R1 billion allocated to stimulate SME growth in SA
Having earmarked R1 billion for financing small and medium enterprises (SMEs) during the 2013/2014 financial period, Business Partners Limited, a specialist risk finance company for formal SMEs, not only delivered, but exceeded its goal of assisting businesses that contribute significantly to the economy.
This is according to the company’s 2013/2014 financial results which revealed that, in total, 386 investments were approved to the value of R1 082.6 million during the 12-month period. The value of approvals represents a significant increase of 21.4% from the R891.7 million approved in the previous financial year. The number of approved investments also increased by 16.6% in comparison to the previous financial year.
According to Nazeem Martin, MD of Business Partners Limited, these results are the business’s best achievements in the last five years, and confirm the resilience of the South African SME sector and steady growth of the company within the sector.
A total of 313 investments, amounting to R864.7 million, were disbursed to SMEs during the 2013/2014 financial year – an increase from 251 investments (R600.8 million) disbursed during the previous financial year. Martin says that of the investments disbursed, 102 investments to the value of R196.2 million were disbursed to black entrepreneurs, while 135 investments amounting to R313.7 million were disbursed to female entrepreneurs.
57 investments, amounting to R199.2 million, were disbursed in the Financial intermediation: Real Estate sector (financing the buying of property by SMEs for their operations or investment purposes) followed by the Manufacturing (food, textiles, wood and chemicals) sector, with 42 approved investments amounting to R126.4 million.
Demonstrating the role SMEs play in job creation in South Africa, more than 17 200 employment opportunities were facilitated through the company’s investment activities during the 12-month period ended March 2014. “This reiterates the important role that small businesses play in creating jobs, and why the country continually needs to support local small businesses.”
The company also reported total income of R470.1 million, up 9.7% from the previous financial year, which was largely attributed to the steady growth in its assets. Net profit after tax was R154.8 million, 13.6% higher than during the previous financial year.
Net credit losses (bad debts and impairments) decreased by 4.2%, in comparison to the previous financial year, and amounted to R46.8 million. “Given this indicator decreased by 31% during the previous financial year (2012/2013), the additional decrease this year is indicative of the continued improvements in credit risk management, and post investment technical assistance (mentorship), specifically with the clients that experienced financial distress.
“With 342 mentors available, we are able to offer valuable mentorship and consulting services to aid our clients in managing their businesses through tough trading conditions, as well as provide them with advice on how to grow their businesses.”
Boosting the company’s results was the establishment of two new funds: The Franchise Fund, launched earlier this year, is aimed at young previously disadvantaged entrepreneurs, with limited assets and access to capital, to qualify as franchisees. As at the end of March 2014, six deals to the value of R6.9 million were approved. Launched in October 2012, the Venture Fund, which provides capital to SMEs for early-stage, high potential and high growth companies, approved six deals amounting to the value of R30.3 million.
Martin says that having reported excellent financial results, the company remains cautiously optimistic and has earmarked R1,13 billion for SME financing during the 2014/2015 financial year. “For this year, we will be focusing less on commercial property finance and more on high impact investments, including through our Venture Fund. We will also use the year to establish Focus Funds for specific industries, details will be provided as we launch each fund.
“Business Partners aims to continue promoting and supporting small business in the country by championing entrepreneurship amongst young and older South Africans,” concludes Martin.