Financial support for black milling company

Lethabo Milling has been given funding of almost R10m to enable it to buy a mill in Ventersburg. Image: Lethabo Milling

The deal, which is worth R9.8 million, is made up of an R8.2 million loan, provided by Absa Enterprise Development with Massmart acting as guarantor for 50% of the loan and a R1.6 million grant from Massmart to upgrade the facilities and to put a new packaging line in place. Lethabo will use the loan to purchase the mill, equipment and upgrades. Absa has also set up a working capital facility to assist with the initial cost of the setup.

This partnership marks an important shift in focus for us, said Massmart supplier development executive, Mncane Mthunzi. "We recognise that reviving key industries and developing much needed skills continues to be an important mandate in the South African context. We believe we have entered into a mutually beneficial partnership with Lethabo and Absa that will result in black representation in a key industry, create jobs and also put our house brand on the shelves."

Lethabo Milling CEO, Xolani Ndzaba said, "This deal has managed to cut out all the administrative barriers most small businesses face when attempting to secure financing agreements. It is difficult to obtain finance for these kinds of projects without production commitments from big companies such as Massmart. We will also be milling our own Lethabo brand and we hope to distribute our products across the country in the coming years."

Speaking about Absa's involvement, head of business banking Barclays Africa, Roy Ross added, "Absa recognises the importance of the SME sector as an engine to drive economic growth that in turn leads to job creation.

"As the financial partner of the Massmart Supplier Development programme, the bank will serve the needs of the SME suppliers involved by making funding available to them. In addition, we will provide market access and business linkages through our procurement portal and provide non-financial support through our network of Centres of Entrepreneurship located across the country."

Enterprise development programme

Having identified the need for practical business courses and leadership training for its suppliers, Massmart, together with the Gordon Institute of Business Sciences (GIBS) have collaborated in an enterprise development programme to enhance the business and leadership skills of entrepreneurs supported by the Supplier Development programme. Ndzaba is one of the 48 entrepreneurs who were selected by Massmart to participate in the 12-month business management programme that began earlier this year.

Massmart's supplier programme continues to gain traction with more than 193 suppliers in different industries currently participating in the programme. The programme successfully launched another manufacturing project in Stutterheim, Eastern Cape last month. Local company Ikusasa Green began manufacturing cooler boxes for Massmart's private label, Camp Master.

"We have a strong pipeline of projects in the manufacturing sector and remain committed to creating opportunities for suppliers," concluded Mthunzi.