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NEF on how it funded SMEs hit by July riots

Nomazizi Siphondo – Senior Investment Associate: Umnotho Fund, NEF

FIFI PETERS: I suppose it’s really important to attract what has been done to repair some of the damage from the July riots in KZN and in Gauteng this time last year. That’s because the extent of the damage was pretty brutal – it stretched into the tens of billions of rands.

The National Empowerment Fund, the NEF, however, along with the Department of Trade and Industry (dtic), as well as the Solidarity Fund provided just over R1 billion towards the post-unrest recovery.

To discuss how impactful that money was, I’m joined by Nomazizi Siphondo, the senior investment associate at uMnotho Fund at the NEF. We went to school together, we did, right?

NOMAZIZI SIPHONDO: We did. I was telling Michael that it’s going be interesting to be interviewed by someone I went to school with.

FIFI PETERS: This is a wonderful throwback. It’s good to catch up with you. Okay, so tell us what has been done. You guys provided support of around R1 billion towards the repair efforts. Can you tell us how that support was distributed between the businesses that received it?

Read: NEF approves over R1bn in July unrest funding for black businesses

NOMAZIZI SIPHONDO: Yes, thanks Fifi. So, following the unrest, the NEF in partnership with the Solitary Fund, as well as the dtic, we … set up a fund of about R1 billion, and that fund was basically just to assist businesses that were affected in KZN and Gauteng. And so we set up the assembled teams at the NEF and everyone was sent out to see some businesses in KZN and Gauteng. It was basically to find the businesses that had been affected. So we were helped by media. Some of the SMEs were in the media as well as the stories that people were posting. And we were also assisted by the provincial government,  giving us a list of businesses that were affected.

So you would get down there, and you would basically assist the businesses to package the applications and send them to head office for execution, within a very short turnaround time.

FIFI PETERS: And what’s the state of some of those businesses now?

NOMAZIZI SIPHONDO: We’ve had a lot of success stories actually. So it was very crucial for us, that the businesses be able to re-employ some of the employees that had been retrenched as a result of the unrest. And we are happy to report that some of the businesses have come back [to ask for more funding]. So they were able to re-employ the employees. But then now, [they are] doing much better. I think us being able to just get down there as fast as possible and to deploy the funds as quickly as possible, and also just to every single business, regardless of race was really helpful. And now we’ve seen growth.

So what the NEF does is we place associates to monitor the investment and the report-back that we are getting is that things are looking up.

The guys are finally opening up and it’s positive stories all around.

FIFI PETERS: Yes. And I’m glad that you mentioned the issue of additional funding, to say that some businesses are even coming back to ask for more help. And given the fact that the value of the damage just runs so large, I’m wondering if there are any talks happening behind the scenes there at the NEF about maybe putting together more to direct towards relief efforts?

NOMAZIZI SIPHONDO: We’d really love more support of that nature, because we saw the impact that this fund had. Right now the answer, the are costs regarding setting up a similar fund because obviously we’re hoping that [it won’t] happen again. But in terms of just making funding available in general … the NEF does have other products. So we are looking at deploying more funds into those businesses so that they can expand, obviously pricing them better, using third-party funding as well as some of our concessionary funding products to basically get the businesses to a stage where they can grow. So …… funds not so much; however we are making funding available to those businesses and other businesses that could be businesses …funding.

FIFI PETERS: It was pretty rough for the province of KZN because, just as a lot of these businesses were recovering from the impact of the riots, and then the floods happened and a lot of them got set back again. I know we’re talking about the recovery related to the unrest, but I’m just wondering if you guys are working on anything related to the flooding?

NOMAZIZI SIPHONDO: I know we have set up some funding to assist businesses. However, as the NEF, we don’t have a specific fund for that. But what the NEF was able to do on its own is just humanitarian work. So again, we send people down to help the families that have been affected. However, in terms of separate funds right now, we do not have that facility.

FIFI PETERS: Okay. I know your mind and you’re on top of everything. You have always been from varsity days, and you know that the bigger picture of the economy is pretty bleak right now. I’m just wondering what you guys are doing, or thinking of doing, in terms of the broader support that is needed for a lot of these small businesses that are trying to get back on their feet following the knock-back from the pandemic.

So just talk to us about how you’re envisioning your role in supporting the post-Covid-19 recovery for a lot of small businesses.

NOMAZIZI SIPHONDO: Thank you so much for that question. I think this gives me a chance to brag or talk about some more products at the NEF. So yes, we’ve closed funds now, but we’ve also introduced some as a funding product. The NEF has set up the Black Business Manufacturing Fund, we’ve got the WEF (Women Empowerment Fund), which is a fund that we set up for women-owned businesses in townships and villages.

We’ve also got products…we’ve got some of the regional funds. So the difference between those funds, those newer funds that we have, and the traditional NEF products is just pricing and concessionaires. So pricing is really relatively low, usually between 1.5% fixed to 2.5% fixed. And, you’ve got moratoriums. We’ve introduced affordable funding and the turnaround times are much shorter.

And we are basically just allowing more businesses to come to us. We go out there to find businesses now. We have a Covid (?) fund that we utilise. However, we’ve got these newer products that are looking at funding businesses that could be struggling in manufacturing, counter businesses in retail, in property, as well as some regional funding: Gauteng, Northern Cape, Limpopo, all these other regions that struggle with access funding. We are now setting up concessionary funding to attract entrepreneurs in those areas.

So we do have newer products…

FIFI PETERS: Good to know. I imagine that you guys have your work cut out for you, because a lot of assistance is needed it out there. Nomazizi, really good to catch up with you. Nomazizi Siphondo … is the senior investment associate at uMnotho fund for the NEF.

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