Ketso Gordhan. Picture: BUSINESS DAY
Ketso Gordhan. Picture: BUSINESS DAY

President Cyril Ramaphosa had lauded the launch of the small- and medium-enterprise (SME) fund CEO circle, which aims to propel economic growth and create employment.

“This initiative is beginning to pay off and is operating at a level that matters most. SMEs create the jobs we need the most. It is the SMEs you are targeting and that is precisely where we want you to keep your focus,” Ramaphosa said at the launch in Sandton on Thursday morning.

The CEO circle will focus on funding, mentorship and access to the market for SMEs.

The fund, headed by Ketso Gordhan, has pledged R1.4bn for SMEs. Of this, R725m has already been committed with the balance expected by August; the total amount will support 10 significant black businesses, 200 SMEs, and five black entrepreneurs over the next five years.

“By August we will be the largest institutional investor in venture capital in SA,” Gordhan said. 

The fund was set up under the auspices of the CEO Initiative in 2016 to stimulate growth and investment drawn from the expertise of SA’s top business leaders. 

This comes as the latest employment figures show a job bloodbath in the primary sectors of the economy, despite job creation in business services and trade sectors. Unemployment is nearing the 30% mark while growth has failed to breach the 2% mark in the past five years.

“The ecosystem is broader than just funders — funders that will create the impact process that is required. What we are seeking to do is address the challenge our country faces of unemployment, which is huge. There are certain initiatives we can embark on to address the unemployment challenge,” Ramaphosa said.

R265m will be allocated to venture capitalism and incubation, R285m for growth investments, and R175m for impact and support investments.

“Mixing funding with mentoring and incubation is the right approach to growing black-owned businesses,” Ramaphosa said.

Gordhan told Business Day: “The reality is that unemployment is a long-term problem and we have to work on it bite by bite. Start-ups employ between 10 and 20 people and SMEs employ between 50 and 100. It's not going to make a massive dent in unemployment but it will be a vehicle for job creation which could lower our unemployment rate.”  

In addition to the fund, Business Leadership SA’s (BLSA’s) launched the “Connect” initiative. This is an online trading platform that will link multinational companies, which are responsible for more than half the GDP of the country, with black SMEs.

BLSA CEO Bonang Mohale said SMEs create 60% of jobs but less than 15% succeed.

“If this is not arrested, it could lead to social unrest,” Mohale said. “We’ll have a contract directly with South Africans — one part is that we will invest in SMEs, and secondly in black executives, so the economy is broadly reflective of the demographics.”