the South African Micro Finance Apex Fund
3 March 2006
Mofumahali Mathokoana Mopeli,
Chiefs, executive mayors and councillors,
Community members,
Chairperson of Makwane Village Bank,
Members of Makwane Village Bank,
MEC of Economic Affairs and Tourism,
All government officials,
Ladies and gentlemen,
It is an honour for me to be here in the Free State Province, for the
launching of the South African Micro Finance Apex Fund (SAMAF) Project. This is
the sixth provincial launch of the Apex Fund, which was officially launched
nationally by the Minister of Trade and Industry in May 2005, at Motswedi
Village in the Northwest.
One of the key mandates of government is to half unemployment and poverty by
the year 2014. We aim to achieve this mandate by increasing the number of
people who participate meaningfully in the South African economy. Due to our
history of Apartheid, we have many people who are located in what is called the
âsecond economyâ. Our younger, better educated people, who are currently
unemployed, have a good chance of being integrated into the formal economy if
given the proper support. Unfortunately, there are also many of older people
who have not been fortunate enough to get formal training, who will remain
trapped in poverty if government does not make a concerted effort to support
them.
The South African Micro Finance Apex Fund will provide support for both
those people who can be integrated, and those people who are regarded as
unemployable.
The Apex Fund will be used to stimulate and activate development at a local
level by providing households, who are usually excluded from the banking
sector, with access to financial services. In so doing it will create
employment, increase incomes and expand economic opportunities. The Apex Fund
is thus more than an income generating tool. It presents our people with
choices, enabling movement beyond survival toward building up assets, planning
for the future, access to better nutrition and provision of better
education.
The Apex Fund is now a targeted vehicle for the Accelerated Shared Growth
Strategy for South Africa (Asgisa), which is aimed at increasing income and
employment opportunities to 15 â 20 million people living in the rural areas or
in shack areas outside the big cities. South Africa has a good experience of
self help groups and cooperatives and has also different financial institutions
for micro finance. However, impact on enterprise and job creation has been
limited. Much bigger growth is required.
The President in his State of the Nation Address, had declared âWe should
move faster to address the challenges of poverty, underdevelopment and
marginalisation, confronting those caught within the second economy, to ensure
that the poor in our country share in our growing prosperityâ. âWe must ensure
that the machinery of government, especially the local government sphere,
discharges its responsibilities effectively and efficiently, honouring the
precepts of Batho Pele; and we must harness the Proudly South African spirit
that is abroad among the people to build the strongest possible partnership
between all section of our population to accelerate our advance towards the
realisation of important goal of a better life for allâ.
In South Africa, women and children are more vulnerable to poverty, with an
increasing number finding themselves as heads of households, especially in
rural areas. Black women also form the largest part of South Africaâs
unemployed persons and rural women in particular find themselves on the bottom
rail of the economic ladder. Evidence indicates that women seem to benefit from
access to micro finance and credit to a greater extent than men do. Because of
the increasing responsibility of women in heading up households, micro finance
programmes that target female clients will not only benefit individual clients,
but will benefit households as a whole. The Apex Fund is therefore an important
tool for the economic empowerment of women.
The vision of the Apex Fund is to be a leader in developmental micro finance
outreach and best practice in South Africa. This vision will be attained
through:
* Being an effective mobility of capital for development project with proven
potential;
* Being innovative development products and services to market;
* Forging valuable development partnerships between business, government and
the community; and
* Developing human capital in the economic sphere through supporting capacity
building.
To this end, the following four products are offered:
* Institutional and client capacity building including the establishment of
good financial systems and strengthening of management teams;
* Savings mobilization through co-operatives and other indigenous formations
such as burial societies and stokvels; and
* Affordable access to financial services through the Micro Credit Loan Fund,
which provides loans of up to R10 000 for households and micro entrepreneurs
who depend on their micro-enterprises for their livelihood.
The fund will take two forms:
* Micro credit for micro enterprise development; and
* The poverty alleviation fund for clients with a household income of less
than
R1500.00
In order to ensure the widest possible outreach, partnerships are being
established with peopleâs structures on the ground and existing infrastructure
will be used for distribution. There has been significant progress with regard
to operationalising the Fund. To date more than 60 institutions, throughout the
country, have applied and being considered for partner organisation status to
the Apex Fund. These include three in the Free State, including Makwane Village
Bank. The project team is currently implementing the capacity building program,
in all nine provinces, in preparation for the loan disbursements, which should
be in place by June 2006.
