Capital gains

SME funding is getting a boost via the exchange’s latest collaboration

Capital gains

In the world of finance, stock exchanges are often perceived as the epicentres of mammoth transactions involving giant corporations. Yet, beneath the spotlight that shines on blue-chip companies lies a quieter yet equally vital facet of these financial hubs – their role in nurturing and catalysing the growth of small businesses.

‘Small businesses represent the spirit of entrepreneurship. They’re agile, innovative and often the breeding grounds for disruptive ideas that can revolutionise industries,’ says Cleola Kunene, Head of SME Development and Customer Experience at the JSE.

‘These enterprises contribute significantly to employment, fuel economic diversification and foster competition that benefits consumers and society. However, small businesses need capital to flourish, whether to expand operations, develop new products or enter new markets. Raising this capital is often a formidable barrier,’ she says.

This is where the JSE serves as a lifeline. Stock exchanges offer businesses an opportunity to access a diverse pool of investors and can serve as the gateway to capital markets; providing smaller enterprises with access to the funds they need to expand and prosper. This includes facilitating access to both private capital and listings.

Kunene says the JSE runs several initiatives focused at SMEs, among them the JSE Enterprise Acceleration programme, which aims to support the growth of medium-sized companies sustainably, thereby driving employment and economic growth in SA. After a successful launch last year where 16 companies were aided, the second phase of the programme this year saw 14 companies join.

‘It’s an intense ecosystem of advisers, mentors, educational enablers and network programmes that enables entrepreneurs to focus on at least two to three of their identified key performance indicators, while working through a combination of individual mentoring and structured group sessions. There is also a strong focus on scaling, capital and funding requirements and operations,’ says Kunene. ‘There is no doubt this programme is a game-changer for SMEs and economic development. Not only are these businesses enjoying skills enhancement, but they are also now poised to be the solutions providers of the future.’

Allied to these efforts in developing smaller companies, in July the JSE joined forces with the Western Cape government’s Department of Economic Development and Tourism (DEDAT) to announce a collaboration on a three-year development programme to stimulate the growth of SMEs in the province. The first year (2023) will focus on a capital-matching initiative, whereby SMEs will be introduced to capital providers who are interested in funding the businesses in their growth phases.

The Capital Matching roadshow, held in Cape Town, aims to match 100 companies predominantly from priority sectors including tourism and film; agriculture and agricultural processing; real estate; the green economy; technology; and manufacturing, with the aim of scaling up the SMEs and driving job creation and increased economic activity across the province. This first initiative consists of three phases – recruitment of potential SMEs, capital or investor readiness support for them and then an event in Cape Town where the businesses will have the opportunity to present their investment cases to investors.

The key focus of the Western Cape government’s DEDAT is to provide access to economic opportunities with an emphasis on employability as a major component of the Western Cape’s Growth for Jobs strategy, aimed at creating ‘a jobs-rich, inclusive, sustainable and resilient provincial economy’.

The JSE and DEDAT will also work with other institutions such as the Small Enterprise Development Agency, and SME development organisations in the Capital Matching roadshow.

‘This access to capital can be transformative, allowing these businesses to scale their operations, create jobs and drive economic progress,’ says Kunene.

‘By supporting the growth of these small businesses, the JSE is not just fostering economic prosperity but also nurturing the very essence of entrepreneurship and innovation.’

By Patrick Farrell
Images: Gallo/Getty Images