Small business in South Africa stands to receive a cash injection of R1Bil through the IDC. With the SA economy relying on small business to boost employment rates, international investment, exports and of course tax contributions, this investment comes as no surprise and for those who receive it as more than welcome.

Many will agree that investment itself is certainly not enough to answer the prayers of entrepreneurs around the country. What is need is a effective control mechanism through which the money is distributed and results measured. Lets ensure that the money reaches those who it is meant for and fulfill the purpose it was intended for.

The above follows this article from Business Day:

Thabang Mokopanele
Johannesburg

SMALL and medium-size enterprises (SMEs) struggling to raise finance should start knocking at the doors of state-owned financier the Industrial Development Corporation (IDC) if the institution's approval of almost R1bn of funding last year for the sector is anything to go by.

SMEs are considered labour-intensive with huge potential for job creation. Their growth is expected to contribute to the intended halving of SA's official 25% unemployment rate.

In its annual report this year, CE Geoffrey Qhena noted that the IDC sought to improve access to finance and lower barriers to entry into certain high-growth sectors of the economy by identifying market gaps sector by sector and finding appropriate funding channels to support start-up SMEs and black economic empowerment entrepreneurs. "The IDC's R1bn competitive financing for development schemes launched in November 2005 contributed to a significant number of applications and approvals last year," Qhena said.

About 8373 job opportunities were created by the scheme through 117 approvals valued at R544m.

Qhena said investment provided to entrepreneurs in the franchising sector had grown to account for 75% of rand value and 70% of the number of outlets financed by the IDC.

However, IDC chairman Wendy Luhabe said such enterprises typically faced a challenging set of constraints including access to finance, the acquisition of adequate business skills and access to information.

"In order to promote the growth of the SME sector, numerous initiatives and programmes have been rolled out by the three spheres of government, state-owned enterprises, nongovernmental organisations and business associations. The IDC is a key agent within this national effort," Luhabe said.

An IDC-Absa transport scheme launched in April last year has been renewed for an extra year. About R141m has been approved since the launch and 320 jobs created.

Through a R200m guarantee to Absa, the scheme has enabled the bank to provide finance to SME transport operators with a capital contribution as low as 2,5%, significantly reducing barriers to entry in the industry.

Qhena said one of the major challenges faced by SMEs was the shortage of an appropriately skilled workforce.

For the 2007-08 year, the IDC would launch a new training product called the Basic Work Skills Training Initiative .