Public Enterprises Minister Malusi Gigaba has launched a R165-million tripartite supplier development fund aimed at supporting black-owned small, medium-sized and micro enterprises and incorporating these businesses into the supply chain of State-owned logistics group Transnet.

Equally funded by miner Anglo American, Transnet and the Small Enterprise Funding Agency (Sefa), the Godisa Supplier Development Fund would offer loans and capital advances to small enterprises in the manufacturing and services centre, while also providing business and technical support at no extra cost.

Over ten years, R150-million would be allocated as investment financing, while the remaining R15-million would be used to provide support services.

Beneficiaries would be given a certain timeframe within which they would be required to repay the development loan, along with interest and an undisclosed administrative fee.

Gigaba said on Friday that the fund would proactively seek to secure opportunities for emerging manufacturers to meet common requirements across Transnet and Anglo American, enabling greater economies of scale and customer diversification.

“The most fundamental and sustainable way to grow our economy is through industrialisation and by creating a thriving manufacturing sector. Manufacturing is unique in that it has the capacity to generate dynamic increasing returns as the growth of output in manufacturing is associated with increases in economic productivity.

“In particular, manufacturing facilitates the expansion of a knowledge-intensive services sector, hence, growth in manufacturing is overwhelmingly associated with sustained growth in employment and gross domestic product,” he commented.

Applications for Godisa funding would be required to take the form of an investment proposal accompanied by a formal business plan.

Once these had been screened and evaluated by a fund manager, potential fund recipients would be asked to present their business case to a committee comprising the Godisa fund manager and representatives from the various contributors.

Should the business case be accepted by the committee, a due diligence process would be undertaken to ensure that the company was legally and financially compliant.

Godisa would also assist companies in meeting their compliance obligations, finalising the relevant documentation for the receipt of financing and redirect unsuitable candidates to other funding initiatives for which they qualified.

Speaking at the fund’s launch, Minister of Economic Development Ebrahim Patel said the fund was not aimed at simply providing cash finance to budding black entrepreneurs, but was driven by a larger developmental agenda aimed at providing commercial security.

“For example, Transnet has guaranteed that it will pay invoices issued by its suppliers within 30 days of being [issued] and these suppliers will also have certainty of orders. What is unusual about this fund is that it provides [this] package of support,” he noted.

Godisa would become the sixth fund in Anglo American’s overarching Zimele enterprise development arm and would, according to Anglo American executive director Khanyisile Kweyama, capitalise on Transnet’s vast value chain while validating the Zimele model on a larger scale.

“Godisa is based on Zimele’s successful supply chain fund, which has helped Anglo American to transform its own value chain and build black-owned businesses in communities associated with our operations.

“These are businesses that not only supply key localised services to our operations, but businesses that create jobs and help build communities.

“Moreover, the main focus of the [Godisa] fund is on the creation of businesses that are owned and operated by women, the youth and the disabled,” she said, noting that the fund would be managed by Zimele.

Sefa CEO Thakhani Makhuvha said Sefa’s role in the partnership would be one of administrative support, with applications being received through the agency, which would act as a beneficiary pipeline.

“We realise the value of collaborations and it was, therefore, critical for us to be part of this partnership to address the liquidity challenge currently prevalent in [the] supply chain by making funding accessible to black-owned suppliers,” he outlined.

Gigaga added that the creation of a core of black industrialists was critical to reversing deindustrialisation and promoting the development of national manufacturing capabilities.

“We need to increase our appetite for risk, take a handholding approach and trust black people as capable entrepreneurs so that we do not build the economy on the back of fronting entrepreneurs with no experience, skills or keenness for industry,” the Minister concluded.

Enterprises wishing to apply for financing through the Godisa fund would be required to:

• be permanently owned and managed by an entrepreneur who was a South African citizen and who actively contributed to the business;
• be at least 51% black-owned or 30% female-owned;
• be an existing or potential Transnet supplier;
• have a broad-based black economic-empowerment rating of between one and four;
• preserve existing jobs and aim to create new jobs;
• have an environmental protection plan;
• have or plan to implement an HIV/Aids prevention and management programme
• have sufficient cash flow to service the finance granted by Godisa;
• maintain proper accounting records; and
• have the scope to grow to supply clients other than Transnet.