ekurhuleni international onvention entre ity of ekurhuleni | … · 2018-10-04 · presenter:...

Ekurhuleni International Convention Centre

City of Ekurhuleni | Gauteng, South Africa

FORUM PROGRAMME

Day One I THURSDAY 28 MARCH 2019

PROGRAMME DIRECTOR: Teboho Mafodi, Founder: TM Group

07h30-09h00 Registration

09h00-09h05 Introductory Remarks

09h05-09h10 Official Welcome

09h15-09h45 Opening address by Minister of Small Business Development

09h45-10h15 Keynote presentation on Entrepreneurial Financing

10h15-11h15 PLENARY A: The impact of bank and credit regulation on access to finance for SMEs

11h15-11h30 REFRESHMENT BREAK

11h30-12h30 PLENARY B: Risk mitigation in SME financing The role of credit and mutual guarantee schemes and business advising

12h30-13h30 Plenary C: The role of development finance institutions (DFIs) Mandates, capitalisation and business models

13h30-14h15 LUNCH

14h15-15h45 PLENARY D: Corporate Enterprise and Supplier Development (ESD) financing A game changer for SME access to finance?

15h45-16h30 PLENARY E: The impact of late payment on SME financing An elephant in the room?

16h30-18h30 NETWORKING COCKTAIL

Day Two I FRIDAY 29 MARCH 2019

09h00 - 09h10 Day 1 Review

09h10-10h10 PLENARY F: Non-bank, business angel and online SME financing State of the field, issues and future directions

10h10-11h00 PLENARY G: Moveable collateral registries Contribution to increasing SME access to finance and future directions


11h15-11h55 PLENARY H: The challenge of thin files Is sharing of positive borrower information the way to go?

11h55-12h55 PLENARY I: Borrower capacity and conduct Is it an important inhibitor to access to finance being neglected?

12h55-13h35 PLENARY J: Co-operative Financial Institutions

What role in SME financing, current and future?

13h35-14h20 LUNCH

14h20-15h20 PLENARY K: Distillation of key Forum themes and mapping of future directions

15h20-15h35 Closing Address by Deputy Minister of Small Business Development

15h35-16h00 Forum wrap up and departure

28-29 March 2019 |

Ekurhuleni International Conven-

tion Centre |

City of Ekurhuleni |

PROGRAMME AT A GLANCE

Foreword

It is a generally acknowledged fact that access to finance is one of the main challenges confronting entrepre-neurs who seek to start and grow their own businesses. Difficulties in accessing finance are particularly pro-nounced for start-up, young, and micro to small businesses. In its 2017 economic review of South Africa, the Organisation for Economic Cooperation and Development (OECD) found that bank lending to SMMEs account-ed for only 26% of all business lending, which, according to the organisation, is low relative to comparison countries. Several other studies have come to similar conclusions. All in all, therefore, access to finance re-mains a challenge for South African SMEs. What is even more alarming is that recent studies have revealed that instead of showing signs of improvement, the situation is getting worse, particularly at the lower end of the SME spectrum and earlier stages on the business lifecycle. The reasons for this situation are as many and varied as they are complex.

Regrettably, discourse on this pressing challenge has been characterised by blame trading instead of construc-tive dialogue among all players, to seek workable solutions. It has become clear that these challenges, complex as they are, cannot be resolved without constructive engagement among all key players. What is needed is a platform for inclusive engagement and solution-seeking, that is devoid of blame attribution. This is the platform the Enterprise Financing Forum seeks to provide. The inaugural Enterprise Financing Forum brings together a broad range of players in the SME financing field for constructive engagement on how to improve access to finance for SMEs. It covers a wide range of topics, some of which, though not usually associated with financing at all, have an equally significant bearing on SME financing. The Forum seeks to accurately identify the key challenges and understand them as they are experienced first-hand by various stakeholders, and pro-pose workable actions aimed at tackling the challenges together.

We wish to express sincere gratitude to the Forum sponsors, the Department of Small Business Development (DSBD), City of Ekurhuleni and Small Enterprise Finance Agency (SEFA) and to partners that have endorsed the Forum, namely All Africa Association for Small and Medium Enterprises (AAASME), Banking Association of South Africa (BASA), Financial Sector Transformation Council (FSTC), Entrepreneurial Planning Institute (EPI) and Institute of Business Advisors Southern Africa (IBASA). We also thank presenters, panellists, moderators, and all participants for availing themselves to contribute in different ways to the deliberations of the Forum. We look forward to an outcome that will shape a positive and collaborative way forward in easing access to finance for SMEs.

