Since re-opening its doors for applications for finance two months ago, the National Empowerment Fund (NEF) has already received 85 requests from black entrepreneurs looking to get a slice of the R950 million available in funding.
The financier, which ran short of funds last year, was thrown a life-line earlier this year after being forced to put a temporary moratorium on applications and postpone the opening of a Northern Cape office.
In addition to the new applications, NEF spokesperson Emmanuel Mohlamme says the fund has also received 462 new inquiries.
“We have witnessed an alarming response from potential entrepreneurs which confirms the need for development funding for black entrepreneurs,” says Mohlamme.
The inquiries and applications have come mainly from small businesses requesting start-up funding and expansion finance.
The applications are at present in various stages of approval, with some in pre-screening, while others are still undergoing analysis and due diligence.
“Although we have received proposals and requests for funding since the moratorium was lifted, there have been no disbursements post the moratorium,” says Mohlamme.
He assures business owners that the funding criteria and application process will remain unchanged and that the NEF is looking to increase the number of applications that land on its desk.
Capitalised by the government in 2005 to the tune of R2.4 billion, the fund was established to provide finance to viable black business owners that promote economic growth.
Recently-appointed acting chairman of the NEF’s board of trustees Rakesh Garach says the agency was compelled to put a hold on applications while negotiations were under way with the Department of Trade and Industry (DTI) and the National Treasury.
“Now that we are confident and certain that new capital is on the horizon, the NEF is comfortable to re-open funding for new transactions,” says Garach.
Despite being endorsed by President Jacob Zuma at the opening of Parliament in February – when he said that the NEF would continue to provide finance to black-owned businesses – no allocation was made to the agency in this year’s budget. This led to uncertainty over future funding, which prevented new deals from being written.
The situation now looks to be on the mend. Mohlamme says the agency would be making another application for further capitalisation when applications for the Medium-Term Expenditure Framework (MTEF) open later this year.
The MTEF is a rolling three-year period which the government uses to budget for the country’s needs.
“The R950 million currently available represents the balance of the DTI approved facilities that are yet to be disbursed. The board is confident that the liquidity requirements of the NEF are close to being addressed,” says Mohlamme.
Other than the NEF’s application for recapitalisation through the MTEF, the agency is also exploring other means to capitalise the fund. Following the disbursement of the last of the initial capital of R2.4 billion in 2010, the NEF had been financing itself through proceeds derived from dividends and interest from investments as well as the proceeds of a sale in 2007 through the Asonge Share Scheme, the NEF’s holding in the MTN Group.
Business owners can apply for finance at the NEF’s nine offices.
- Visit www.nefcorp.co.za for more information.