NEF: Fund to boost black entrepreneurs

The National Empowerment Fund (NEF) is a government agency set up to provide capital for black economic empowerment transactions.

BEE Codes of Good Practice
The aim of the NEF is to ensure that black economic empowerment benefits not only the black elite but also women, workers, the youth, people with disabilities and the rural poor. (Image: Brand South Africa)

Brand South Africa reporter

Established via legislation, the NEF is a driver and a thought-leader in promoting and facilitating black economic participation through the provision of financial and non- financial support to black empowered businesses, as well as by promoting a culture of savings and investment among black people.

The NEF Trust operates under the umbrella of the Department of Trade and Industry (DTI) and is governed by a board of trustees which is chaired by the director-general of the DTI.

It has as its strategic objectives:

  • promotion and support of business ventures pioneered and run by black people;
  • promotion of the understanding of equity ownership among black people;
  • provide black people with direct and indirect opportunities to acquire share interests in state-owned and private business enterprises;
  • encourage and promotion of investments, savings and meaningful economic participation among black people.

The NEF’s mandate and funding are in line with national growth and industrial objectives which aim to increase South Africa’s competitiveness and support for co- operatives and small businesses.

As the debate concerning what constitutes meaningful and sustainable BB-BEE evolves, the NEF says it anticipates future funding and investment requirements to help black individuals, communities and businesses achieve each element of the Codes of Good Practice on B-BBEE.

These include a focus on preferential procurement, broadening the reach of black equity ownership, transformation in management and staff and preventing the dilution of black shareholding.

Broad-based black economic empowerment
Broad-based black economic empowerment, or B-BBEE, is a strategy to ensure all South Africans are able to meanfully participate in the mainstream economy. (Image: Brand South Africa)

Empowerment dividend

The agency’s main investment areas are construction, information and communication technology and media, and food and agro-processing.

The impact of the NEF is not driven only by financial terms, but by the “empowerment dividend”. This is made up of criteria such as:

  • Broad-based black economic empowerment (ownership, management control, employment equity, skills)
  • Black women empowerment
  • Job creation
  • Growth sectors
  • Geographic spread
  • Investment return
  • Transactions concluded

Focused funds

SME and rural and community development

The iMbewu Fund supports black entrepreneurs wishing to start new businesses as well support existing black-owned enterprises with expansion capital. The Fund supports these entities by offering debt, quasi-equity and equity finance products. Funding threshold: R250 000 to R10-million.

The iMbewu Fund offer supports to black entrepreneurs with expansion capital. (Image: SA Tourism)

The NEF Rural and Community Development Fund provides investment from R1-million to R50-million to commercially viable projects that seek to economically benefit communities in rural and peri-urban areas. Sectors to be funded include: primary and secondary agriculture; agro-processing; manufacturing; tourism; agro-forestry; retail property development; aqua and marine culture; small-scale mining; renewal energy.

Corporate finance and venture capital

The NEF uMnotho Fund is designed to improve access to BEE capital. It provides investment debt and equity solutions from R2-million to R75-million, focusing mainly on providing capital to finance acquisitions, expansions and new ventures.

Strategic projects fund is focused on increasing the inclusion of black people in early-stage projects. While sectors are those identified as important drivers of growth by the government, each project will be judged on economic merit and ability to deliver on the development mandate.

How do I apply for funding?

Whether a start-up or an exisiting business, applicants must fill in an application form once they have familiarised themselves with the NEF requirements and products. The application serves as a screening document, after which you may be requested to draw up a comprehensive business plan.