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New fund to aid small business

Jul 06 2011 18:36 Sapa

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Johannesburg - The National Empowerment Fund (NEF) launched an enterprise development fund in aid of small and medium companies on Wednesday.

The development would help speed up black economic empowerment in the private sector, NEF board of trustees chairperson Ronnie Ntuli.

NEF CEO Philisiwe Buthelezi said this entailed private sector businesses making contributions to the NEF's enterprise development fund. The NEF would use this money to co-finance the NEF's investments in enterprise development beneficiaries. It would help make these businesses sustainable and financially independent.

For a company to obtain the maximum of 15 points on enterprise development it should contribute 3% of its net profit after tax.

"The minimum contribution a measured entity may make into the NEF enterprise development fund is R5m."

Looking exclusively at the 3% net profit after tax of the top 40 JSE-listed companies collectively, the potential resources available for enterprise development exceed R5.3bn.

Buthelezi said for every transaction that qualified for enterprise development funding, the NEF would co-invest on a 60:40 ratio, with the fund carrying up to a maximum of 40% of the risk.

The NEF said for five years from the time of contribution, the companies would enjoy their newly improved BEE scorecard ratings. The benefits would fall away on year six, after which the company had to contribute again to maintain the enterprise development points on the scorecard.
sme  |  entrepreneurship
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