The National Empowerment Fund (NEF), established in 1998 was created and designed to support Broad-based Black Economic Empowerment (B-BBEE).
According to the NEF, funding and investment requirements are aimed at assisting black youth, women and men, communities and businesses achieve sustainable success through preferential procurement, broadening black equity ownership, transformation in management and staffing, and preventing the dilution of black shareholding.
To date, the NEF has approved 519 black-empowered businesses to the value of R5,05 billion. During the financial year of 2011/12, 135 deals were approved to the value of R1,33 billion. Since its inception the NEF has supported more than 44 000 jobs and created 24 000 new jobs. 21% of projects approved have been for businesses owned and managed by black women.
NEF Funding: Types of NEF funding available
The NEF has four main channels of funding that have subdivisions within them. They include:
- iMbewu Fund with subdivisions of entrepreneurship finance, procurement finance and franchise finance. This particular fund is aimed at supporting black entrepreneurs who want to start a new business or expand an existing one. It takes the form of offering debt, quasi-equity, and equity finance products ranging from R250 000 to a maximum R10 million.
- uMnotho Fund with subdivisions of acquisition finance, new venture finance, expansion capital, capital markets, and liquidity and warehousing. These products are available to black-owned and managed businesses, new ventures, expanding existing businesses and to black entrepreneurs wanting to buy equity shares in established black and white owned businesses. Funding ranges from R2 million to R75 million.
- Rural and Community Development Fund with subdivisions in acquisition, new venture capital, expansion capital and start-up/green fields. This fund promotes sustainable change in social and economic relations, as well as supporting and developing the rural economy through financing sustainable enterprises and co-operatives. Through the four products funding ranges from R1 million to R50 million.
- Strategic Projects Fund with a subdivision of empowerment objectives is aimed at increasing black participation in early-stage projects. Projects are evaluated on its economic merit and ability to deliver on the government’s development mandate.
How to access NEF funding
The vision of the NEF is to be a leading provider of innovative transformation for an economically inclusive South Africa through being a thought leader, promoting and facilitating black participation, providing financial and non-financial support to black-owned or empowered businesses, and by promoting a culture of savings and investment among black individuals and communities. This is achieved through fund management, asset management and strategic project funds.
What sectors does the NEF fund?
- Tourism and entertainment
- Printing services
- Motor industry
- Mining services
- Wood and paper industry
- Chemicals and pharmaceuticals
- Construction and materials
- Financial services
- Food and beverages
- Information and computer technology
- And other industries.
How to apply for NEF funding
Funding is available for both start-up and existing businesses and follows this process:
Conduct a self-needs analysis to determine how the NEF can assist with your business needs and which product is best suited to you. Along with the application form, you need to provide a comprehensive proposal with information that supports the commercial viability and financial proposition of the business. Once the application has been submitted to the NEF, it will be assessed for final approval and receiving of funds.
The NEF website provides the following checklist when applying for funding that can be found here.
All of the requirements on the checklist need to be met for an application to be processed. This can take up to six weeks. If successful, the time from application to receiving of funds can be three to four months.