One of the mandates and roles of the South African government is to ensure and enhance equal economic development and support for all the citizens. It achieves this through its numerous government funding projects. The National Empowerment Fund is an excellent example of South African government business funding projects that specifically focuses on supporting the Black community Business owners and entrepreneurs.
By simply applying for the National Empowerment Fund, various groups of black entrepreneurs such as youth, women, men, and the entire South African black community business owners and future business investors are guaranteed to achieve sustainable success. Let's take an in-depth look at what NEF means and its application details.
National Empowerment Fund products
The National Empowerment Fund Act (No. 105) that was adopted in 1998 by the South African government led to the establishment of the NEF funding program. Apart from the provision of monetary fund support, NEF also provides the black community business entrepreneurs with non-financial knowledge and consultation services that are key in empowering their various businesses. This includes cultivation of a saving and investment culture among the black population.
The National Empowerment Fund draws its mandate from South Africa's Department of Trade and Industry (DTI). Through the Chairmanship of the Department of Trade and Industry, NEF is administered by a qualified board of trustees. On the other hand, NEF operations and decisions are legally governed by the Public Finance Management Act (No. 1) adopted in 1991, Protocol on Corporate Governance within the Public Sector (2002), King (III) Report on Governance for South Africa, and finally the National Treasury Regulations.
National Empowerment Fund main role
As stated above, the main objective of NEF funding is to specifically support and enhance black South African citizen's economic empowerment dividend. It makes future economic forecasts on the necessary business funding and investment requirements that are essential in assisting all black investors and business owners accomplish every component of the Codes of Good Practice. These components range from enabling the black entrepreneurs to achieve equity in broadened ownership limit, effective management and employee reorganization, preferential procurement, and curbing the diminishing rate of black shareholding capacity.
According to NEF official website known as "nefcorp,' NEF "assumes a predominantly equity-based risk to maximize the Empowerment Dividend. The reward should balance the risk with the application of sound commercial decisions to support national priorities and government policy such as the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) or targeted investments through the Department of Trade and Industry's (the dti's) Industrial Policy Framework (IPF)."
In a nutshell, the duties of National Empowerment Fund is to enhance and empower the various existing South African government Development Financial Institutions (DFIs) by authorizing them to collaborate closely to collectively promote Broad-Based Black Economic Empowerment (BB-BEE). DFIs operations are sure to be readily endorsed and empowered based on NEF sharing its rich expertise information and legal know-how concerning BB-BEE.
NEF business operational pillars
NEF is composed of 4 primary business operational pillars. These pillars resulted from numerous passed charters such as Broad-Based Empowerment Charter, various state policies, and sectorial charters. All these were based on an in-depth understanding of the preceding South African market needs.
Corporate Transformation Services
Market Making Services
Group and Entrepreneurial Schemes
What business sectors does the NEF fund?
As a government based business fund, NEF offers its financial and non-financial services to a vast number of business sector titles. Through the NEF detailed know-how, it focuses on some of the popular businesses carried out by most South Africa black community members. These range from food-related, transportation, energy, among others.
- Food and Beverages
- Information and Computer Technology
- Financial Services
- Construction and Materials
- Chemicals and Pharmaceuticals
- Wood and Paper Industry
- Mining Services
- Motor Industry
- Printing Services
- Textile Industry Services
- Tourism and Entertainment
The obtainable funds of the National Empowerment Fund
NEF is a funding package that consists of a total of 4 available funds.
This NEF fund is tailored to assist black entrepreneurs who are planning or have an interest in starting up a new business venture. iMbewu Fund is also eligible to black entrepreneurs who want to offer expansion capital support to their fellow black entrepreneurs who already possess existing business ventures. iMbewu Fund supports such business enterprises by providing them financial support in either debt agreements, quasi-equity, and finally equity finance products. The allocated funds range from R250 000 as the minimum amount and R10 million as the maximum amount.
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This fund is tailored to fit black entrepreneurs to improve their access to Black Economic Empowerment (BEE) capital. uMnotho Fund is composed of 5 different financial products. These include:
- Acquisition Finance
- Project Finance
- Expansion Finance
- Capital Markets Fund
- Liquidity and Warehousing
These services are a source of capital to enterprises that are either managed or belong to black business persons. They are also a source of capital to black business persons who are in the process of buying equity shares in established business premises that are owned by both black and white entrepreneurs. Furthermore, black entrepreneurs who are starting new businesses, expanding their existing enterprises, and Black Economic Empowerment (BEE) enterprises that are in the process /that the owner wants to list on the JSE.
Rural and Community Development Fund
This fund was tailored to enhance sustainable development of black resident's social and economic interactions. The fund is aimed at boosting the rural economy hence growth and development of the rural economy by focusing on the specific funding of sustainable businesses. This is achievable by transforming rural communities into becoming mobilized legal enterprises or cooperatives. The fund enables the black people's community to engage in large-scale economic transactions hence achieve the transformational financial goals in South African rural areas.
Rural and Community Development Fund products:
- Acquisition Finance
- Expansion Capital
- Project Finance (New Venture/Start-up/Greenfields)
Its funding limit is R1 million, while the highest available fund is R50 million.
Strategic Projects Fund
This fund is directed based on the South African government SPF's information that focuses on industrial development. This is through the Department of Trade Industries National Industrial Policy Framework. The fund is also dependent on the report by the Industrial Policy Action Plans (IPAP) alongside the government's growth plan strategy.
How to apply for [National Empowerment Fund] (NEF) support
The first step involves you filling the NEF application form. This is the avenue that will enable the officials to go through your business case and make the necessary assessments concerning the NEF criteria.
Secondly, it is essential that your business proposal is filled with exclusive comprehensive data to enhance commercial viability and the financial status of your enterprise. Due to this, the form is equipped with straight forward business plan guidelines that will provide you with necessary information concerning the vital topics and sections that you should cover before submitting your business proposal.
After submission of your business application form based on satisfaction of all the stated requirements, it will go through the relevant processes as you await final approval and funds to be released.
NEF funding requirements
- NEF application form
- Deviant form from the available company/business members confirming the acknowledgment of the provided NEF application form details
- Three years Audited financial records of the business transactions
- Business projections for five years
- Current management accounts
- Applicant personal statements that include both assets and liabilities of all the current company members that are inclusive of the married members with their spouses
- Business bank statements (past 12 months)
- Both certificate and Identification cards (ID) copies of all the business members
- CK 1/ CK 2
- CM1 attached with memorandum and articles of association
- Franchisers detailed profile if available
- In-depth information on why your business is on sale
- Sales agreement (where applicable)
- The CV of Principal Applicant
- Proof of residence through Fica compliance
- Historical financial records of business-related franchisers
- Information concerning the lease agreement concerning the new company
187 Rivonia Road, Morningside, Sandton, 2076
P.O. Box 31, Melrose Arch, Melrose North, 2076
The dti call center: 0861 843 384
Tel: 011 305 8000
Fax: 011 305 8001
You can also access a step by step detailed instruction of applying for the NEF fund through its website and its online available documents such as the National Empowerment Fund pdf documents.
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Source: Briefly News