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Johannesburg - The French information systems group, Thales, will provide start-up finance to South African entrepreneurs.
The initiative forms part of the now infamous arms deal, which saw allegations of bribery levelled against Thales. The company received a contract to supply the Navy with corvettes, which has to be offset by investments in projects that will benefit South African society in the long term.
The group will join forces with the Industrial Development Corporate (IDC) and Societe Generale (SocGen) to supply small and medium-sized enterprises (SME's) with finance.
Loans will be offered at interest rates approximately 175 basis points below prime.
IDC CEO Geoffrey Qhena said "This facility provides SME loans at more attractive interest rates, while providing the IDC with a more cost-effective source of dollar-based funding."
Thales international offsets director-general Jean-Claude Climeau took a dig at his SocGen counterpart when he pointed out that lack of access to capital and high bank charges in South Africa remained a significant barrier to entry for many would be entrepreneurs. Climeau said "this provides a direct and effective solution to the challenge of financing SME's."
IDC CFO Gert Gouws said that apart from applications to the IDC franchising business unit, who reviewed applications of R300 000 and upwards, the IDC would be attempting to place loans in the region of R1m and upwards per investment.
Many South African remain hesitant about approaching the IDC due to concerns about empowerment credentials. Gouws reassured potential investors that while BEE remained a key issue for the IDC to address, this funding was open to all entrepreneurs.
Funding would be available for businesses in a variety of different fields including food, agriculture, chemicals, textiles, metals, healthcare and education amongst others.
This is the second round of investment that Thales has made as part of its contractual obligations. The first round of financing saw $50m being invested through the IDC into 40 SME's, creating employment for more than 5 500 people.
- Fin24.com