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Development Finance
Development financing and support for small, medium and micro enterprises is critical for economic growth.
Development financing aims to build new businesses or support existing businesses as they seek to expand. The provincial government of the North West, through its agencies, has as one of its key aims, the provision of support to emerging businesses. The lead provincial agency in this mission is the North West Development Corporation (NWDC).
The NWDC supports small, medium and micro enterprises (SMMEs) in a variety of ways. Lower rental rates are offered to such businesses at one of the several sites owned throughout the province by the NWDC. One such property holding is the Light Industrial Park at Mafikeng, where 25 units are available. Plans are under way for the rolling out of similar schemes in other parts of the province.
Projects particularly aimed at supporting SMMEs include the Wild Silk Project (at Ganyesa), and the car wash (Mafikeng), sisal (Madikwe) and thatch décor projects.
The provincial government announced in 2009 that 200 jobs had been created through the establishment of 40 SMMEs in the arts, crafts, leather and beads subsector and that a further 60 SMMEs would be established over the next three years.
Procurement policies are geared towards providing SMMEs opportunities to cater for provincial functions or to provide services for sports functions and the like. In the period 2007/08, more than 86% of tenders went to historically disadvantaged individuals.
A partnership between the North West Provincial Government and the national Department of Trade and Industry ensures that training for SMMEs is available. In 2009, 489 SMMEs received business and specific skills training through a partnership between the department and the Industrial Development Corporation (IDC) and the 2009/10 period saw 11 SMMEs successfully applying for financing through this scheme.
National development finance institutions
Development Bank of Southern Africa
The Development Bank of Southern Africa has approved loans of R29.8-billion since its inception in 1983. The focus of the bank is physical, social and economic infrastructural development. The bank is financier, advisor, partner, implementer and integrator in mobilising finance and
expertise for developmental projects.
Industrial Development Corporation
The Industrial Development Corporation (IDC) provides finance across a range of sectors from agriculture to tourism. The corporation funded 270 businesses nationwide in 2008/09 compared to 210 the previous year.
Established in 1940 as a self-financing development finance institution to promote economic growth and industrial development, the IDC found itself at the centre of some debate during the world economic slowdown. Some analysts argue that the IDC should rescue troubled sectors, while others suggest that sectors that are not competitive should not receive artificial – and ultimately unsustainable – stimulation.
The IDC came down on the side of intervention, devising special schemes for the gold, jewellery, footwear, leather, clothing, textile and forestry industries.
In the North West, the IDC has supported schemes involving the cultivation of barley, groundnuts and cut flowers, the manufacture of ferrochrome and chrome chemicals and the beneficiation of alluvial diamonds.
In addition, the IDC supports the provincial development agency, North West Development Corporation.
Khula Enterpise Finance Ltd
Khula Enterpise Finance Ltd is a financing agency of the Department of Trade and Industry. It has ties with the public and private sectors, including banks, retail institutions and retail ventures. It aims to fill the gaps not addressed by commercial financial institutions. Khula will lend about R3-billion to SMMEs between 2009 and 2013 via a subsidiary called Khula Direct. Khula is also looking for private investors to partner with the agency in supporting smaller enterprises.
Land and Agricultural Development Bank of South Africa
The Land and Agricultural Development Bank of South Africa (Land Bank) offers financing to established farmers and emerging farmers.
The National Empowerment Fund
The National Empowerment Fund (NEF) is an agency located with the national Department of Trade and Industry which is geared towards promoting broad-based black economic empowerment (BBBEE). A new initiative in 2009 saw the launch of an online business planner in five languages. Small businesses often have trouble developing business plans so this tool will help budding entrepreneurs in planning and presentation. A nine-step process includes cash-flow projections, managing financial statements, capital expenditure and balance sheets.
National Youth Development Agency
The National Youth Development Agency (NYDA) was launched on Youth Day 2009, out of a merger of the Umsobomvu Youth Fund and the National Youth Commission. As a statutory body, the NYDA will be closely monitored in the way that it disburses its allocation of R1-billion during a three-year mandate.
