THE National Empowerment Fund (NEF) has launched a preferential procurement funding product for companies which need to boost their capacity to execute contracts or tenders to help implement broad-based BEE through the Codes of Good Practice.

The product offers bridging finance, asset finance or term loans to black-owned businesses that have been awarded or short-listed for service contracts or tenders, and require capital to ensure effective delivery.

CEO Philisiwe Buthelezi says that the NEF identified an inability for black businesses to access sufficient funding to either secure or fulfil a procurement contract.

Buthelezi says: “This product has been conceptualised and designed to underpin one of the key pillars of the codes — preferential procurement — by ensuring that companies awarded tenders can carry out their mandates and the procurement process can lead to sustainable black enterprise development.”

Nhlanhla Nyembe, a fund manager at the NEF who reviewed many of the inquiries that led to the product’s development, says companies that have already been awarded tenders or those that would require the security of finance after being short-listed are eligible for the NEF’s new product. Further criteria require a 51% majority black ownership for existing business and 76% black shareholding for start-ups.

“The NEF will assist qualifying applicants with commercially viable business plans and a secured contract or tender with financing ranging from R250000 to R20m.

“We will co-fund in instances where borrowers require asset finance requirements with our private-sector banking partners,” he said.

The NEF would favour companies managed by women, particularly in rural areas.

“Much of the country’s infrastructure development will be taking place outside of major urban areas so we hope the take-up of this product will extend to our target clients in underdeveloped communities.”