M Mpahlwa: South African Micro-finance Apex Fund launch

19 September 2006

The Chairperson of Diatla Co-operatives
Programme Director
Executive Mayor
Representatives from local government
Senior government officials
Ladies and gentlemen

It is indeed a pleasure and honour for me to be in Atteridgeville as this
occasion allows us to together realise a commitment made at the launch of the
South African Micro-finance Apex Fund in the North West province in 2005. I
said then, that we will be establishing a presence of South African
Micro-finance Apex Fund (SAMAF) in all provinces by 2006 and today we fulfil
that commitment.

We can also report that during this initial phase of implementation, this
initiative has received an overwhelming reception in every province. This
enthusiastic response, not only shows that we have correctly identified a
critical need in our communities but also bodes well for the future. SAMAF will
therefore remain a priority initiative of the Department of Trade and Industry
(dti), and will be closely monitored as a key project in the Government
Programme of Action.

Executive Mayor, as you will well know, the imperative and operational
nature of implementation can cause us to lose sight of the overall strategic
intent of an initiative such as the one we are engaged with today. I want to
therefore very briefly reflect on our strategy which forms this strategic
initiative to support and grow entrepreneurs.

Firstly, this strategy is premised on the fact that our economy is currently
more vibrant and robust that ever before. This robustness is a result of the
correct policy approaches adopted since democracy which allowed us to diversify
our products and which has allowed us to take advantage of the demand for
commodities.

A feature for this economic trajectory however is that many South Africans
are excluded from the benefits of this modern, competitive and growing economy
that we have become. The reasons for this exclusion do not range from people
not having the appropriate skills; not being aware of the many opportunities
being created by the growth in the economy, nor are they aware of the support
available from government and so on. All of these mean that such people are
very vulnerable to being marginalised as this process of economic growth
threatens to leave them further and further behind the mainstream economy. Now
the important question is how we respond to this challenge.

On the one hand, there is an increasing reliance on social welfare measures
to solve these challenges. Whilst these measures are necessary and critical, it
is not sustainable in the long term as it often competes very directly with
resources from other activities such as the provision of entrepreneurial
support, amongst others, which in turn provides the basis for economic
growth.

Our response to the sustainability challenge must therefore be a
comprehensive one. In this regard, you will in the near future be hearing a lot
more on new directions in the industrial policy, steps taken to support
Accelerated and Shared Growth Initiative for South Africa (AsgiSA), new
financial support measures for business and the finalisation of the codes for
the good practice on broad based black economic empowerment. Together, these
are steps that are being taken to ensure that we continue our growth and indeed
accelerate it, but that also we so in a manner which is sustainable and
increasingly broadens the net of economic participation.

Ladies and gentlemen, particularly in respect to this point, of broadening
economic participation, we have, during the past two years been giving
increasing attention to revitalising our efforts in supporting micro and small
businesses. We therefore embarked on a programme that said we must keep the
broader goal of poverty alleviation in view whilst sharpening the policy focus,
developing businesses, streamlining the institutional framework for small
business support and local economic development and responding to entrepreneurs
with special needs.

We developed this approach in line with our analysis of the changing needs
of small, medium and micro enterprises (SMMEs) and also in line with
international best practice. For instance we recently hosted the Small Business
Tri-Nations Summit which provided a platform to exchange development strategies
with Brazil and India, both countries with challenges similar to ours. Among
the development strategy discussions that took place during the summit, we were
reflecting on how to achieve the full potential of what is referred to as a
second economy in South Africa. Participants rose as key issues, the business
regulatory environment, access to technology and access to finance.

In launching the South African Micro-finance Apex Fund, we have therefore
already anticipated a critical intervention that deals with some of these areas
of concern, directly. Thus the Fund responds to the issue of access to
micro-finance and addressed the appropriate regulatory environment conductive
for the growth of the micro-finance sector. Indirectly, SAMAF deals with the
issue of access to technology through the capacity building interventions that
are part of the SAMAF model.

Programme Director, given that the Fund will service the market need for
loans up to R10 000 a significant number of self-help initiatives will be
supported. Important to the dti is the nurturing of these self-help initiatives
to viable micro-enterprises. The Fund will also stimulate and activate
development at a local level by providing financial means to households who are
usually excluded from the banking sector. In this way the Fund will become more
than simply a conduit for access to micro-loans. It presents our people with
choices, enabling movement beyond survival toward building up assets, and for
many people providing the first real opportunity to self-sufficiency.

Ladies and gentlemen, I am therefore pleased to report that SAMAF has
already been operationalised and is beginning to establish a strong national
footprint.

A commitment to the amount of R23 million to 18 partner organisations in
eight provinces has already been made. Concurrently, the organisation is being
strengthened to ensure proper service and delivery and it is expected that all
vacant posts will be filled within the next few months. We are therefore
confident that by March 2007, we are certain to reach out to 50 communities
with a total investment of R65 million.

Interestingly, evidence from current activities indicate that women in
particular are beginning to benefit from access to micro finance and credit to
a greater extent than men and whereas we do not know the exact reasons for
this, it is a cause for celebration that the Fund is providing concrete support
for women empowerment.

In conclusion, the turn-out today, as indeed the turnout in all provinces
with as many as 5 000 people attending the KwaZulu-Natal launch, is indicative
of the need for this facility. We know that micro-finance has an important
effect on stimulating and activating development at the local level, thereby
creating employment, increasing incomes and expanding economic opportunities.
Micro-finance can be as a means for many of our people to gain access to build
a better life. In short SAMAF can make a very big difference to the lives of
people. It is therefore so very important that we all, the dti Staff of SAMAF,
partner organisations, other stakeholders and above all the clients, commit to
making every effort to ensure that we will succeed.

I thank you

Issued by: Department of Trade and Industry
19 September 2006