The US Agency for International Development (USAID) has partnered with Cadiz Asset Management to launch the Cadiz Protected High Impact Fund, aimed at creating thousands of jobs in the next eight years by increasing access to finance for small and medium-sized enterprises (SMEs).

As per its development credit guarantee programme, USAID is providing a risk-sharing agreement for Cadiz to raise over R1-billion of South African private capital for the fund.

The US government said in a statement that by mobilising private capital to support intermediaries that were lending to SMEs, the USAID-Cadiz partnership was directly addressing the funding constraints in the sector.

It stated that the financing gap for SMEs limited South Africa’s growth potential as these enterprises served as the backbone of economic activity.

Cadiz CEO Frank Cadiz said at the launch, in Johannesburg, that the USAID partnership enabled Cadiz to access pools of capital that were unavailable previously, owing to the perceived level of risk associated with this area of investing.

“The fear of capital loss has been one of the factors limiting capital rising historically and the mitigation of risk through the introduction of the USAID guarantee will explicitly remove one of the hurdles preventing capital allocation in this area,” he enthused.

A waste management company mentoring over 50 small enterprises that employ about 700 workers, would be one of the first to receive debt financing from the Cadiz fund.