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Young entrepreneurs call for reduction in restrictions and regulations

  • by African Times
  • 2 Years ago
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YOUNG black entrepreneurs have identified financial difficulty as one of the core challenges that restrict the growth of small businesses.
They have largely attributed the problem to “red tape” constructed by financial agencies that are designed to develop and assist SMMEs.

With more and more young black entrepreneurs entering the business sector, funding SMMEs has proven to come with its challenges. That is why young entrepreneurs are calling for a reduction in restrictions and regulations that have been put in place.

Spokesperson of the Small Enterprise Finance Agency (SEFA), Innocent Ndima, says the agency provides financial products and services to qualifying SMMEs and Cooperatives.

He adds that the enterprise programme is designed to assist SMME’s businesses to improve enterprise performance, and achieve operational and financial self sufficiency

“The agency has a national footprint which is important to ensure that access to finance is extended to all South African based small enterprises and cooperatives,” he explains.

RED TAPE: Lack of financial assistance has been an obstacle for growth to many black young entrepreneurs across the country. However,
Small Enterprise Finance Agency (SEFA) has stepped in to fill the void.
Photo: Lebogang Makwela/Visual Buzz SA.

Ndima says small businesses and cooperatives are considered a high risk by mainstream commercial banks and as a result, they struggle to access funding which is crucial for the creation of the much-needed jobs.

“The Small Enterprise Finance Agency (SEFA) was set up by the government to foster their establishment and to jump-start entrepreneurship by ensuring that small businesses and cooperatives are able to access finance up to R 5 million,” says Ndima.

However, the young business owner of a clothing brand company called Botho ka Bothoro says he had to start his business with less than R1000 after trying to get funding from government business funding agencies with no luck.

Thabiso Mokonoto, whose business based in Soshanguve, outside of Pretoria, explained his struggles.
“I had to use my money that I had been saving for a while to gather start-up capital. I am a student and saving money has not always been easy. “I alongside my business partners
(who are also students) got together and we were only able to come up with R600 to buy raw materials and equipment,” he said.
“I went to government funding agencies several times since I cannot afford a bank business loan. I am always turned away because my business plan is not in order, and I do not know how to write a proper business plan.”

He says there is a lot of excessive bureaucracy and formalities that entrepreneurs applying for funding have to adhere to, especially young black entrepreneurs.

Mokonoto says although the company is doing well, it is difficult to grow and develop it because he still cannot afford the right equipment.

The disgruntled entrepreneur says he envisions his business growing but needs financial assistance to increase the scale of his brand.
“A challenge I face as a black company based in a township is the lack of resources and equipment, we end up having to outsource some our services and products to other companies.
“When we apply for funding from government agencies, we are told that we need security (safe property and infrastructure) to be able to access funding,” he said.

Ndima says the agency considers all applications for financing, he, however, says business and
co-operatives that do not meet their set requirements will not be considered.

“Any business that does not meet our criteria, as well as some specific sectors will fall out of the
scope SEFA is mandated to finance, such as Labour Brokers, Non-Profit organisations Unrehabilitated insolvent shareholders and/or directors of applying entities and persons under debt review (amongst other things),” Ndima says.
“SEFA considers all applications for financing. The business must have a business plan. However, in instances where there is a contract or purchase order in place the business plan is not required,” he added.

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