Financial services firm Barclays Africa local subsidiary Absa provided a R8.2-million loan and South African retail giant Massmart provided a 10 000 t/y offtake agreement that enabled a new maize miller to enter the South African market.
The new miller, Lethabo Milling, will provide 830 t of maize meal a month for Massmart, which will be sold under Massmart’s house brand of Econo Super Maize Meal. The miller will also produce meal for its own Tau maize meal brand.
Lethabo Milling CEO Xolani Ndzaba says Lethabo Milling can compete against the large, established millers in the country in terms of price and that its mill, in Ventersburg, has a yearly capacity of 36 000 t, providing it with additional capacity to expand its customer base.
Further, the miller will generate more than 40 jobs in six months and the quality of the maize meal is verified by its in-house laboratory tests and by the laboratory of United National Breweries, which brews traditional beer.
“The project started in 2010 and it took more than three years to get the requisite approval and funding. “We are determined to become a top-perform-ing milling company within five years,” says Ndzaba.
He highlights that, without production com-mitments from big companies such as Massmart, it is difficult to obtain financing for these kinds of projects.
Massmart Supplier Development executive Mncane Mthunzi says Massmart acts as the guarantor of 50% of the loan provided by Absa.
Massmart’s supplier development programme is one condition of the deal that enabled US retail giant Walmart to acquire a 51% stake of Massmart and the programme aims to revive key industries and develop much-needed skills, he says.
The programme is growing, with 193 suppliers in South Africa in different industries currently participating in the programme.
“We have a strong pipeline of projects in the manufacturing sector and remain committed to creating opportunities for suppliers,” says Mthunzi.
Further, Absa provides access to additional markets and business linkages for small and medium-sized enterprises through its Procurement Portal, it also provides nonfinancial support through its network of Absa Centres of Entrepreneurship, says Barclays Africa head of business banking Roy Ross.
Ndzaba is one of 48 entrepreneurs who will participate in a 12-month business management programme at the Gordon Institute of Business Sciences, in Illovo.