Date: 29/03/2007

Source: Department of Trade and Industry

Title: Thabethe: Women's access to finance conference

Opening remarks at the access to finance conference delivered by: Deputy Minister of Trade and Industry Ms Elizabeth Thabethe

Programme Director Ms Mmabatho Matiwane
Deputy Director General EIDD, the Department of Trade and Industry (dti), Mr Lionel October
Head of Gender Entrepreneurship Markets, International Finance Corporation (IFC), Ms Amanda Ellis
National Manager: Small Business & Women's Markets: RBC Royal Bank: Ms Kristina Depencier
Chief Executive Officer South African Micro-finance Apex Fund (SAMAF), Mr Sitembele Mase
Team Leader of the dti Women's Fund, Mr Rindai Jaravaza
Executive Director-DFCU Uganda, Mr Moses Kibirige
Director�Equity Bank Kenya, Ms Winnie Imanyara
Officials from the dti
Officials from IFC
South African Women Entrepreneurs' Network (SAWEN) members
Women in Business
Ladies and gentlemen

Welcome

Good morning to you all. It is indeed a great honour for me to finally be able to be a part of this conference which is a stepping stone to us in declaring this year "the year of improving South African women's access to finance." Allow me Programme Director, to remind the house that the issue of access to finance is an international problem faced by many countries, both developed and underdeveloped. In SA both public and private sector, in trying to come up with possible solutions, have deliberated on this problem in different forums. Sadly so, the problem seems to be persistent due to various factors including the dynamisms of the Small Medium Micro Enterprises (SMMEs) sector itself. It is my personal belief that not only because the solutions that have already been proposed are not good enough, but also perhaps the fact that small business's needs are forever changing.

Definitely in SA this has been the case. The dynamism that I am refereeing to refers to the characters of the small business itself. This is made up of the size of the enterprise, its turnover, the product produced/services rendered and more importantly the profile of the owners and the managers of those businesses.

In SA today, immediately after the new dispensation we have seen an increasing number of new SMMEs who mainly come from the previously disadvantaged background. These happen to be black females coming from peri-urban and rural areas with some of them being physically disabled and young. These all make up what is referred to as "the second economy," all of these groups faced by the common challenge, being lack of access to finance. As much as the challenge might seem common, it requires different interventions of the same solution. Hence today's conference is focusing on addressing a challenge faced by one specific group who happen to be women.

Ladies and gentlemen, as already stated in my foreword, it is my personal and professional belief that facilitating equitable and easy access to finance is key for us to unlock the entrepreneurial potential amongst South African women. Fortunately, this view has been well supported by women from all over the country who have actively participated in our consultation drive as part of developing the National Strategic Framework on Gender and Women's Economic Empowerment. It is no secret that, historically, the South African financial markets, both from the public and the private sector, have and continue to be gender blind and thus a major obstacle for women to start, grow and strengthen their enterprises. This happens to be the case with the traditional banks, our very own dti financial institutions and the micro-lenders. In all their interaction with women, all of these institutions continue to have lending conditions that are unfavourable to the majority of SA women owning and managing small to medium size enterprises. This is a situation that, if not attended to, can negatively affect our economy by continuing to fail to attract new entrants to the economy as set by our current national economic objectives.

Programme director, ladies and gentlemen, today's conference is part of a long process we embarked on involving an extensive dialogue held between women in business, government and private sector. We, at the dti, have been at the forefront of coming up with solutions on how best to support and grow South African businesswomen. One of the solutions include establishment of the women's bank, which to some was too idealistic but not unrealistic in my opinion seeing that it has been achieved in other countries including Egypt and Canada. In an attempt to mainstream and integrate these issues as one of our economic imperatives, the issue has also been adopted as one of the major deliverables in last year's adopted strategy on engendering Accelerated Shared Growth Initiative for South Africa, championed by our Deputy President, Ms Phumzile Mlambo-Ngcuka. In ensuring that this happens, we as the dti have further identified this as one of our deliverables in the already finalised strategic framework on Gender and Women's Economic Empowerment.

As always expected, it is always important to investigate the extent of the problem to be able to come up with the right solution. In doing this we had to seek assistance and collaboration of our partners as part of the Public Private Partnerships. Fortunately as it has happened in other instances, the International Finance Corporation's Gender Entrepreneurship Markets, under the leadership of Ms Amanda Ellis, we managed to successfully conduct an in depth study on SA women's access to finance. I believe the full report of this study is in your packages. It was officially launched by International Finance Corporation (IFC) last year and I urge all of you to read it. Its contents are very informative and its conclusions are critical in terms of addressing the other facets of this problem.

Programme director, ladies and gentlemen, allow me to share with you in brief what we as the dti have also been doing to address this issue at a broad level. Ladies and gentlemen access to finance by small enterprises has been a thorny issue since the adoption of the White Paper on the Development and Promotion of Small Business in the country. Recently we have been working with banks to see how they can support the development of competitive economic clusters within and across provinces. The banks are examining the possibility of providing partial funding for the clusters. In the process, banking initiatives can be introduced to support community-based economic development plans and individual enterprises.

Through the Apex Fund, the dti seeks to remove institutional constraints to successful SMME lending and the mobilisation of community. The fund distributes loans of up to R10 000, serving the micro-finance market. The fund has been launched in all provinces and has disbursed more than R10 million in loans through micro-credit outlets. Additional partner organisations are ready to disburse and the fund is set to expand its business partner portfolio to fifty by the end of the year. This will enable it to disburse its full-allocated budget by year-end, however progress will depend on improving the readiness of partner organisations.

In February 2006, Khula and Business Partners created an instrument for SMME start-up funding focusing on the provision of loans of R10 000 to R250 000 to black entrepreneurs which is also up and running in three provinces and has disbursed an amount of R6 million in two months, demonstrating further progress in filling this critical funding gap. In addition, the Khula Credit Indemnity Scheme has also been successfully revised with commercial banks. Khula has also successfully launched the first ever South African Start-Up Fund, with an initial capital amount of R150 million, specifically for the benefit of new black entrepreneurs.

The Industrial Development Corporation (IDC) has already allocated R1 billion to the SMME sectors where 54 projects to the value of R315 million have already been approved. There is also a healthy pipeline of projects (in excess of R500 million) and it is envisaged that the entire amount of R1 billion has been utilised last year alone. I would also like to inform the house that the National Empowerment Fund is open for business with a new CEO and a Board. I am pleased to report that transactions to the value of R491 million have been approved for the period up until the end of March 2006.

Ladies and gentlemen, with regards to women, you have heard us mentioning the establishment of the much-anticipated women's fund. In pursuit of this major intervention, the Gender and Women's Empowerment Unit has been working tirelessly together with some of our partners like the Women's Development Banking. It is with great relief to publicly announce that indeed, impressive progress has now been made towards the establishment of this fund. As part of sharing with you, you will get to hear the strategic importance of establishing this fund. This importance has provided us with the basic foundation on how the fund should be established. It is one of our good intentions that the fund addresses the main problems experienced by women in accessing finance. Further we intend to use it as a leveraging tool to other government and private sector related funding mechanisms. Its unique selling point should be the criteria to access, the specific type of enterprises it will support and more over the difference it will make in further growing and diversifying women's enterprises in this country. Since the study has already confirmed that women borrowers have lower default rate than men, we are therefore convinced that women will continue to work with us in ensuring the fund's growth and sustainability. It is on this basis that I now declare this conference open and hope to see you at the next forum where we will be launching the fund itself.

I wish you well in your deliberations and thank you for joining us to day.

Issued by: Department of Trade and Industry
29 March 2007