06 Aug 2020

Ministry of Investment, Trade and Industry has identified several challenges faced by youth entrepreneurs in rural areas compared to those in major villages and towns.

Mr Karabo Gare told Parliament that challenges included, among others, financing, where financiers’ risk appetite for entrepreneurs based in rural areas was low, mainly because of limited markets, low business skills and limited access to information on financing options.

He said low access to government and private business development services, government institutions including Citizen Entrepreneurial Development Agency (CEDA), Local Enterprise Authority (LEA), CIPA, BITC and private business facilitation and development services were mainly found in major villages and urban areas. 

He explained that entrepreneurs in rural areas travelled long distances to access the services.

Mr Gare said due to limited internet penetration and other communication infrastructure in rural areas, majority of the youth in rural areas faced challenges related to access to online services such as company registration, business development services, business information, marketing platforms for advertising and sales of products and services.

He said there was limited market access for products and services, high input cost and limited supply of inputs and raw materials. 

He said the high production costs resulted in uncompetitive prices for products manufactured in rural areas, relative to those produced in urban areas.

Mr Gare said lack of operational space in rural areas was limited due to the level of development. 

He said the ministry was implementing some interventions towards these challenges such as taking the services and products to the rural areas through mobile outreach programmes to provide business development services and interact with the business community and public.

He said online submission and inquiry channels had since been introduced to improve access to CEDA programmes. 

The introduction of a toll free number (0800600253) had also improved access to CEDA services by the public including the youth in rural areas.

Minister Gare explained that LEA had 15 branches across the country mainly in major villages and towns, while CEDA had 11. 

He said to improve access, more satellite offices would be opened to reach out to the rural clientele.

He said LEA had offered subsidised internet services through its resource centres at its branches countrywide and information leaflets were also distributed to disseminate information.

He added that LEA had partnered with the Ministry of Youth Empowerment, Sport and Culture Development to avail SMME registration access points in libraries since they had relatively bigger footprint. 

He said his ministry hosted flea markets and market days in different areas throughout the country to facilitate linkages with the market.

He said capacity building interventions to facilitate entrepreneurs on product quality and certification were undertaken on a continuous basis, adding that LEA was working with entrepreneurs throughout the country to establish linkages with retailers and procuring entities in government to gain market access.

Assistant Minister Gare said LEA had been operating factory shells in an effort to provide operating space for SMMEs and was in the process of refurbishing other facilities to expand capacity to accommodate other clients including those operating metal works, light manufacturing and tourism.

He said the ministry, through CEDA and LEA continued to facilitate entrepreneurs in the preparation of business planning. Further, he explained that CEDA had invested in training and mentoring post funding to ensure businesses were equipped with sound management and technical skills.

He said the agency had introduced a peer to peer mentoring arrangement, especially for youth within the agricultural sector such as horticulture and dry land farming.

Mr Gare said the ministry launched the project facilitation fund in May 2019 to facilitate pre-financing requirements including Environmental Impact Assessment, product testing and process certification, due diligence/valuation report, soil and water tests, borehole test pump report and structural reports.

He said the fund was based on a grant/loan contributory arrangement with client expected to contribute 50 per cent of the cost outlay in the form of a loan or paid up capital where feasible.

He said the minimum amount issued was P5 000 while the maximum was P200 000 depending on the size and nature of the project. 

He said the loan was charged interest of five per cent per annum and was payable within 12 months for loans up to P50 000 while those above this amount were paid within 60 months.

He added that projects were given a grace period of not more than 48 months during which period no interest accrued. He said a total of nine projects had been funded to the tune of at least P1m.

He said the revised CEDA guidelines,  which were launched last month, had identified the youth, women and people with disabilities as special groups and therefore discounted security requirements would be extended to them.

He was responding to a question from Kanye North MP, Mr Thapelo Letsholo, who asked the minister what challenges the ministry had identified, faced by youth entrepreneurs in rural areas compared to those in major villages and towns.

He wanted to know what the ministry was doing to address the challenges and what special considerations CEDA and LEA were implementing or planning to implement to remedy the challenges. Ends