Septi M. Bukula

Forum Director Osiba Analytics

28-29 March 2019 |

Ekurhuleni International Convention Centre |


Gauteng, South Africa |

Day One I THURSDAY 28 MARCH 2019

PROGRAMME DIRECTOR: Teboho Mafodi, Founder: TM Group

07h30-09h00 Registration

09h00-09h05 Introductory Remarks

Septi Bukula, Forum Director: Osiba Analytics

09h05-09h10 Official Welcome

Caiphus Chauke, HOD Economic Development: City of Ekurhuleni

09h10-09h15 Introduction of the Minister

Lindokuhle Mkhumane, Acting Director General: Department of Small Business Development

09h15-09h45 Opening address by Hon. Ms. Lindiwe Zulu, Minister of Small Business Development

09h45-10h15 Keynote presentation on Entrepreneurial Finance

Jay Mitra, (UK), Professor of Business Enterprise & Innovation and Director of the Venture Academy, University of Essex

10h15-11h15 PLENARY A: The impact of bank and credit regulation on access to finance for SMEs

Regulation is often cited as one of the key impediments to SME financing - from Basel III to the National

Credit Act (in South Africa) and the Banking Amendment Act 2016 (Kenya), as examples. But South Africa's

NCA, for example, only regulates lending to SMEs with annual turnover or assets of less than R1m. Even

then, those borrowing over R250k are excluded from regulation. This means only a small proportion of

SMEs actually fall under the NCA. To what extent then is regulation really an impediment to lending to the

majority of SMEs?

Moderator: Septi Bukula, Forum Director: Osiba Analytics

Presenter: Cynthia Sathekge-Latha, Head of SME Credit: Absa Bank Panellists: Dean Raath, Corporate Legal Adviser Nthupang Ngobeni, Senior Legal Adviser: National Credit Regulator

Alison Magrath, Executive Manager: Credit Bureau Association


11h30-12h30 PLENARY B: Risk mitigation in SME financing

The role of credit and mutual guarantee schemes and business advising

Credit guarantee schemes are used by many governments and DFIs around the world as an important in-

strument to mitigate SME financing risk and thereby increase access to finance for SMEs. However, in

South Africa this instrument has proved largely unsuccessful, guaranteeing a dismal R12 million (US$

866,000) in SME lending in 2016. Yet, one of the key proposals in the Presidential Jobs Summit Framework

Agreement of 4 October 2018 is "to upscale and re-capitalise the Khula Credit Guarantee Scheme (KCG) for

greater impact." What makes South African banks so reluctant to utilise the CG scheme? What can be done

to change this? Will a mere recapitalisation of KCG change the situation? What can be learned from other

African and non-African countries with a longer history of successful credit guarantee schemes for SMEs?

This session will also examine the role of business advising as a risk mitigator in SME lending, based on the

view that SMEs that receive quality business advice, especially during the early stages of the business, are

more likely to act in ways that enhance the success of the business, thereby mitigating the risk of business

failure and defaulting on financing received.

28-29 March 2019 |




Moderator: Itia Otabor (Nigeria), CEO, Citia Associates

Presenter: Jean-Louis Leloir, Senior Adviser: European Association of Guarantee Institutions

Panellist: Joseph Tshiwilowilo, Executive: Stakeholder Relations, Education, Training & Development:

Institute of Business Advisors Southern Africa

12h30-13h30 Plenary C: The role of development finance institutions (DFIs)

Mandates, capitalisation and business models

Development Finance Institutions (DFI) are an important source of financing for small enterprises. However,

there's a view that these institutions tend to operate in ways that are not dissimilar to how commercial

funders operate, and therefore fail to close the critical funding gaps left open by commercial funders, par-

ticularly at enterprise start-up level. On the other hand, there’s a view that public policy mandates that re-

quire these institutions to finance risky start-ups and at the same time achieve sustainability are contrib-

uting to the difficulties DFIs face. What should appropriate mandates and funding and operating models for

DFIs be? How can they effectively close the funding gaps left open by commercial funders?

Moderator: Refilwe Belebesi, Chief Executive Officer: Grip Capital

Presenter: Lefentse Radikeledi, Director DFIs: National Treasury

Panellists: Don Mashele, Head of Department, Partnerships: Small Enterprise Finance Agency Moloko Ramatsui, Senior Manager Funding: Eastern Cape Development Corporation

13h30-14h15 LUNCH

14h15-15h45 PLENARY D: Corporate Enterprise and Supplier Development (ESD) financing

A game changer for SME access to finance?

