The National Development Plan (NDP) envisages that 90% of the 11 million jobs will be generated by small enterprises in 2030. In the South African context, support for SMEs also constitutes a major lever in the inclusive transformation of the economy. However, despite this, SMEs remain locked out of the funding ecosystem that could enable the growth that is required to deliver these much-needed jobs. Old Mutual SMEgo and JSE Private Placements (JPP) a wholly-owned subsidiary of the JSE which facilitates private capital raising and deal origination between institutional investors and high-growth businesses, held a dynamic event for SMEs, procurement managers, corporate buyers, suppliers, financial institutions and capital providers aimed at exploring innovative funding solutions that will assist businesses unlock these funds.
Saki Zamxaka the CEO of the Gauteng Enterprise Propeller (GEP) delivered the keynote address.He spoke at length on the trust deficit that SMEs experience in funding and the need for both government and the private sector to work together. “The size of the capital markets presents an opportunity to lower the requirements needed to facilitate access. This requires a collaborative effort between the private and public sectors to make this model effective. We need to address the trust deficit, whether it is through open dialogue or by finding partners who can contribute to a facility designed to fund SMEs. Additionally, it is important to create real opportunities that enable SMEs to grow into larger businesses. Simply providing small contracts that allow them to survive is not enough; we must ensure they thrive. Let’s take the time to work on rebuilding trust towards small businesses, particularly those that are black owned.
The keynote was layered on by a panel discussion titled Corporate Commitments and Financial Innovation. Moderated by Noluthando Bobani from Old Mutual SME, Lerato Sebata from the ROI Group, Thabang Hleza of Old Mutual Masisizane, Mbulelo Ntlontli of Aurik Investments and Sifiso Tshabalala from the JSE. The key takeouts were as follows;
- Funding readiness; This is a function of two pillars: i) the need for funding and ii) the type of funding that is required. With an approval rate between 3-5%, SMEs need to know when to pivot and innovate as the environment changes. Many SMEs struggle with cash flow gaps, which can lead to the inability to pay salaries and fulfill the next order. Therefore, it is crucial to explore the right funding solutions, such as Supply Chain Financing, to help SMEs close these gaps.
- Digitalisation, data analytics and AI tools help to “understand the SME” beyond the balance sheet. Digital platforms have become indispensable and AI tools assist with onboarding making the funding process faster and more efficient. Data analytics help funders understand viability more succinctly.
- The Regulatory Environment in Need of Reforms: Reforms may include the government providing guarantees to banks to facilitate financing, as well as regulations on the interest rates charged on funding vehicles. Such regulations will promote transparency throughout the value chain and help ensure that SMEs remain sustainable.
- SME Scaling: Delivery is Key: Business owners are encouraged to consider the total cost of ownership when applying for funding. To support these businesses, large corporations should address concentration risks and avoid over-reliance on a single company by diversifying their spending to include SMEs. This is a crucial step towards fostering the growth and scaling of SMEs.
Sam Mokorosi, head of origination and deals at the JSE shared, “This collaboration with Old Mutual SMEgo marks a pivotal moment for JSE Private Placements as we deepen our commitment to unlocking scalable financing solutions for SMEs within corporate value chains. By combining the JSE’s trusted capital markets expertise and reputation with Old Mutual SMEgo’s innovative tech capabilities, we are creating a powerful platform to drive inclusive growth, originate impactful deals and strengthen procurement ecosystems. This event is the genesis of a long-term collaboration focused on enabling real economic value where it matters most.”
“SME play a crucial role in the South African economy. Access to cash flow is crucial for the growth and sustainability of these businesses with the Supply Chain Finance (SCF) product being instrumental in providing the liquidity needed to support their success. Our strategic partnership with the JSE Private Placements is part of our efforts to make the funding journey better understood and more accessible”, concluded Nobesuthu Ndlovu, director SME, Old Mutual Corporate.
For more information on how to access these products go to www.smego.co.za and www.jseprivateplacements.co.za
