VENTURES: Tebfin Fights Rising Unemployment with Entrepreneurship
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Statistics South Africa has reported that between April and June of this year, 61,000 South Africans lost their jobs. This brings the total number of unemployed South Africans to 4.31 million. This situation is detrimental to the South African economy, and is expected to worsen. Economists predict that a continued rise in job losses could negatively impact consumer spending and stall economic recovery.
The obvious solution is to create new business opportunities, which in turn will create new jobs.
Unfortunately, as many entrepreneurs and start-up businesses know all too well, securing the funding necessary to turn a well-spotted opportunity into a small business which could put bread on a family’s table is virtually impossible with the constricted conventional lending procedures of big banks in South Africa.
Stemming the tide of growing unemployment, private lender Tebfin has put its weight behind growing small businesses by providing SMMEs (small, medium and micro enterprises) with the necessary tools and financial backing, specifically to secure public sector tenders.
Where other lenders would balk, Tebfin embraces the challenge of creating a successful foundation for these perceived higher-risk SMMEs.
“We recognise entrepreneurial potential and harness it by providing the necessary funding,” says Tebogo Mogashoa, Tebfin’s chairman and founder.
“The majority of small business owners battle to obtain funding because they cannot be boxed within the rigid requirements of traditional lending institutions,” adds Mogashoa.
He points to traditional credit checks as an example. “In our experience, this hurdle often unnecessarily obstructs the creation of a new entrepreneurial business,” explains Mogashoa.
Tebfin takes a forward-looking position based on the prospect of success, creating tailored support to achieve this. In return the entrepreneur provides cessionary rights to their public sector contract which acts as security and serves to mitigate risks. “This way, hundreds of small contractors get access to working capital, that they otherwise wouldn’t. They also enjoy access to valuable support resources which are hard to come by in the competitive business environment,” adds Mogashoa.
Tebfin has helped more than 500 SMMEs to build their businesses over the past three years. “It’s the initial jump-start SMMEs require,” says Mogashoa. “As they unlock profits they are able to move into more formal and traditional operating frameworks, creating sustainable business entities.”
In addition, Tebfin introduces entrepreneurs to established supplier relationships. This means new SMMEs get larger discounts and value-add services, advantages usually only available to established companies which have achieved critical mass. “Small businesses often don’t have the leverage to negotiate a better deal,” Mogashoa says, “We do this for them, where possible.”
Tebfin also assists inexperienced SMMEs in managing their business. Invoice discounting is just one of the products applied to achieve this. “By issuing invoices and collecting invoices, Tebfin saves SMMEs valuable time, ensures faster access to cash flow and allows the SMME to concentrate on delivering on their contracts.” SMMEs are assured they will receive payment and are only required to pay a small percentage in commission in return for the service.
Tebfin’s material supply service operates on a similar basis, assisting entrepreneurs to source, pay for and deliver supplies in exchange for a 3 to 5% commission – but often saving the entrepreneur amounts substantially higher than this.
In addition, a 24-hour client contact centre, with trained staff, is available to guide and advises clients.
Amongst the new business which Tebfin has empowered is Elmectron (Pty) Ltd, which has been able to take on new jobs, because of the invoice discounting offered by Tebfin. Owner, Jan Coetzee, whose company provides building, electrical and mechanical services to the public sector, attributes his success to Tebfin’s financial support and services.
“Without Tebfin, my business would have suffered. We battled before, but once we teamed up with Tebfin, it was as easy as submitting our invoices and they would pay us promptly. They in turn would then recover the amount from the government,” says Coetzee.
“This helped as I was able to take on new jobs, and I didn’t have to worry about finding the funds to buy supplies and pay expenses. The team at Tebfin is helpful and professional, and it is a pleasure to deal with them. I trust them and am able to phone them at anytime,” adds Coetzee.
Mogashoa notes that:“SMMEs have the greatest potential to contribute to growth of our economy. Very often these businesses need nothing more than a push start on the path to success and Tebfin is structured to do exactly this.”
Of the 62 countries currently tracked by Bloomberg, South Africa’s unemployment rate remains the highest. In addition, according to Yandiswa Mpetsheni, executive manager of labour statistics, more than 60% of those unemployed in South Africa have been without jobs for more than a year. “It’s out of this need to survive that many SMMEs have been created,” says Mogashoa.
“These entrepreneurs start with very little and often don’t have the knowledge or skills to secure funding. We’re pleased to play a part in enabling SMMEs to get the capital they need to keep them in business.”
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