Gigaba launches ZAR165 million Godisa fund for SMEs

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South African Public Enterprises Minister, Malusi Gigaba today, 21 February 2014, launched a ZAR165 million fund intended to enable and empower Transnet’s black-owned suppliers in a joint initiative between public and private institutions.

The newly established Godisa is a collaboration between Anglo-American’s enterprise development arm Zimele, Transnet and the Small Enterprise Finance Agency (sefa), a wholly- owned subsidiary of the IDC.

Each partner has contributed ZAR55 million towards the creation of the Fund, which will be managed by Zimele.

Inspired by the Department of Economic Development’s vision of promoting entrepreneurship and fostering transformation through the development of small and medium enterprises (SMMEs), Godisa will offer both financial and business development support to qualifying beneficiaries.

“The aim of the fund is to promote growth and sustainability amongst existing and potential black-owned suppliers of Transnet in the rail engineering and freight services,” says Gigaba.

“Godisa is a Setswana word which means to nurture or to grow, which speaks to the nature of the fund in that it aims to nurture black-owned suppliers in order to facilitate sustainable socio-economic transformation and development. It is also our intention to foster enterprise development in such a way that recipients will be able to create new jobs in the communities in which they operate.”

Godisa will offer loans and capital advances for the development of black-owned Transnet suppliers in the manufacturing and services sectors, and will provide business and technical support at no extra cost to the beneficiaries. Over a ten-year period, ZAR150 million will be used for investment financing, and the remaining ZAR15 million will be used to provide support services.

All applications will need to take the form of an investment proposal accompanied by a formal business plan. Once these have been screened and evaluated, potential recipients will be asked to present their business case to a committee consisting of the Godisa fund manager and representatives from the various contributors.

Speaking at the launch of the fund, Khanyisile Kweyama, Executive Director of Anglo American in South Africa and the chairperson of Zimele said: “Enterprise development has become a vital source for job creation and poverty alleviation in South Africa. The launch of Godisa Supplier Development Fund will provide more opportunities where entrepreneurs and small to medium enterprises can grow within Transnet. Partnering with Transnet and sefa further brings to life our cumulative intention to increase the participation of small businesses in the mainstream economy, as they have been identified as critical to unlocking economic- and inclusive growth.”

If the business case is accepted, a due diligence process will be undertaken to ensure that the company is legally and financially compliant. Godisa will assist the company to meet its compliance obligations, and will help in the process of finalising the relevant documentation for the receipt of financing.

One of the contributing partners, sefa has been in partnership with Anglo American as part of their mandate to provide funding to SMEs.

The CEO of sefa Thakhani Makhuvha says, “ We realised the value of collaborations, it was critical for us to be part of this partnership, so as to address the liquidity challenge curently prevalent in supply-chain by making funding accessible to black-owned SME suppliers.”

SMEs applying for investment financing through Godisa should:

1. Be permanently owned and managed by an entrepreneur or entrepreneurs who are South African citizens and who actively contribute to the business
2. Be at least 51% black-owned, (or 30% black female-owned)
3. Be an existing or potential Transnet supplier
4. Have a BBBEE status of Level 1 – 4, regardless of turnover
5. Preserve existing jobs and aim to create new jobs
6. Have an environmental protection plan
7. Have or plan to have an HIV/Aids prevention and management programme. Recipients that do not already have such a plan in place will need to implement one within six months of receiving financing
8. Have sufficient cash flow or potential cash flow to service the financing granted by Godisa
9. Maintain proper accounting records
10. Have the scope to grow in order to supply clients other than Transnet

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