Mr. Mohlolo Selala is the ESD Business Support and Fund Manager of the KT programme Kagiso Enterprises Rural Private Equity Fund (KERPEF).
- Why did Kagiso Trust (KT) through the KERPEF Programme decide to fund rural and small businesses, and how does the KERPEF differ from government development finance institutions that fund entrepreneurs?
Globally there is a consensus that small businesses are the heartbeat for economic growth and development. Currently in the country, it is estimated that about 60 percent of jobs are created by small businesses. As such, to help curb unemployment, inequality and poverty, KERPEF seeks to invest and promote black and rural businesses. Government is to create an enabling environment for small businesses to thrive, however given the magnitude of the challenges faced by the country, a combination of different solutions to help, in addition to DFI’s, is required.
- In your experience what are the three main factors that determine economic sustainability or development?
Although these are not exhaustive, I think that development of human capital through appropriate education and skills is critical as this allows for the creation and exploitation of opportunities. Secondly, an entrepreneurship culture allows for innovation in different spheres of the economy and lastly, social capital is important in keeping together the fundamental economic activities across different levels of society.
- How can the development and support of small businesses contribute towards economic growth and job creation?
Support of small businesses contributes towards economic growth in that, in their nature, small businesses exist to take advantage of an opportunity to solve current problems, as such this process results in economic activities.
- To date how much has KERPEF invested and how many decent jobs have been created or supported?
To date KERPEF has invested over R50 million in the creation and support of small businesses and has in the period of 2014 to date created more than 130 jobs.
- With the economic downturn, downgrades from International rating agencies, the raise interest rate by 50 basis points as well as South Africa’s economic growth only expected to grow by 0.9% this year, what advice do you have for entrepreneurs during these challenging economic times?
The current economic environment negatively affects business, especially small businesses. However hard economic times, although not palatable, have an element of taking the best out of entrepreneurs to force them to come up with lasting and efficient solutions. At this time of squeezed margins, entrepreneurs must single out costs, which they can control to balance out the negative impact of exogenous costs.
- How is KERPEF contributing towards the empowerment of female entrepreneurs?
Lack of women participation in the economy is blamed to what is termed ‘double barrel’ exclusion in that women have been marginalized by political systems and market forces, and in addition discriminated against based on gender. We seek to invest into businesses with bias to women ownership and employment.
- Does KERPEF fund social entrepreneurship?
As a subsidiary of Kagiso Trust, KERPEF strictly finances for profit businesses, however KT looks to promote initiatives which attend to solutions sustainably.
- Since KERPEF’s inception, which sectors of the KERPEF’s investment portfolio have seen significant growth with regards to black ownership?
Investments have been across the economic sectors in the country, although there are pockets of excellence, there is still a long way in realizing meaningful black participation in the economy. Our role, although small, in a meaningful way contributes towards this end through a balance portfolio.
- Why is the National Development Plan such an important document to achieve the country’s vision 2030? And how can the private sector, government, civil society and labour work together to achieve the vision and begin to address the “triple challenge” of unemployment, poverty and inequality?
The NDP, as a vision for South Africa, focuses efforts and forms the base for strategic initiatives by all stakeholders in addressing the “triple curse” of unemployment, poverty and inequality. The success however depends on coordinated relationship between government, private sector and civil society from policy formation to implementation. The lack of coordination and defined roles lead to duplications, which steal from already limited resources.
- Tell us more about KERPEF’s partnership with the South African Franchise Warehouse (SAFW) and the progress thus far. Lessons learnt and highlights.
KERPEF partnered with the South African Franchise Warehouse (SAFW) to help identify potential black franchisees to be funded in the franchise sector. The partnership allows first time entrepreneurs a soft landing in the franchise sector. To date KERPEF has invested R11. 5 million in funding and supporting franchise opportunities for black entrepreneurs. SAFW and its networks provide support to the franchisees so as to maximize their chances of success. Franchisees going through the SAFW training program are protected from illegitimate franchisors. Given the current difficult economic environment, SAFW is a link between the franchisors and franchisees and when problems arise in the business, franchisees and franchisors are drawn to find solutions beneficial to all parties.
Although the franchise model is a proven model, running the actual business requires the same amount of dedication and hard work. As such, businesses of those who are not putting an effort face more challenges.
As the partnership between SAFW is maturing, KERPEF is gathering lessons on how best to increase black participation in the franchise sector.
- Which KERPEF beneficiary stands out for you?
Thembeka Sales and Logistics; 30 jobs created; the business was a start up set up in 2012 and has to date grown by 30 percent in turnover with a target to grow by 50 percent by 2017. There has been a growing interest from other manufacturers who are approaching Thembeka with an interest to distribute their products. At the beginning of 2016, KERPEF helped the business to put shelves in the business, which helped to maximize the storage space and make the warehouse presentable.