South Africa could be in danger if unemployment and poverty keep getting worse and more common. A small and medium-sized business (SME) sector that is growing and stable does a lot to help with these problems. Last week, FNB said it would give R200 million to the Vumela Enterprise Development Fund, which was set up by FNB Commercial and Edge Growth in 2009 to help this sector.
Between 2010 and 2021, the first three phases of the Vumela Fund invested R 404 million and created over 6 500 jobs. For the first time in the SME development arena, the next phase will target two specific weaknesses in the SME sector: accelerating early-stage enterprises and keeping SA scale-ups in their owners’ hands.
Edge Growth is proud to have worked with FNB on the Vumela Fund since it began, and Richard Rose, CEO of Edge Growth’s Fund Management division, says, “We’ve seen firsthand how this program continues to help small businesses grow.”
“We know that investing in innovative businesses with new ideas can make the world a better place and help small businesses in South Africa, which are the key to long-term growth and development,” he says.
Missing-middle SMEs are small and medium-sized businesses that don’t fit into the traditional funding continuum.
They are too big for microfinance, don’t meet traditional credit criteria like collateral and balance sheets, are too small or in their early stages for private equity, and still need to make the high returns venture capital is looking for.
Gordon Little, CEO of FNB Commercial, says, “Our goal for Vumela was to build a model that would strengthen South Africa one small and medium-sized enterprise at a time.
By giving small and medium-sized businesses (SMEs) the proper funding and growth support for their size, stage of business, and funding needs, we can speed up their growth and help them through the complex process of scaling.
Heather Lowe, Head of SME Development at FNB, concludes: “SMEs are the engine of job creation, change, and lessening the gap between rich and poor.” We are very proud that through Vumela, we have been able to build a model that is both long-lasting and effective at improving this engine.
Over the last decade, we have extensively researched and mapped the South African finance environment. We are growing increasingly confident in Vumela’s ability to effectively answer the needs we have discovered. Pamela now plays an integral part in alternative finance, which is primarily intended to benefit and support investors.“