State boost for SMMEs
IOL / 15 MARCH 2018 - 08:00 / GIVEN MAJOLA
Durban - The KwaZulu-Natal Economic Development, Tourism and Environmental Affairs Department plans to establish a revolving loan fund to assist small, medium and micro enterprises (SMMEs) who battle to stay afloat because of late payments.
MEC Sihle Zikalala disclosed this on Tuesday in an address at the regional and local economic development summit at the Durban International Convention Centre.
KZN Department of Economic Development Tourism and Environmental Affairs, Economic Empowerment chief director Dr Sixtus Sibeta, left, and SA Local Government Association provincial executive officer Sabelo Gwala during a question and answer session within the regional and local economic development summit in Durban.
The summit brings together local economic development stakeholders to consider innovative means to promote the local economy.
Zikalala said he wanted to address the financial problems of SMMEs by creating a revolving loan facility for all of those who were part of the Operation Vula and Radical Socio-Economic Transformation to, among other things, revitalise township and rural economies.
“This then would address the challenge where people would say we have done this on behalf of this government department but we have not been paid for a particular period and therefore are unable to continue working.
“Under this project, as long as you are able to prove that you have provided services that are required, then we would be able to advance payment and get the refund later. Through this we want to address the issue of the challenge of finance,” he said.
Zikalala said the department supported many other programmes as part of development.
These include the Gijima Local Competitiveness Fund, which was a conditional grant to stimulate local economic development in the KZN Eco-cycle waste management aimed at expanding the medical waste, disinfection and disposal capacity.
It also addressed the increased demand for specialised services in the market and had been provided with R5million, which was expected to create 25 new jobs, he said.
“We are also supporting projects in forestry, called Sihleza Forest Development, for which the department provided R3.1m, while the IDC and Sappi are funding the R3.2m balance.
“It will create nine full-time jobs and 52 temporary jobs during land preparation, planting season and harvesting,” he said.
Zikalala said they were also engaged in partnership with Toyota on a project called Toyota Kushuki Quantum Localisation, which involved the localisation of production of Quantum seats that were previously produced in Japan.
“They will now be produced here where local SMMEs will provide the seats for the Toyota Quantum,” he said.
Zikalala said the department had provided R6.5m for the project.
He said there was a need to use local economic initiatives as an alternative to supporting communities to achieve self- reliance, empowerment and participation because of the number of people who depended on social assistance rather than self-reliance.
“Through local economic development, we should be able to empower the people to participate meaningfully in the economy of the country,” he said.
SA Local Government Association provincial executive officer Sabelo Gwala said recent research by the provincial treasury found that money multipliers in local municipalities were quite low.
“If one invests R1 in a municipality, they would not get that much of a return on the investment.
Salga says we need to find a way for that money - which is invested through social grants, infrastructure investment, public service wages and all of those income generation methods - to stay in those localities.
“Buying locally and making sure the inputs also come from local suppliers, so that we do not have a situation where, down the line, we are still losing a lot of value in terms of income generation we manage to get,” Gwala said.
Gwala added that capacity remained a deterrent to economic development in local government.
“Our argument is that municipalities have not had an increase in terms of the money that they get so that they can hire qualified people and retain good skills so that those people are able to stay and improve those economies.
“If we can improve local skills in the municipalities and outside of them, we would be able to generate some kind of spin-offs that are sustainable,” he said.
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