Merger of development agencies to boost SMME

Thursday, October 27, 2011

Pretoria - Cabinet has approved the merger of key small business development agencies under the Industrial Development Corporation (IDC) umbrella.

Cabinet spokesperson Jimmy Manyi announced on Thursday that Khula Enterprise Finance, the South African Micro-Finance Apex Fund (SAMAF) and the IDC small business activities would be merged.

Cabinet hopes that the merger will improve government lending to smaller enterprises by avoiding the duplication of financial support and cutting administrative costs.

Prompted by the need for sustainable increase in government assistance to the small business sector, as part of job creation, the merger plans were first hinted by President Jacob Zuma during his State of the Nation Address in February this year.

The merger is still subject to approval by the National Treasury and Public Service and Administration Department, Cabinet spokesperson Jimmy Manyi told a media briefing on Thursday.

Manyi said the merger was in line with the New Growth Path, which identifies small business as an enabler for creating and sustaining enterprise and jobs.

"The merger will fall under the auspices of the IDC where it would be better resourced and capitated. It would also create the framework for improved support for SMMEs," explained Manyi.

He added that the current fragmented approach of delivery of finance in these agencies has resulted in higher overhead costs which have no impact and limited reach.

As it is the agencies which have been plagued by underfunding had different duties which overlap.