A loan of R23,3 million from the National Empowerment Fund (NEF) helped a business owner realise his dream of building the rural town’s first shopping centre and in the process provide jobs to 115 people.
The NEF is seeks to assist black businesses with both financial and non financial support.
Sibongile Mdyesha says the idea to construct Willowvale Shopping Centre came to him when he thought about the number of people who were forced to travel to a different town so that they could do basic things such as buy food and do banking. Willowvale is situated 30 km from Idutywa and 80 km from Butterworth.
“The area needed a facelift. There was poverty, unemployment, a lack of development, no infrastructure, and the people here were dependent on other towns so I decided to close the gap,” says Mdyesha.
Co-owner of Mdyesha General Trading, along with his siblings Lwazi Mdyesha, Vuyolwethu Mdyesha, Notemba Mqingwana and Nonyameko Mbiko, Sibongile decided to invest the piece of land owned by the business.
However, despite investing in the land and some R800 000, the siblings were still short and realised they needed funding.
“We did a feasibilty study, costing, business plan, drawings and plans that needed approval by the municipality and we also approached potential tenants.
Once we had working papers we went to the banks but we were denied funding because the return on investment wanted by the banks was too high.
We can only charge a certain amount of rent because our tenants are not wealthy people and could not meet those high returns,” says Mdyesha.
He then heard about the NEF from another business owner and set up an appointment to meet with it.
During the meeting Mdyesha had to do a presentation on his business and what his plans were regarding the shopping centre.
“I then filled in forms and the NEF sent a team to do a due diligence on the land and three months after applying we were notified that our loan was approved,” says Mdyesha.
Besides the loan amount of R23,3 million by the NEF, the NEF also bought shares in the shopping centre valued at R6,6 million.
Mdyesha says the reason for the NEF’s investment instead is because the business would not have been able to pay back a higher loan amount.
“After 10 years we will have the right of first refusal. If it had not been for the NEF it would probably have taken us longer to get the money because banks want sureties and guarantees,” says Mdyesha.
He says the centre opened its doors on 24 October, and its tenants include big retailers such as Pick n Pay and Boxer Super stores, a bank and a clothing store.
According to Emmanuel Mohlamme, communications manager at the NEF, the transaction was approved in August 2012 anc construction began in December 2012.
“The loan horizon is 10 years and was granted on normal commercial terms.,” says Mohlamme.
Since 2004, the NEF has approved funding of 500 black businesses amounting to more than R5 billion and as a result created more than 44 000 jobs.
At least 21% of businesses funded are owned and managed by women.
As a result of poor business plans and lack of understanding of financials by business owners, the NEF has launched a free comprehensive online Business Plan tool available via its website ,www.nefbusinessplanner.co.za or www.nefcorp.co.za.
Business owners who apply for funding from the NEF must meet the NEF’s minimum criteria available on their website.
The tool is designed to assist applicants in improving and refining the quality of their business plans, including financial projections, through a step-by-step question and answer process.
• For more information call the NEF on 0861 843 6333.