Financial services firm JP Morgan has announced that Cadiz Asset Management, GroFin and Imprint Capital had become the first investment partners in its small and medium-sized enterprise (SME) Catalyst for Growth (C4G) Programme.

The C4G programme is JP Morgan’s first significant social investment in the SME space in South Africa, with an investment of more than $1-million. The two-year pilot programme is run in collaboration with three core partners – the Aurik Business Incubator, Raizcorp and Dalberg Global Development Advisors.

The programme supported the provision of business development support (BDS) to selected entrepreneurial companies, while building knowledge and experience on the value and impact of effective BDS services.

The new investment partners would have access to a pipeline of high-performing SMEs that were seeking finance, of which the investment information had already been collated and verified directly by the BDS providers, thereby limiting transaction costs, JP Morgan stated.

“We are pleased with the progress of this innovative C4G programme for SMEs and excited that three investment partners have joined the initiative after only one year. Their participation allows further scale to the C4G Programme and is a strong independent endorsement to the programme,” JP Morgan sub-Saharan country officer John Coulter said.

Meanwhile, the C4G programme would also develop and launch an independent rating platform to increase accountability and transparency in the South African BDS market.

Historically, the inability to assess or compare different types of BDS has been a hurdle to SMEs seeking assistance to grow, JP Morgan said, adding that the new programme's rating platform would tackle this knowledge gap by providing performance data on BDS providers across the country.

The ratings would be based on information gathered from SMEs that have received support from these types of providers in areas such as business growth, improvement of systems, financial performance and literacy.

Coulter added that, aside from enabling SMEs and investors to have an independent and verified platform of information, the rating tool could also accelerate growth in the BDS market across Africa by diverting scarce resources to the most impactful providers.

Meanwhile, the company pointed out that, since the C4G Programme was initiated in 2012, the overall increase in revenue of participating SMEs was 43% with a 19% increase in permanent employees.

“The SMEs also appear to be having more success in accessing capital, as the percentage of successful applications for finance among the group has risen by 13%,” JP Morgan said.
Trade and Industry Minister Dr Rob Davies commented that the programme had a number of synergies with the Department of Trade and Industry’s initiatives to transform the SME space in South Africa.

“Government alone cannot address the enormous need to create more entrepreneurs. We need to collaborate with the private sector to empower many more South African people to find a livelihood and to create job opportunities,” Davies said.