Cape Town — The government's wholesale small business promotion agency Khula had written off R220,6m of its loans advanced to its intermediary clients and partners between 2003-04 and 2009-10, Trade and Industry Minister Rob Davies said this week.
This represented 13% of total disbursements of R1,68bn over the period, during which the average provision for bad debts was 16,6%.
The repayment level showed a decline last year to 74% from 83% the previous year.
Davies was asked in a parliamentary question by Inkatha Freedom Front MP Seeng Lebenya-Ntanzi to give details of the repayment record of small and medium-sized enterprises (SMEs) loaned money by institutions falling under his department, which include the National Empowerment Fund, the South African Micro-Finance Apex Fund, Khula and the Industrial Development Corporation (IDC).
Davies said that the repayment record for SMEs in the IDC's portfolio was lower than that of larger enterprises.
Of its overall arrears, 69% were related to clients with a turnover of less than R50m.
More than 80% of the businesses which were involved in talks about restructuring were SME-related. The IDC wrote off capital of R90m in the year to March.
"The bulk of this was in franchising businesses which were hard hit by reduced consumer spending.
"IDC's policy is to only write off exposures when all avenues of restructuring have been explored, the business has ceased operations and there is very little probability to recover its capital," Davies said.
For the South African Micro-Finance Apex Fund, the loan recovery rate was 66%. Loan losses written off amounted to R6,4m, or 17%, of the loan book.
The National Empowerment Fund experienced a 74% repayment in the year to March.
Preliminary year-end results indicated that between 5,5% and 8% of loans advanced would be written off.
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THAMI MAZWAI: Small business needs support to create jobs THAMI MAZWAI Published: 2010/03/05 08:26:03 AM
THREE gatherings in the past week indicate that more people now realise small business is an urgent necessity as we grapple with endemic and intolerable poverty in predominantly black areas.
Last Wednesday, the Institute of Business Advisers had its AGM and one speaker lamented: If only our countrys mind-set could change and small business become the launch pad for economic development.
On Thursday and Friday, speakers at an information and communications technology (ICT) conference hosted by the Department of Communications looked at integrating support for small business, with ICT as a cross-cutter, and ensuring implementation. The delegates came from several government departments. I sensed a deep level of concern for the plight of people in rural areas and black townships. I am also reliably told that President Jacob Zuma is cracking the whip as he demands concrete evidence on improving lives in rural areas and for black urban dwellers.
Then on Monday this week, experts at a workshop organised by Ann Bernsteins Centre for Development and Enterprise (CDE) advocated the opening of the economy to deal with the challenges of poverty and inequality.
The urgency in the discussions was pleasing. On assessing the three gatherings, it is evident that most accept that entrepreneurship, rather than heavy government control of the economy, is still the trusted route for economic growth. The developmental state is about empowering people to help themselves, and not spoon-feeding them.
It is now time for the insiders, those currently enjoying the gravy, to open up. When one talks of these insiders, folklore comes to mind. According to some South American tribes, all one had to do to catch one of their indigenous monkeys was to have a bottle with nuts in it embedded in the ground. The nuts attract the monkey, which, after looking around for danger, dips its hand into the bottle to get at them. When danger looms, instead of letting go of the nuts and fleeing, it tries to wiggle its hand out of the bottle while still holding the nuts. It is then easily caught.
This is SAs conundrum as specific constituencies hold on, oblivious of the bigger danger on the horizon. Unemployment in some townships is running at more than 60%, at times at 80%. This desperation will not hold out for ever. Attacks on foreigners and the service delivery protests are merely an outlet, a symptom of the anger in the townships.
Yet we are so engrossed with being the biggest economy in Africa that we only think big business forgetting it is small business that will alleviate the situation and give these township residents their rightful place in the sun.
What is worse is that there is even an unholy alliance between big business and labour, and this alliance suffocates small business. Four years ago, the Department of Trade and Industry crafted a strategy in which the government would purchase 10 products from small businesses to help grow turnovers and make many sustainable. However, when this was raised at the National Economic Development and Labour Council, labour objected on the ground that jobs in companies that employ their members may be at risk. Really!
Instead of big business coming to the assistance of small business on the principle of economic inclusivity, it looked the other way. Obviously, it was conflicted as some big businesses were in the sectors affected. This is how these two continually stab small business in the back, despite the fact that it employs 60% of the labour force. The labour position holds sway to this day while small business, mostly concentrated in the townships, continues to gasp for oxygen.
Fortunately, there is hope on the horizon. The Monday meeting spoke of a social compact, echoing sentiments by Michael Spicer and Bobby Godsell last week that all stakeholders must put their heads together and find a way out of the crisis facing the country. SA needs such an initiative. The growth and development indabas of the past have not brought the bacon home. After all, they were tailored around specific stakeholders.
Let us now tailor them around the crisis facing us, which is creating a job for every South African. The world has moved away from the debate around socialism or capitalism, on to practical economics that address issues. India and China unshackled their economies while US President Barack Obama did not hesitate to intervene in companies to ensure economic stability.
Medicine that heals, rather than ideology, is needed. Economic involvement for all is that medicine.
- Mazwai is director of the Centre for Small Business Development at the University of Johannesburg, Soweto campus.
Its beyond me as to how can these roleplayers "jump the gun" and suddenly want to fix very critical and contentious issues without having have levelled the playing fields!
Here,black people have not been emancipated or liberated yet we now talk as if that phase has been fulfilld and now we need to empower them economically.This qestin of "blackness"is another issue that needs to be debated and addressed since right now it is just being abused for advancements,elevation,popularity and enhancement!As far as I`m cncerned there`s no black since no black has been created.The writer above talk about black business but the only time you will have black business will be when you have black manufacturers,wholesalers,prodcers,banks etc and bring white money to blacks not the other way around.
He was the first batch of blaks to move to formerly white areas where his residence and business are based yet he harp abot blacks taking their businesses to the townships.That means nothig because they take black money to whites.
Black leaders needs to sit down and resolve the questin of blackness before they go around the world shouting black!