Investing in SMMEs can be beneficial, summit hears

Although SMMEs are the lifeblood of South Africa’s economy and employ around 60% of the workforce, they are most at risk due to very little support and limited access to capital.

FILE: The Standard Bank SME Summit in partnership with Business Day hosted a webinar on reigniting businesses in the new economy. Picture: 123rf.com

Author: Amy Musgrave

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Banks and equity funders in South Africa plan to ramp up their support for SMEs over the next five years as they are critical to help rebuild the economy. According to panelists at a Standard Bank SME Summit in partnership with Business Day webinar on reigniting businesses in the new economy, investing in the SME sector market can be mutually beneficial for financial institutions, investors and smaller businesses.

Although SMMEs are the lifeblood of South Africa’s economy and employ around 60% of the workforce, they are most at risk due to very little support and limited access to capital. But both Standard Bank and Jaltech Fund Management told the webinar that they were looking to change this situation. Jaltech Fund Management co-founder and partner Gaurav Nair said that already investors were moving away from the traditional markets of listed equities for their returns.

“So what lies ahead is investing into the alternatives and the alternatives are equity funding into small and medium-sized businesses and what lies over there is that you have really good deals as an equity investor because a lot of the other funders are not looking there… it’s the really good deals that you are not competing for,” he said.

“They are great businesses (and) they can give great returns if only they could get the equity funding. And so, what we see coming ahead, is more and more investors realising the opportunity and more and more money coming into this sector and that providing business owners much needed growth… and the growth that the country needs.”

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