{"id":41358,"date":"2021-08-17T00:00:00","date_gmt":"2021-08-17T00:00:00","guid":{"rendered":"http:\/\/dailysouthafrica.com\/?guid=1954d82dab8ba95aa2170cb07ebd28d6"},"modified":"2021-08-17T00:00:00","modified_gmt":"2021-08-17T00:00:00","slug":"r340-million-funding-for-sa-businesses","status":"publish","type":"post","link":"https:\/\/dailysouthafrica.com\/r340-million-funding-for-sa-businesses\/","title":{"rendered":"R340 million funding for SA businesses"},"content":{"rendered":"

Trade, Industry and Competition Minister Ebrahim Patel has announced the new JP Morgan funding facility to the tune of R342 million for South African businesses, under the Equity Equivalent Investment Programme (EEIP) to boost the industrial and green economy sectors.<\/P>

\u201cThe boost to manufacturing in particular is timely as one of the key lessons of the COVID-19 period has been the value of having domestic industrial capabilities,\u201d Minister Patel said on Tuesday.<\/P>

Making the announcement, Patel said JP Morgan becomes the first international investment bank to undertake an EEIP programme alongside government through the R340 million commitment. This is in grants and loans that has been projected by JP Morgan to unlock and up to R2 billion in capital or financing for short, medium- and long-term funding over an eight-year period.<\/P>

Patel explained that the funding is intended to support small and medium-sized businesses in sectors of significant public importance, ranging from transactions in the green economy to funding for firms with manufacturing operations.<\/P>

\u201cSouth Africa needs more jobs for young people and deeper levels of industrialisation. This transaction will give a boost to the country\u2019s localisation efforts, creating employment and helping to strengthen economic output.<\/P>

\u201cI welcome the commitment to the creation of 1 000 new jobs and the focus on supporting a segment of the market that is not adequately served by the financial system,\u201d he said.<\/P>

The Minister said the funding will facilitate an injection into the South African economy aimed at small and medium-sized enterprises (SMEs) who face critical funding challenges or who might not meet the traditional underwriting criteria of the commercial banks.<\/P>

\u201cThe terms on which this funding will be extended is concessional and includes limited security requirements and loan repayment holidays that respond to the life stage of the enterprises supported and the operational challenges they might face.<\/P>

\u201cIn this regard, it is intended to be \u2018responsive\u2019 funding. Responsive to the demand challenges the OECD flags in its scorecard on SME financing in South Africa,\u201d Patel said.<\/P>

Generating jobs<\/P>

Patel said the support to more than 500 businesses that the Fund is targeting is intended to generate more than 1000 jobs, the bulk of which will come from the green and industrial sectors of the economy.<\/P>

\u201cThe sum committed by JP Morgan is equivalent to the calculated cost of financing an equity holding of 22% by black South Africans in the local operations of JP Morgan, based on a modeling exercise undertaken by the parties,\u201d the Minister said.<\/P>

He said recent unrest in Gauteng and KwaZulu-Natal, is indicative of the challenges that remain.<\/P>

Many of the affected firms, especially the small and medium sized firms, are the typical candidates who would benefit from the Abadali EEIP.<\/P>

Grants<\/P>

J.P. Morgan has already committed and made the funds available to the Abadali EEIP, which will allow for applications to be accepted immediately.<\/P>

The Abadali Grant will also extend grants of R40 million towards developing black enterprises into sustainable and successful businesses with a focus on supporting entrepreneurship, and advancing jobs and skills for in-demand sectors like the digital and the green economy.<\/P>

Medium-to long-term finance will be offered at significantly subsidised rates to businesses with revenue starting from R1 million that require funding for two to five years.<\/P>

The eligible, selected businesses will be majority black owned and managed enterprises with a track record of at least 12 months of trading.<\/P>

\u201cThe Ministry, alongside our counterparts in the Department of Small Business Development and our funding agencies, will have more to say in the period ahead about the funding measures in response to the unrest.<\/P>

\u201cWe remain committed to ensuring that we support the rebuilding and restoration efforts of firms in these affected areas and will ensure that support is readily available to assist in these reconstruction efforts,\u201d Patel said.<\/P>

<\/P>

Source: South African Government News Agency<\/P>

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