South Africa's legislation on Broad-based Black Economic Empowerment has unleashed small business

financing by large corporations running into billions of Rands. At the same time, the legislation has

spawned a lucrative private ESD fund management industry that is seen by some as siphoning funds

meant to benefit SMEs. Consequently, there have been calls for government to consider regulation to

stem these practices. Could ESD financing be the new game changer for SME financing in South Africa and

a model for other countries to emulate? Is it time for government to regulate the ESD fund management

industry to ensure ESD funds benefit SMEs rather than fund management companies?

Moderator: Vuyo Ncwaiba, Founder and CEO: Vumali Consulting

Presenters: Litha Kutta, Director: Enterprise & Supplier Development: Tiger Brands Panellists: Justin Naidoo, Executive Director: True Impact Asset Management & Advisory Gordon Malebo, Divisional Head - Business Development and Marketing: Tushiyah Advisory Services

15h45-16h30 PLENARY E: The impact of late payment on SME financing

An elephant in the room?

Late payment to SMEs is a perennial problem, as a 2017 eleven-country study revealed. That year, late / non-payments to South African SMEs amounted to an eye-popping R25 billion (SA was the only African country in the study, so the scale of the problem in other African countries wasn't discussed). Late / non-payment has a direct effect on SME financing. In a 2018 study on hurdles faced by financial institutions in financing SMEs, all of SA's major banks stressed that they view government contracts as a major financing risk if presented as a source of cash flow to repay the loan. What will it take to overturn the culture of

28-29 March 2019 |




late /non- payment to SMEs, which is also attributable to large businesses, thereby unlocking access to finance for SMEs?

Moderator: Andile Sipengane, Chief Operating Officer, Services SETA Presenter: Septi Bukula, Director: Osiba Analytics and Enterprise Financing Forum

16h30-18h30 NETWORKING COCKTAIL

Programme Director: Tebogo Mafodi, Founder Mafodi Trading and Construction

1. Remarks by Cyril Akika

Investment Expert and Advisor on investment to the Governor of Bayelsa State, Nigeria

2. Introduction of Guest Speaker

John Francis, Director: John Francis and Associates

3. Guest Speaker: Reggie Naidoo, Executive Chairman: AGE Group of Companies

Reggie Naidoo is one of the foremost pioneers in the field of SME development in South Africa. In the early 1990s, he founded Independent Business Enrichment Centre and Independent Business Finance Centre. His pioneering work has been documented in a recent book titled The Survivalists: Visionary Leadership for South Africa’s Marginalised Entrepreneurs .

Day Two I FRIDAY 29 MARCH 2019

09h00-09h10 Day 1 Review

Septi Bukula, Forum Director: Osiba Analytics

09h10-10h10 PLENARY F: Non-bank, business angel and online SME financing

State of the field, issues and future directions

Non-bank finance, angel investing and online financing, including crowdfunding, are part of a growing

trend in SME financing, opening up alternatives to commercial bank funding. At the same time, there are

calls to regulate certain practices, specifically relating to transparent disclosure of financing costs to bor-

rowers. For example, California's Senate Bill #1235, a first in the US, seeks to "mandate commercial loan

term disclosures by online or other nonbank lenders." The Bill has received strong support from groups

such as the Responsible Business Lending Coalition and Small Business Finance Association. What differ-

ence are these alternative players making in increasing access to finance for SMEs? How can they be stim-

ulated further? Are there practices among these players that call for regulatory intervention to protect the

rights of SME borrowers or investees?

Moderator: Precious Mvulane, Director: GAD Consulting Services

Panellists: Jay Mitra (UK), Professor of Business Enterprise & Innovation and Director of the Venture Academy, University of Essex Tabassum Qadir, Chief Executive Officer: Uprise Africa Kumaran Padayachee, Chief Executive Officer: Spartan SME Finance

10h10-11h00 PLENARY G: Moveable collateral registries

Contribution to increasing SME access to finance and future directions

International evidence suggests that moveable collateral registries play a critical role in stimulating SME

access to finance, with agencies such as USAID and World Bank/IFC actively assisting governments around

28-29 March 2019 |




the world to establish them. Registries enable borrowers that lack traditional collateral to use movable

assets such as vehicles, machinery, livestock, inventory, and accounts receivables as collateral for loans,

thereby increasing financing options for SMEs. A reliable collateral registry alleviates the risk that a bor-

rower uses the same movable property as collateral to secure other loans without the knowledge of the

lender. The importance of a functioning movable collateral registry cannot be overstated, says USAID. With

moveable asset registries now in operation in a growing number of countries, what is their record in ena-

bling improved SME financing? How can more countries, especially in Africa, be encouraged to set up reg-

istries? What are the necessary conditions?

