Entrepreneurship and small businesses are central to this because they fuel growth and create jobs. Our companies have backed and funded the establishment of the SA SME Fund, which will focus on stimulating entrepreneurs and high-growth small and medium businesses. We have committed an initial amount of capital of R1.5 billion which is an exciting milestone in our investment in the future of our country.
Overview of the SA SME Fund
South Africa is at a critical juncture – the need to drive economic growth and job creation is imperative. Small and medium enterprises (SMEs) are the only entities that will create jobs at the quantum required: big business is focused on efficiencies, and Government needs to manage its budgetary constraints.
SA has high unemployment (more than five million working age SA’s without jobs), a high rate of SME failure (75%), and very low growth. It is therefore of national importance to work together to stimulate SME development.
Following the charge set by Minister Gordhan in January 2016, the CEO’s Initiative SME workstream led by Discovery founder and Group Chief Executive Adrian Gore and Bidvest founder Brian Joffe brought together experts in the public, private and non-profit sectors to explore solutions to this problem. The team has consulted widely in the last few months to understand what is required to stimulate entrepreneurial activity – from supporting the nascent Venture Capital sector to providing incentives to existing fund managers to focus on riskier portfolio investments.
“Let’s call them small green shoots in different parts of the economy. If we nurture those shoots in the right kind of way and create the right kind of ecosystems, we can certainly get back to two or three percent growth over the next two or three years.”
Pravin Gordhan – South African Minister of Finance
The market failures we have identified and hope to influence
The ‘funding gap’ in the early stages
There is a strong risk aversion amongst traditional market players to fund SMEs that are still in the scale-up phase: illiquid equity markets and lack of exit opportunities compound this problem.
Lack of access to C-suite level mentors
There are many professional services firms and mentors: however, access to such resources is generally constrained for most SMEs; and the quality of these resources is often variable.
Working capital constraints due to late payments
A common issue for SMEs, regardless of size or sector, is the issue of working capital. Overdue invoices is a major source of failure for these companies.
Our aim for the SA SME Fund
Our aim is to create a substantial fund that coinvests with fund and investment managers we accredit. We will seek to grow the private sectors initial R1.5bn investment, with the aim that over time, the public sector will contribute matching funds. The Fund will provide high-potential entrepreneurs and enterprises with access to a strictly-governed ecosystem, comprising proprietary networks of accredited funders and best-of-breed mentors and professional services firms.
* Please note: The SA SME Fund will only be investing together with fund or investment managers we have accredited – we will not fund any SME directly.
The initial response to the Fund has been tremendously positive on both the investment and mentorship side. We have committed an initial amount of capital of R1.5 billion which is an exciting milestone in our investment in the future of our country.
As CEOs who represent most of the country’s large companies, we are committed to building South Africa’s economy.
Adcock Ingram: Andrew Hall
Anglo American Platinum: Chris Griffith
Arrowhead Properties: Gerald Leissner
Barclays Africa: Maria Ramos
Bidcorp: Brian Joffe
Bidvest: Lindsay Ralphs
Capitec Bank: Gerrie Fourie
CIG: Raoul Gamsu
City Lodge Hotels: Clifford Ross
Coronation Fund Managers: Anton Pillay
Curro Holdings: Chris van der Merwe
Distell: Richard Rushton
Discovery: Adrian Gore
Firstrand: Johan Burger
Growthpoint: Norbert Sasse
Hollard: Nic Kohler
Imperial Holdings: Mark Lamberti
Investec Property Fund: Nick Riley
Investec Ltd: Stephen Koseff
JSE: Nicky Newton-King
Kumba Iron Ore: Themba Mkhwanazi
Liberty: Thabo Dloti
Mediclinic International: Danie Meintjies
MMI Holdings: Nicolaas Kruger
Mr Price Group: Stuart Bird
MTN Group: Phuthuma Nhleko
Murray & Roberts: Henry Laas
Nandos: Geoff Whyte
Naspers / Multichoice: Imtiaz Patel
Nedbank: Mike Brown
Netcare: Richard Friedland
Old Mutual: Ralph Mupita
PIC: Daniel Matjila
Pioneer Foods: Phil Roux
PSG Group: Piet Mouton
PSG Konsult: Francois Gous
RCL Foods: Miles Dally
Rebosis Property Fund: Sisa Ngebulana
Remgro: Jannie Durand
Richemont: Johann Rupert
RMI: Herman Bosman
Sanlam Limited: Ian Kirk
Santam: Lize Lambrechts
Sasol: Bongani Nqwababa, Stephen Cornell
Standard Bank Group: Sim Tshabalala, Ben Kruger
Steinhoff/Wiese Group Companies: Christo Wiese
Sun International: Graeme Stephens
Telkom: Sipho Maseko
The Spar Group: Graham O’Connor
Vodacom Group: Shameel Joosub
Zeder Investments Limited: Norman Celliers