The Women Entrepreneurial Fund (WEF) has been established by the Industrial Development Corporation (IDC) to increase access to entrepreneurial finance for marginalised groups in South Africa, prompted by the realisation that race and gender remain important variables in the ability of entrepreneurs to access finance. The fund, which falls within the R1 billion IDC Transformation and Entrepreneurship Scheme (TES), has ring-fenced R400 million for women-owned businesses until 2015.
Meryl Mamathuba, head of Development Funds Department at the development financier, says “We need to increase the extent to which women own and manage existing and new enterprises by improving their access to economic activities and infrastructure. This strategy is necessary to create viable opportunities that facilitate sustainable development and empowerment.”
Funding for start up businesses and expansions under the Women Entrepreneurial Fund (WEF) is available to businesses with a minimum shareholding by women of at least 50%. Funding for businesses with women shareholding of between 25% and 50% will be considered only to the extent of the individual contribution amounts of these female shareholders.
Only female shareholders with a direct or indirect total net asset base of less than R15 million are considered. “Finance is provided to businesses with a total asset base of up to R80 million and the maximum amount we will finance under this fund is R30 million per transaction,” says Mamathuba. Importantly, the business must include women in its operations and management, or present a plan to do this within two years. “
“Entrepreneurial women building and expanding businesses with real potential need to know that this finance is available for them at a Real After Tax Internal Rate of Return (RATIRR) of 3% for equity financing.”
Funding and support
The financing instruments applied are equity, quasi-equity or loans. “Along with finance, business support is offered in the form of a partial grant, helping with the development of business plans, training and mentorship. By providing such support, we are able to ensure that the chances of success of such businesses are improved,” she says.
A WEF fund success story is Sula Smart Supply Services cc (Sula Smart), a 100 percent black female owned company established in 1999 by Managing Director Hlengiwe Hlophe to supply office consumables, protective clothing and cleaning materials. In its more than ten years of operation, the company has diversified into waste management which now accounts for over 98% of revenue. It provides services to different municipalities and private companies and is the only black female owned business involved in waste management for the City of Johannesburg.
Sula Smart’s application for expansion funding for the acquisition of waste compactor trucks, expects to create 136 permanent jobs where 56 of the 136 will be created at Sula Smart while the balance of the 80 will be created at Pikitup as the collectors are employed by Pikitup. “The expansion of capacity through IDC funding has allowed us to consider diversifying into other markets such as retail to reduce dependency on municipalities,” says Hlophe.