The Masisizane Fund is a non-profit organisation that was set up by Old Mutual to provide working and business support to entrepreneurs and small businesses.

Over the past 16 years, it has disbursed more than R800 million in direct funding to small and medium-sized Black-owned enterprises, largely in townships and rural areas.

About 45% of these small businesses are owned by women, and close to 20 000 jobs have been created.

Which small businesses can apply to the Masisizane Fund?

We started out in 2007 as an agri-financier and supporting rural businesswomen was a major focus for us. Agriculture remains important to us, but the Fund has branched out into other sectors. In fact, our current focus is franchising and specifically retail service stations, better known as petrol stations.

As you know, South Africa is a different country to the one we lived in two decades ago. The Masisizane Fund can’t be the same organisation it was back then because the entrepreneurial landscape has changed dramatically.

To remain a strategic and useful partner to small-business founders, we must change with them. We are, for example, financing and supporting more small businesses in information and communication technology (ICT) too. Our reasoning is simple: young people gravitate towards tech startups, and we would like to respond to their needs and preferences.

We have also begun to digitise all our processes. Young people don’t want to use a pen and paper to apply for funding. They want to do everything online, and the turnaround must be quick. If you provide a service, irrespective of the business you’re in, your customers and clients shouldn’t have to fit in with your way of doing things – you have to adapt to their needs.

The Fund had started working with tourism entrepreneurs in January 2020 but then the country went into lockdown two months later when Covid-19 hit. Now we are working with guesthouses, tour operators, restaurants and again, and we’re happy to report that the sector is really looking up.

How the Masisizane Fund helps small businesses

We are proud that during the pandemic we were proactive by first asking our clients how we could help them through a very tough time.

As a result, we placed moratoriums on repayments. In this way our clients could avoid getting a poor credit record due to defaulting on payments, which in turn would have compromised them financially. By partnering with our sister company, Old Mutual Insure, we could also provide interest-free loans to SMMEs that had received Covid funding relief.

Now, loadshedding is strangling small businesses. Unlike big retailers, small stores cannot afford to run generators every day, which they need to since a substantial portion of their inventory is perishable products.

As a result, we have added alternative energy solutions, including generators, inverters and solar power, to some of our funding packages.

Although we value helping businesses with direct funding, that’s only part of what the Fund does. We also offer ongoing support to help them to run successful, sustainable enterprises.

Masisizane used to fund subsistence farmers to help them to grow produce, but now we work with organisations that can also advise them on what and when to plant, what tools they should use and how to access the market.

Rural areas remain our focus and we are collaborating with the Phakamani Foundation, which works with women entrepreneurs, to help address rural unemployment and poverty. The more we refine our business model in these ways, the more jobs we can create.

The Masisizane Fund’s achievements

One of the achievements we are most proud of is the longevity of the Fund itself. When it was started, we envisaged a short-term intervention, but it has developed a life of its own and has become self-sustaining.

Masisizane began with R1 billion in 2007 and has distributed R800 million in the past 16 years. It now has R850 million in the pot as our investment strategy has produced good returns. In addition, as small businesses repay their loans, this increases the Fund’s sustainability and allows us to help even more entrepreneurs.

Something we don’t mention often enough is the Fund’s multiplier effect. We have created close to 20 000 jobs, but there are many thousands of people benefitting from this indirectly. Entrepreneurs can support their families, which is heartening.

Funding requirements

It’s vital to talk to communities and find out what their needs are. So often funders go into communities and tell them what they need, but it’s the people on the ground who really understand what is needed. If we’re going to move the dial on unemployment and poverty, we need to understand the overall ecosystem and partner with those people and organisations who are best placed to assist.

That said, we have a stringent screening policy. The funding criteria differs slightly for each sector but broadly speaking we require details such as:

• Your business plan and profile, including registration documents and a tax clearance certificate
• Statement of personal assets and liabilities
• FICA documents
• Three months’ bank statements for each director
• Your markets
• Proof of your own contribution

The Fund also requires SMMEs to have comprehensive insurance, including SASRIA cover. We won’t transfer funding unless a business can provide proof of insurance.

This is because many businesses are in areas where protest action and riots are common. If a business has been damaged because of a protest, we will work with the client to consider how best to use the insurance payout, like whether to use the money to pay off their loan or to rebuild the business immediately, or how to safeguard the business against further damage by protesters.

The future of entrepreneurship and the role of funders in South Africa

We’re cautiously optimistic about entrepreneurship in South Africa. We have to be optimistic in this business – but we can’t be so naive as to think everything will be fine tomorrow. The next five to 10 years will probably still be challenging for our country, especially for small businesses.

One of the Masisizane Fund’s aims is to fund the unfundable. If they then go on to become creditworthy in the eyes of a bank and no longer come to us for further funding, we will have met our objective.

In our view, financial education is an important enabler on this journey. If development funding institutions like us stay the course and provide comprehensive support to the small business sector, we believe we will achieve a lot.

SMMEs aren’t going anywhere – they can’t afford to – and we can’t afford not to have them in South Africa. If we’re going to grow as a country, this is the sector from where growth will come. The old trope is true: our big businesses today were the SMMEs of yesteryear.

Learn more about the Masisizane Fund and how to apply for working capital and business support.