Access to financing is one of the most critical factors in building a thriving small business sector in SA. Small and medium-sized enterprises (SMEs) drive economic growth, create jobs and foster innovation. However, many entrepreneurs struggle to secure the funding they need to start, sustain and expand their businesses. Without sufficient financial support, SMEs face challenges that limit their ability to grow and contribute meaningfully to the economy.
One of the key reasons why financing is essential is that it provides the necessary capital for businesses to start and operate effectively. Many aspiring entrepreneurs lack personal savings or collateral, making it difficult for them to launch their businesses. Loans, grants and investment opportunities help cover essential costs such as equipment, inventory, rent and salaries. Without this support, many small businesses fail before they even get off the ground.
‘If we want to see a more inclusive and competitive economy, we need to ensure SMEs have the funding they need to scale and succeed,’ says Cleola Kunene, Head of SME Development at the JSE.
Access to financing allows businesses to scale and expand, she says. ‘Growing busi nesses need funds to hire more employees, improve their products or services, and reach new markets. In South Africa, where unemploy ment is a major challenge, financing small businesses can help create job opportunities and boost economic development. A thriving SME sector also strengthens local economies by increasing demand for goods and services.
‘For our economy to thrive, we must bridge the funding gap for SMEs – these enterprises are the engine of job creation and long-term growth,’ says Kunene.
Despite their importance, many SMEs in SA struggle to access financing because of strict lending requirements, high interest rates and bureaucratic processes. To address these challenges, financial institutions have been providing easier access to funding through a variety of programmes.
The JSE’s SME Rise Capital Matching initiative, for example, offers qualifying SMEs an opportunity during a capital-matching roadshow to pitch their businesses to potential funders, facilitating access to critical funding.
The roadshows are a collaboration between the JSE, various government institutions, private-sector companies, funding bodies and economic development organisations.
African Bank is one of the companies involved. Zweli Manyathi, CEO of business and commercial at African Bank, says the institution recognises the important work being done by the JSE through the initiative.
‘We are delighted to be part of an initiative that mirrors our profound legacy, and our commitment to growing and backing businesses in South Africa. We salute the audacious spirit of the entrepreneurs who have joined this initiative. We look forward to partnering with them on their journey to business success.’
During the capital-matching roadshow events, companies that meet the criteria and have successfully completed the funding readiness programme will have the chance to engage directly with prospective funders. Participating capital providers will offer a range of funding solutions, such as debt financing, invoice and purchase order financing, equity options for angel and venture capital investors, enterprise supply development and grant funding.
Matches are carefully made based on the specific funding needs of the SMEs and the strategic mandates of the funders.
In 2023, the inaugural roadshow in Cape Town successfully achieved a 62% match rate among 90 participating SMEs and financing partners, and the initiative was expanded to the Free State and Eastern Cape provinces late last year.
‘This expansion has been pivotal in promoting inclusive economic growth by ensuring that all regions, including smaller provinces have access to the necessary resources and opportunities to flourish,’ says Kunene.
‘This year, we have seen an encouraging turnout from both funders and SMEs, highlighting the growing need and market readiness to fuel the much-needed growth of SMEs across the country.’
