Recapitalisation of NEF on the cards
Prospects are looking good for a R1bn recapitalisation of the National Empowerment Fund (NEF) by the Industrial Development Corporation (IDC).
This is according to NEF CEO Philisiwe Mthethwa, who was speaking on Tuesday ahead of a briefing to Parliament’s trade and industry committee.
She said the departments of trade and industry and economic development had reached agreement on the way forward and had given the IDC the go-ahead to proceed with the recapitalisation of R1bn.
The funding would not be tied to fiscal allocations as it would be funded by the IDC itself.
The news of the recapitalisation was welcomed by DA trade and industry spokesman Geordin Hill-Lewis, who said the NEF, unlike many other state departments and entities, had been effective in supporting black entrepreneurs and needed more funds to expand its work.
The organisation had a good track record in identifying good business prospects and supporting them to fruition.
"We believe the NEF has a very important role in supporting black entrepreneurs," he said.
The lack of capital had become a constraint to the NEF’s work, Mthethwa said in an interview. The NEF received between 2,500 and 3,000 applications for funding each year but was now having to turn applicants away because of the lack of funds.
Mthethwa said the current economic climate was putting black entrepreneurs under tremendous pressure, mainly because of non-payment by government departments, municipalities and state entities.
The NEF was trying to assist in ensuring that these payments were made. A lot of post-investment support was being provided, Mthethwa said.
The NEF will eventually become a standalone subsidiary of the IDC, which has also funded other development finance institutions such as the Small Enterprise Finance Agency (Sefa), the Land Bank and the Development Bank of Southern Africa (DBSA).