26 January 2021
His Excellency, the State President, Mr. Matamela Cyril Ramaphosa,
My colleague, the Minister of Tourism Honourable Mmamoloko Kubayi-Ngubane,
Deputy Minister of Tourism, Honourable Fish Mahlalela,
Deputy Minister for Small Business Development, Hon Zoleka Capa,
Chairpersons of the Portfolio Committees of Small Business Development and Tourism and the Select Committee of Trade, Tourism and Small Business Development,
The President of the Black Business Council, Mr Sandile Zungu
It is our pleasure, as the department of Small Business Development and its agency, Small Enterprise Finance Agency (popularly known as SEFA) to be launching the TOURISM EQUITY FUND in partnership with the Department of Tourism.
For us, it is an embodiment of what we have sought to achieve since the start of the 6th Administration, which is ensuring that SMME support across government is coordinated. In this regard, I would like to extend our appreciation to my colleague, Hon Mmamoloko Kubayi-Ngubane for her leadership and partnership. As the Minister responsible for SEFA, I have committed to her and the Department she leads and now to you, Mr President and the SMMEs in the tourism sector that the improved services they are starting to experience at SEFA will be extended and will strive for continuous improvement with the implementation of this Fund.
We have committed to position SEFA as a leading government financing support agency for SMMEs in the country. Meaning that beyond the funding responsibilities of SEFA, we have positioned SEFA to mobilise and partner with other SMME funders including commercial banks, as evidenced through the Tourism Equity Fund and our other schemes such as the Spaza Support Scheme, the Fruit and Vegetable Vendors Support amongst others. Our goal is to leverage government funds to improve access to other funds by SMMEs.
The Tourism Equity Fund will focus on the following sub-sectors:
a. Accommodation, e.g. Hotels, Lodges, Resorts and Self-catering Units, Backpacker facilities.
b. Hospitality and related services, e.g. Conference and Convention venues attached to a substantial accommodation element, privately owned attractions in already developed tourism nodes.
c. Travel and related services, e.g. Tour operators.
d. Any other tourism related products and initiatives not referred to above which supports tourism development imperatives and economic impact in terms of job creation, geographic spread and strengthening the tourism offering of South Africa.
This financial support will be provided on the following basis:
a. Funding to acquire controlling equity in entities in the Tourism sector.
b. Funding of the assets of existing entities in the Tourism sector for the explicit purpose of setting up a new entity operating in the sector.
c. Asset finance and working capital that would be required in relation to the acquisition of the Tourism entity for expansion or operational purposes.
As already indicated the funding terms are structure in such as way as to make the repayment easy or what we term patient capital, and the terms are as follows:
a. The grant capital injection would be up to a maximum of R20 million as determined by the Fund scorecard.
b. The sefa loan will be according to the following terms:
- Funding of up to a maximum of R15 million per enterprise.
- The term of the funding will be determined by the business cash flows up to a maximum of
- 120 months per enterprise with a maximum moratorium of 12 months.
- The loan will be priced according to the sefa pricing matrix.
We also understand the importance of the non-financial component of support. The non-financial support includes the following:
a. Mentorship support will be provided to investees that require financial, technical or business support based on needs analysis.
b. Market access will be facilitated with various industry partners in order to ensure that entities are sustainable.
c. Investment monitoring and support will be provided.
It is important to point out that this Fund is for entities that are 100% owned by South African citizens and they can apply through a dedicate email address firstname.lastname@example.org.
Mr. President, this is our first step to the realisation of the vision that you outlined for building an inclusive economy through the Economic Reconstruction and Recovery Programme.