The Small Enterprise Development and Finance Agency (Sedfa) and construction industry regulator the Construction Industry Development Board (CIDB) have launched the R300-million Construction Fund – a government-led initiative aimed at strengthening support for small enterprises in the construction sector.

This initiative is aimed at providing access to finance and developmental support to micro, small and medium-sized enterprises (MSMEs) operating across various subsectors of the construction sector.

Through this fund, Sedfa will provide financial products, while the CIDB ensures regulatory compliance and sector development.

Through the fund, the parties are seeking to improve access to finance for construction MSMEs, strengthen participation across the construction value chain, support job creation and local economic development and enhance sector transformation and sustainability.

“For far too long, access to the construction economy has remained out of reach for many small businesses in South Africa, yet the construction sector continues to play a critical role in South Africa's economy,” Small Business Development Minister Stella Ndabeni said during the launch on May 12.

She added that economic participation in many sectors remained unequal, arguing that too many black,- women- and youth-owned enterprises, as well as township and rural MSMEs, still struggled to access finance, procurement opportunities and large infrastructure value chains.

She highlighted that, while MSME’s were important for the local economy, many emerging enterprises continued to face persistent barriers relating to access to finance, compliance requirements, technical support and market opportunities.

“Many of these businesses possess both the capability and determination to succeed, but too often, they spend more time trying to survive than trying to grow,” she said.

The fund will focus on supporting MSMEs operating in roads and civil construction; residential, industrial and commercial construction; construction materials supply; electrical and energy-related infrastructure; and plumbing.

Sedfa and the CIDB will source implementation support through Sedfa’s wholesale funding model, which uses non-banking financial institutions and other intermediaries to deliver financial services to qualifying enterprises. 

These intermediaries will be responsible for administering the blended finance programme, facilitating access to funding and providing ongoing support to qualifying small construction enterprises in accordance with the objectives and implementation framework of the fund. 

Following the official launch of the programme, an online portal will be opened for intermediaries – non-banking financial institutions and other intermediaries – to apply to participate in the implementation of the Construction Fund. 

Applications for request for information submissions open on May 13 and close on June 24. Submissions can be done through the Sedfa website.

“This fund is an opportunity; an opportunity to grow, an opportunity to formalise and strengthen your business, an opportunity to build capacity, an opportunity to make a meaningful contribution to the development of our country and our society,” Public Works and Infrastructure Deputy Minister Sihle Zikalala said during the launch.