Black
Economic Empowerment (South Africa)
Fund boosts black entrepreneurs
South
Africa's National Empowerment Fund (NEF), the government agency
set up to provide capital for black economic empowerment transactions,
has contributed almost R700-million toward economic transformation
in the country since its formation in 1998, while its capital
reserves now stand at about R3.5-billion.
NEF chief investment officer Frencel Gillion told members of Parliament
in October 2007 that that NEF approvals now exceeded R500-million.
Using two funds - the iMbewu Fund and the Corporate Fund - Gillion
said that by the end of March 2007, the agency had a total approved
investment portfolio of 102 transactions worth R692-million.
This
would ensure the creation of 3 000 new jobs, he said, while 6
000 existing jobs would be supported.
The
agency's main investment areas are construction, information and
communication technology and media, and food and agro-processing.
NEF
chief executive Philisiwe Buthelezi said in the agency's latest
annual report that, in the financial year to March 2007, the NEF
had grown its capital reserves from R2-billion to R3.5-billion,
largely because of additional trust capital of R500-million from
the Department of Trade and Industry.
The
fund was thus fulfilling its mandate, Buthelezi said, "by
bridging the divide from the second to the first economy for black-owned
enterprises, and in introducing black investors into higher investment
classes in the economy".
The
NEF reported that it had received an allocation of R709-million
for the new financial year, representing an increase of R300-million.
This would in turn increase NEF disbursements by R405-million
during the new financial year.
Asonge
share scheme
NEF chief operating officer Andrew Wright also pointed to the
agency's Asonge share scheme, which saw the sale of 12-million
shares in sub-Saharan Africa's largest cellular operator, MTN,
to previously disadvantaged individuals and groups, as a major
milestone for transformation in the country.
The
scheme, which operated between July and August 2007, saw investors
receiving a 20% discount on the actual share price of MTN. With
the initial 10.04-million MTN shares - worth some R1.14-billion
- being oversubscribed by 13%, the NEF decided to allocate a further
1.4-million shares.
To
encourage meaningful economic participation and prevent rapid
sale of the discounted shares, the NEF said that black investors
who hold the shares for the full 24-month investment period would
receive one bonus share for every 10 MTN shares held.
Black
men hold 52% of the Asonge share offering, women hold 39%, while
savings and investment groups hold the remaining 9%.
Low
to medium-risk investments
The agency's review of the first quarter of the year showed that
74% of the fund's total investment portfolio was used to fund
black empowerment purchases of equity in white-owned companies,
while the other 26% was disbursed in the form of loan funding.
Of
those deals, 80% by number were worth under R5-million per transaction.
Seventy-seven percent of the NEF's investments are considered
to fall between the low to medium risk category.
The
quarterly report also highlighted the following statistics:
78%
of the portfolio by number has been disbursed to black entrepreneurs
starting up or expanding their own businesses.
72% of the portfolio by value has been disbursed to buy equity
in white-owned businesses on behalf of black entrepreneurs.
By number, 68% of the portfolio is based on pure loan funding
and 32% of the portfolio is in associate investment funding (equity
plus loan), but by value 26% of the portfolio is based on loan
funding and 74% of the portfolio is in associate investment funding.
The NEF also places an emphasis on the development of female entrepreneurs,
devoting 38% of the fund to financing women-owned business ventures.
"We are especially pleased with the results achieved in the
black men and women participation statistics, as well as the leveraging
of NEF capital against funding sourced from the private sector,"
Buthelezi said in the report.
Article
last updated: October 2007
SAinfo reporter
www.southafrica.info