NEF):
The vision of the fund is to provide financial and non-financial help to promote the participation of black people in the economy. Aiming to incorporate a culture of investment and savings, the NEF provides advanced financing products to businesses managed by the black via different funds such as Women Empowerment Funds, Rural and Community Development, uMonotho etc. Non-financial services includes pre-investment support, asset management, turnaround and many more.
The objective of the funding agencies is to tackle the current unemployment of 27.7% in South Africa while giving a push to its economy which is growing at 2%. Small and Medium Enterprises (SMEs) is considered as an agent of job creation and economic growth.
A gateway to the continent, South Africa is the second largest economy in Sub-Saharan Africa. Realizing the importance of entrepreneurship in the country, the Department of Trade and Industry (DTI) initiated several programs and grants in partnership with different funding organizations. These SMEs established by these funding have the potential to transform the economy by not only contributing to the GDP but also tapping into the development of new sectors in the market. Being a key driver of innovation, job creation, and economic growth, SMEs can significantly benefit the South African economy.
A few simple steps can be taken by the government to make the country more hospitable to entrepreneurs. First and foremost is the establishment of policies that supports new businesses. There should be tax-cut and similar incentives to encourage startups. Secondly, the establishment of funding accelerators and incubation centers can help people strategize their business plan.
Striving hard to differentiate your business from the existing competition in the market is the best business strategy. A few steps that you can take to set your business apart is to make a viable business plan and have a good online presence. If you are an established business in some other country that wants to penetrate the South African market, then make sure you translate and convey your message and business idea to this land of diverse culture by hiring a professional translation company like AfroLingo. AfroLingo is the finest interpretation and translation company in South Africa that is committed to hiring trained in-country native speakers to make sure that your project is efficiently completed without any glitch.