Strategic partnerships have also been initiated with the Post bank, MAFISA,
National Treasury, Bank SETA, Provincial Governments and very soon the National
Department of Social Development.
Ladies and gentlemen, The Apex Fund is the one tool that will unleash the
productive potential currently locked within under-developed sectors of the
economy and will facilitate a more equal spread of economic resources, activity
and control. Other significant tools are in the areas of specific support for
small enterprises and co-operatives. In December 2004, the dti launched the
Small Enterprise Development Agency (SEDA). SEDA has since been launched in
three other provinces and has opened offices in those provinces, Northwest,
Mpumalanga, KwaZulu-Natal and very soon in the Free State.
It will ensure a coordinated approach to the design and implementation of
development support programmes and the creation of a service delivery network
for small businesses throughout South Africa. At SEDA offices, entrepreneurs
will be able to get help with business plans, technical advice and marketing,
as well as information on export support, tenders and incentives.
Very recently, Programme director, ladies and gentlemen: we witnessed yet
another major milestones in the small, medium and micro-enterprise (SMME)
space, the launch of the Business Partners Khula Start up fund. The Business
Partners Khula Start up Fund is aimed at new entrepreneurs and new enterprises.
Many studies have indicated that access to start up capital is one of the
foremost inhibiting factors for entrepreneurs to realise their dreams and
ambitions. As part of its new strategic approach, Khula conceptualised the
establishment of a Start up Fund that would offer economic citizens not already
in business and opportunity to enter the business arena. The fund is currently
capitalised at R150 million. This product forms part of our response to a
number of challenges facing emerging and existing black entrepreneurs.
Programme director, ladies and gentlemen: There is also an increasing need
to strengthen cooperatives as a different form of enterprise. In August 2005
the President subscribed to the Co-operative Act, effectively putting in place
the first ever comprehensive cooperative policy in South Africa. In this
regard, I am proud to announce that the implementation of the policy has
already started with the launch of a co-operative Start up Grant of up to R300
000. In accessing this grant, Co-operation will be expected to contribute 10%,
which can take the form of skills or basic assets. We have also started with
the process of building capacity on the part of service providers who will
train the co-operators. Some of the planned support measures for co-operative
development include technical capacity building and assistance to cooperatives
on compliance areas such as auditing requirements, automatic reserve fund,
taxation, co-operative management, and business skills.
Increasing the number of people who are meaningfully participating in the
economy, however, is not sufficient to solve the challenges of unemployment and
poverty. Growing the economy is an equally important imperative. In this
regard, significant efforts are being directed towards enhancing the
competitiveness within the economy and to increasing levels of investment.
These efforts include providing social and economic infrastructure; reducing
the cost of doing business; developing priority sectors; strengthening domestic
and regional markets; and increasing market access; within the context of a
stable development orientated macro-economic framework.
The success of governmentâs programmes is, however, dependent on the extent
to which there is co-ordination and co-operation across the three spheres of
government. The Free State government has established a good track record of
partnership and we appreciate the efforts that went into the preparations for
the launch of this fund. Just as the government here has ensured that Free
State is one of the fastest growing provinces in the country, I am confident
that you will also ensure that the programme launched here today, will be
amongst the best.
I would also like to thank the team at the national office of the Apex Fund
for their commitment and enthusiasm. The Fund had a slow start due to the
groundwork that needed to be done. The solid foundation is now bearing fruit,
and potential structures for sustainable micro finance access are sprouting
throughout the country. The Fund has disbursed more that R10 million in the
past eight months on loan funds and operational expenditure of 17 micro finance
institutions. It will spend another R20 million on capacity building and
branding exercise with 20-25 partner organisations creating more than a 100
permanent jobs in the next three months. Halving unemployment and poverty by
the year 2014 is a mammoth task. The successful implementation of the Apex Fund
is an important element towards accomplishing that task.
I thank you
Issued by: Department of Trade and Industry
9 March 2006
