Small Enterprise Finance Agency launches Enterprise and Supplier Development (ESD) Fund

The Small Enterprise Finance Agency (sefa) has launched an Enterprise and Supplier Development (ESD) Fund aimed at providing loans to targeted financial intermediaries with the goal of enabling and increasing lending to qualifying SMMEs with links to corporate and public sector supply chains.
The ESD Fund has an allocation of €20 million constituting equal contributions from the European Union (EU) and sefa to the amount of €10 million respectively. The EDSE Project Technical Assistance Team (TAT) is working closely with sefa to ensure implementation of the Fund increases accessibility and availability of budget support to qualifying intermediaries.
The ESD Fund is intended to overcome pre-existing challenges experienced by SMME within the supply chains across sectors. Some of these constraints relate to the capacity of SMMEs to provide quality goods and services to corporates and public sector entities. The benefit offered through the ESD Fund to SMMEs is at a lower cost base with zero return contribution to the EU greatly improving SMME competitiveness, sustainability and job creation.
Sefa’s has prioritised Enterprise and Supplier Development with the objective of strengthen business linkages between small and large businesses through increased participation of Small Businesses in mainstream supply chain (economic) activities, transforming supply chains, creating sustainable jobs and businesses and ensuring the implementation of diversity in supply chains as well as facilitating the localisation of procurement and spend.
The ESD Fund plans to provide loans to financial intermediaries to further enable and increase their lending to qualifying SMMEs. sefa as the implementing agency will partner with financial intermediaries (banking and non-banking). The intermediary selection criteria include assessments on; the provision of accessible funding, the creation of access to markets (supply chains), the improvement of SMME competitiveness and sustainability, intermediary capacity to implement and job creation potential.

The ESD Fund Implementation Journey

Sefa has recently concluded the evaluation of proposals received for the ESD Fund. All shortlisted intermediaries from the preliminary round are now in the process of submitting additional supporting information for final assessment and adjudication of proposals. The final adjudication process is expected to be concluded by end February 2020.

The Concept Note Evaluation resulted in a shortlist in two categories;
o Category A – applications with a min of R10 million and max of R30 million.
o Category B – applications for amounts greater than R30 million, up to a max of R60 million
The next steps are will include;
o Invitations to the shortlisted financial intermediaries to submit Business Plans;
o Evaluation of the Business Plans;
o Due Diligence process;
o Final shortlist and approval;
o Fund implementation

One of the long-term objectives of the Budget support is to facilitate transformation of financial intermediaries to develop a collective of BEE intermediaries that potentially have a commercial agreement to supply goods or services within a supply chain.
The EDSE will continue to assist in the provision of Business Development Services (BDS) support to sefa in order to build internal capacity for the implementation of the programme and to enhance further lending to SMMEs. The end goal is to equip intermediaries, with BDS capabilities that will ultimately benefit eligible SMMEs for financing.