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NATIONAL COUNCIL OF PROVINCES
QUESTION FOR WRITTEN REPLY
QUESTION NO.: 290
DATE OF PUBLICATION: 20 AUGUST 2010
Mr K A Sinclair (COPE-NC) to ask the Minister of Economic Development:
Whether any progress has been made by a certain company (name furnished) to
advance economic development of the bottom end of the market, especially
the informal business sector where less than R50 000 was needed by a
business; if not, why not; if so, (a) how many entrepreneurs who needed
less than R50 000 were supported in the past three years up to the latest
specified date for which information is available and (b) what steps will
his department take to ensure that the bottom end of the market is
adequately catered for?
CW372E
REPLY
The development of small enterprises and cooperatives is critical to
economic development in South Africa. Khula was established in 1996 to
provide financial support in the form of guarantees for loans that
commercial banks and other financial intermediaries provide to small
businesses. Two of Khulaâs clients are retail financial intermediaries
(RFIs) who specialise in short-term, small-scale loans. These loans are
made predominantly to group borrowers, often groups of women in the
community, who serve as guarantor of loans to individuals in the group.
Typically in this model individual borrowers will rapidly repay the loan
and take out further loans and in this way thousands of small-scale loans
are made each year.
Figures provided by the RFIs to Khula, which have not been independently
verified by the Economic Development Department (EDD), indicate that
412,565 loans have been made over the past three years, 497 to individuals
and the balance to groups.
Khula and the South African Micro-Finance Apex Fund have been transferred
to EDD with effect 1 April 2010. The Department together with the
Department of Trade and Industry has established a task team on Micro-
Finance to review the agenciesâ support for borrowers at the lower end of
the market.