A brand new financing offering has been launched by the Small Enterprise Finance Agency (sefa) and the Tourism Enterprise Partnership (TEP) to provide business loans to SMMEs in the tourism industry, encouraging development in this sector.
Given the difficulties experienced by SMMEs in gaining access to finance as well as the punitive high rates charged by commercial banks, TEP saw the opportunity to establish the Ikwezi Tourism Facility (ITF).
This mutually beneficial relationship between TEP is a highly competitive facility that provides business finance to registered SMMEs in the tourism industry, including bridging finance such as short term financing to facilitate up-front contractual obligations;capital financing, such as the acquisition of new equipment and assets; and business expansion of current assets like buildings.
Ikwezi is a R50 million ring-fenced, revolving credit facility exclusively reserved for TEP clients and is offered to all business owners, with preference given to Black, Women, Youth and Rural owned enterprises.
TEP CE Dr Salifou Siddo says: “Although there is a plethora of banks and other development finance institutions in South Africa, access to finance has always been a major challenge to SMME owners as they struggle to develop and grow their businesses.
“The complaint from SMME operators is that, in addition to the complicated and time consuming red tape involved in the funding application process, the interest rates charged by commercial banks are often punitive and therefore unaffordable.”
The Ikwezi Tourism Facility propels TEP to the next level of innovation by making it the only tourism SMME development organisation in the country which, in addition to normal business development support such as training, mentorship, and market access, is also able to provide access to finance.
“We have long realised that access to finance is the missing link in our SMME development strategy. By adding access to finance, Ikwezi allows us to enhance our well established business development services offering to tourism SMME clients.”
Sefa CEO Thakhani Makhuvha says: “Tourism has been identified as one of the key drivers for job creation in South Africa and features prominently in government priority programmes.
“sefa has identified this opportunity to collaborate with TEP in order to stimulate and foster SMME development and support. This partnership will enable SMMEs in the sector to access funding augmented by skills development and support.”
Siddo says Ikwezi is an expression of confidence in TEP by Sefa: “We are extremely honoured and humble to be working with Sefa to promote entrepreneurship development and job creation in South Africa. We are confident that Ikwezi will live up to our expectations of providing a viable alternative of providing access to finance to our SMME clients.”