WITH banks having tightened lending to small businesses since the 2008 recession, government could step in to boost their access to finance.But the Small Enterprise Finance Agency (Sefa), a state agency that lends to small businesses, plans to cut back on providing loans this financial year because of a dramatic increase in impairments.Sefa is a subsidiary of the Industrial Development Corp (IDC). It intends to reduce disbursements from an estimated R1.07bn for 2015/2016 to R885m in 2016/2017, and to focus on collections.The move is outlined in Sefa’s corporate plan for the next five years, presented to parliament last month.Since its inception in 2012 Sefa has approved more than 115,000 loans, totalling over R2bn, to micro-and small enterprises. But impairments have now soared to 38% of its loans book, from 25% in 2014.Sefa chief executive Thakhani Makhuvha attributes the rise in defaults to the agency’s big increase in direct lending to small firms, which has grown to a projected ...

BL Premium

This article is reserved for our subscribers.

A subscription helps you enjoy the best of our business content every day along with benefits such as exclusive Financial Times articles, Morningstar financial data, and digital access to the Sunday Times and Times Select.

Already subscribed? Simply sign in below.



Questions or problems? Email helpdesk@businesslive.co.za or call 0860 52 52 00.