Trade and Industry Minister Mandisi Mpahlwa at the weekend launched the South African Microfinance Apex Fund (Samaf).

Speaking at the launch he said that microfinance has an important effect on stimulating development at a local level.

“It provides households who are usually excluded from the banking sector with access to financial services.

“And, for poor and vulnerable people, microfinance is more than a tool that can be used to generate income, it presents them with choices, enabling movement beyond survivalist activities towards accumulating assets, planning for the future, access to better nutrition and the ability to provide for a better education.

“Microfinance can be a means to break out of the vicious cycle of poverty.”

Mpahlwa added that it is the women of society who benefit the most from these structures.

He stressed that the fund will not disburse funds itself, but will partner with regional and local organisations.

These organisations already have experience in working with the communities and understand the day-to-day problems that community members experience.

Mpahlwa said that special measures need to be looked at to resolve the issue of collateral.

“There are ways of using group lending schemes and other forms of collateral to overcome such barriers.”

Community members will benefit, with loans of up to R10 000 disbursed through the partner organisations.

“The primary target market of Samaf and its partners are micro-entrepreneurs, as well as households that have an income of less than R1 500 per month.” Other financial services will be provided in the future, such as savings cooperatives, burial societies and stokvels.

Samaf is already working with four retail financial intermediaries, three of which were previously part of Khula, to assess their budgetary and capacity needs. The fund will support their current outreach projections and monitor the impact of interventions - as they are already relatively established.

In addition, Mpahlwa said, the discussions regarding the migration of Khula's micro-credit outlets to Samaf have been concluded, and this integration will be completed by June.

Mpahlwa named other Samaf partners, including the Savings and Credit Co-operative League of South Africa, the Financial Co-operative of South Africa, the South African Federation of Burial Societies, the Dora Tamana Savings and Credit Co-operative, and Independent Village Banks.

Strategic partnerships have also been initiated with the Postbank, Ithala and the Department of Agriculture.

The fund's capacity-building interventions, already partnering to improve governance structures, aims to have partners disbursing retail finance products to their membership base within a few months.

This will ensure that loans are issued at an acceptable level of risk and the organisation is able to achieve sustainability.

Some R10-million will be allocated to this capacity-building.

Mpahlwa invited other organisations to partner with the fund.

The launch of the fund, according to the Minister, is one of the ways that government finds practical solutions to help South Africans overcome poverty, and it coincides with the UN's International Year of Microcredit - part of the UN's millennium development goals.

In setting up the fund, South Africa paid attention to the UN's objectives as well as liaising with it.