11 May 2014

Sefa and TEP unveil new multimillion-rand SMME financing facility

To encourage development in the tourism SMME sector, the Tourism Enterprise Partnership (TEP) and Small Enterprise Finance Agency (Sefa) announced the launch of the Ikwezi Tourism Facility at INDABA 2014.

Dr Salifou Siddo, TEP CE. Dr Salifou Siddo, TEP CE

We have long realised that access to finance is the missing link in our SMME development strategy, and by adding access to finance, Ikwezi allows us to enhance our well-established business development services offering to tourism SMME clients. – Dr Salifou Siddo, TEP CE

The Ikwezi Tourism Facility (ITF) is a R50-million ring-fenced revolving credit facility exclusively reserved for TEP clients and is offered to all tourism SMME business owners, with preference given to black-, female-, youth- and rural-owned enterprises.

The facility will offer bridging finance, such as short-term financing to facilitate upfront contractual obligations; capital financing for the acquisition of new equipment and assets; and financing for business expansion of current assets such as buildings.

Dr Salifou Siddo, TEP CE, says that although there are a host of banks and other development finance institutions in South Africa, access to financing has always been a major challenge to SMME owners as they struggle to develop and grow their businesses.

‘The complaint from SMME operators is that in addition to the complicated and time-consuming red tape involved in the funding application process, the interest rates charged by commercial banks are often punitive and therefore unaffordable.’

With the launch of the financing facility, the TEP becomes the only tourism SMME development organisation in South Africa which, in addition to offering business development support such as training, mentorship and market access, is also able to provide access to finance.

‘We have long realised that access to finance is the missing link in our SMME development strategy, and by adding access to finance, Ikwezi allows us to enhance our well-established business development services offering to tourism SMME clients,’ he says.

Sefa, which was established on 1 April 2012, is a wholly owned subsidiary of the Industrial Development Corporation of South Africa. It envisions itself as the leading catalyst for the development of sustainable SMMEs through the provision of finance.

Thakhani Makhuvha, Sefa CEO, says tourism features prominently in government priority programmes, and has been identified as one of the key drivers of job creation in South Africa.

‘Sefa has identified this opportunity to collaborate with the TEP in order to stimulate and foster SMME development and support. This partnership will enable SMMEs in the sector to access funding augmented by skills development and support,’ he says.

According to Siddo, Ikwezi is an expression of confidence in the TEP by Sefa. 

‘We are extremely honoured to be working with Sefa to promote entrepreneurship development and job creation in South Africa. We are confident that Ikwezi will live up to our expectations of providing a viable alternative when it comes to access to finance for our SMME clients,’ he says.