State to merge small business agencies

2011-04-12 12:21

Cape Town - Economic Development Minister Ebrahim Patel has sketched out plans to merge several of the government's key small business development agencies under the umbrella of the Industrial Development Corporation (IDC).

In his budget vote speech delivered to parliament on Tuesday, Patel said: "We are planning a two-pronged reorganisation of our agencies in order to strengthen support for small and micro enterprise."

He said that small business funder Khula would have a direct lending facility of R55m this year under the brand of Khula Direct.

Currently, Khula provides funding to small businesses only through financial intermediaries who lend on to small businesses.

The second step follows an announcement by President Jacob Zuma of the intention to combine Khula, the South African Micro-Finance Apex Fund (Samaf) and the IDC small business loan book to improve government lending to smaller enterprises.

"The process has started. We propose retaining Khula as the brand name of a wholly-owned subsidiary of the IDC, with an expanded focus on micro-finance and support for social economy enterprises. We will now consult on this model," Patel said.

On Monday night, Patel said at a press briefing that there would be a phased approach to consolidating the country's development funding institutions, including those at provincial and municipal government levels.

However, he emphasised that such consolidation would not happen at the expense of disrupting the work of those insitutions.

In his budget vote speech, Patel said the department of economic development would transfer R219m to small business development.

"In addition, Khula and Samaf will deploy a further R381m from their own resources, and the IDC a further R2.2bn to promote small and micro-businesses this year, totalling R2.8bn in all for small, medium and micro enterprise support," Patel said. 

  • Iron John - 2011-04-12 13:13

    They should rationalise the NEF's SME division as well - the managers there are really out of their depth and cannot keep good staff.

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