12 Apr 2019
President Cyril Ramaphosa has launched a fund aimed at boosting the economy and small and medium-sized enterprises in South Africa, Forbes reports.
The SA SME Fund was set up by heads of some of the country’s key businesses to "address some of the most pressing challenges to the country’s economic growth".
When speaking at the launch in Johannesburg, Ramaphosa said: “This initiative is beginning to pay off and is operating at a level that matters most. SMEs create the jobs we need the most. It is the SMEs you are targeting and that is precisely where we want you to keep your focus.”
The ZAR1.4 billion fund ($95 million) consists of pledges from South African businesses, and a whopping R725 million ($50 million) has already been committed.
“The ecosystem is broader than just funders — funders that will create the impact process that is required. What we are seeking to do is address the challenge our country faces of unemployment, which is huge. There are certain initiatives we can embark on to address the unemployment challenge,” Ramaphosa went on to say.
With recent dissatisfactory unemployment figures and a projected weak economic growth, the SME sector is expected to drive economic activity and job creation.
The World Bank revealed: "SMEs play a major role in most economies, particularly in developing countries. Formal SMEs contribute up to 60% of total employment and up to 40% of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included."
Some of the business leaders setting up the fund include Discovery CEO Adrian Gore as chairman, and banker Michael Jordaan as its investment committee head. A large number of the CEOs form part of the Business Leadership South Africa (BLSA), which also works towards improving the country’s economy.
At the launch, Gore said: "With this fund, small and medium enterprises with growth potential would be identified and put through partnerships with our members, who would offer them support and access to new markets.”
"Large corporates cannot grow alone while small industries suffer on the sidelines. We need to create synergies that would lead to a creation of sustainable black-owned companies, which have for the longest of time been battling challenges associated with access to larger markets," said BLSA CEO Bonang Mohale.