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Small loans to build small business
Richard Mantu

18 May 2005

Entrepreneurs needing a little capital - from R10 to R10 000 - to start small businesses can now get it from the Apex Fund, set up to provide micro finance to ordinary South Africans.

Trade and Industry Minister Mandisa Mpahlwa launched the South African Microfinance Apex Fund in Zeerust, North West, on Friday. The fund was first announced by President Thabo Mbeki in October 2004.

The fund is designed to stimulate development of small, medium and micro enterprises (SMMEs), opening the door to aspiring entrepreneurs who need loans of up to R10 000 to start up their own small businesses. The fund has been capitalised at R320 million over the next three years.

The development of South African SMMEs is seen as essential to job creation and empowerment and the fight against poverty.

Mpahlwa urged South Africans to use the fund, adding that they must also take responsibility to meet their "obligations and pay back what they have been loaned."

“Democracy has opened many opportunities and possibilities that were closed to many of the people before 1994,” said Edna Molewa, premier of North West, at the launch.

She said freedom and democracy has allowed many more South Africans to have access to resources and opportunities to create a better life for themselves.

The Fund has appointed Village Banks and micro lenders to begin disbursing funds to those who need them most.

The Fund has two products. The Micro Credit Loan Fund will provide deserving households and micro entrepreneurs who depend on their enterprises for their livelihood with loans of up to R10 000.

The second product, the Poverty Alleviation Fund, will be given to clients with a household income of less than R1 500. Specific criteria to measure the poverty level will be applied.

Mpahlwa said the fund will not require collateral for loans.

"We won't make your house collateral for the loan. We are interested in the social collateral," he said.

North West was chosen for the launch because of the excellent work the Motswedi Village Bank has done since its formation nine years ago.

The Bank is a financial cooperative formed by the Rural Development Committee in 1996 to provide the community with micro finance to start their own small businesses. It now services over 100 000 clients, and has become a partner of the Apex Fund.

"Institutional and client capacity building is a main priority for the Apex Fund," said Apex Fund project manager Ntombi Msimang. "To strengthen institutions and ensure their sustainability, people must be trained on all levels of business management, from client services to senior management skills."

Mpahlwa said the fund also had R10-million available for building capacity among partner organisations and their clients.

Source: BuaNews

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