Moderator: Mzoxolo Maki, Acting DDG Enterprise Development and Entrepreneurship, Department of

Small Business Development

Presenter: Fred Asiamah-Koranteng, Assistant Director, Collateral Registry Department: Bank of Ghana


11h15-11h55 PLENARY H: The challenge of thin files

Is sharing of positive borrower information the way to go?

Entrepreneurs sometimes fail to secure finance because they lack a credit record, a situation called "thin

credit files." This arises partly because while lenders readily share negative borrower information, they are

reluctant to share positive information for fear of competitors poaching their good clients. This clearly

doesn't serve the interests of borrowers. In Kenya, under the Kenya Credit Information Sharing Initiative

(KCISI), which started as a result of the Finance Act mandating borrower information reporting, lenders

moved to include positive information. Will it take legislation to mandate lenders to share positive infor-

mation on borrowers, or can/should they act voluntarily? What other initiatives can be introduced either

by governments or by industry or together to address the problem of "thin credit files"?

Moderator: Moipone Molotsi, Director: University of Johannesburg Centre for Entrepreneurship

Presenter: John Kimathi Ndung’u (Kenya), Principal: kEA Advisory

11h55-12h55 PLENARY I: Borrower capacity and conduct

Is it an important inhibitor to access to finance being neglected?

Recent studies on access to finance for SMEs have found that one of the key hindrances to financing small

enterprises is lack of capacity on the part of the enterprises themselves. This manifests itself in the poor

quality of business proposals submitted for funding and prospective borrowers being too dependent on

external consultants to give articulation to their business plans, an indication that the entrepreneur lacks

understanding of his/her business plan. This does not inspire confidence to finance the entrepreneur’s

business. Another key complaint on the part of the funders is the tendency by some entrepreneurs to use

borrowed funds for purposes other than what they were acquired for. With all the business development

programmes, why does the problem of weak borrower / investee capacity persist? What should be done

to confront borrower / investee conduct that irresponsibly places the funder / investor at the risk of losing

its investment in the business?

Moderator: Sifiso Ndwandwe, Chief Executive Officer: Catalyst for Growth Presenter: John Kimathi Ndung’u (Kenya), Principal: kEA Advisory Panellists: Ntokozo Majola, Executive – Enterprise Development: Small Enterprise Development Agency Sithembiso Mpungose, Chief Investment Officer: IDF Capital Marc Johnson, Founder: It’s a Breeze

28-29 March 2019 |




12h55-13h35 PLENARY J: Co-operative Financial Institutions

What role in SME financing, current and future?

According to NACFISA there are currently 15 Co-operative Financial Institutions registered with CBDA and 1 Co-operative Bank registered with the South African Reserve Bank, operating across the country. A 2013 study undertaken for FinMark Trust reported that CFIs in countries such as Malawi and Swaziland play an important role in broadening financial inclusion. In relation to SME financing by South African CFIs, the study noted that: “There is likely a lack of capacity within CFIs to create appropriate products for small and micro enterprises or to accurately assess and manage business loans.” What is the status of SME financing by CFIs? What measures are necessary for CFIs to increase their participation in SME financing?

Moderator: Ramotshudi Isaac Ramputa, Chief Executive Officer: Financial Sector Transformation Council

Panellists: Timothy Mutyavaviri, Senior Technical Analyst: Co-operative Banks Development Agency

Mzwakhe Sikhosana, Managing Director: National Association of Co-operative Financial Institutions of South Africa

13h35-14h20 LUNCH

14h20-15h10 PLENARY K: Distillation of key Forum themes and mapping of future directions

This session will draw out key policy issues coming out of the two days’ deliberations and articulate key

proposals to improve access to finance for SMEs and to address practices on the part of both financiers

and entrepreneurs that present SME financing hurdles.

15h10-16h00 Forum Closing Session

Remarks by Advocate Mtho Xulu, President: South African Chamber of Commerce and Industries (SACCI)

Announcement of the International Small Business Congress (ISBC ), Abuja, Nigeria

Itia Otabor, Director: Citia Associates

Forum Closing Address: by Hon. Mr. Cassel Mathale, Deputy Minister of Small Business Development

Departure

28-29 March 2019 |




Ekurhuleni International Convention Centre

City of Ekurhuleni | Gauteng, South Africa

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