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EC supports growing businesses in South Africa

A private equity fund is being set up to support economic development in South Africa. A grant of around euro55 million has been allocated to the project by the European Community and the South African Government. The Industrial Development Corporation (IDC) and the European Investment Bank (EIB) will jointly manage the fund, named the Risk Capital Facility.

The Risk Capital Facility will co-invest with the IDC in both direct investments and specialist niche funds. Direct investments will be in the range of ZAR500,000 and ZAR15 million. Michael Lake, ambassador of the European Union to South Africa, said: “The Risk Capital Facility forms part of a larger Private Sector Support Programme to the DTI and illustrates the EC’s continued support for economic development in South Africa.”

It is expected the Risk Capital Facility will facilitate the creation of at least 7,000 additional jobs. The fund will invest in all sectors of the economy in the primary sectors including agriculture and mining, as well as the industrial, commercial and service sectors. Projects to be financed must be located in South Africa. In addition, funding will only be provided to enterprises in which historically disadvantaged persons (namely those persons who were disenfranchised politically prior to 1994) will hold at least 25 per cent of the issued share capital and will have significant operational involvement in the development of the business.

Bram Schim Van Der Loeff of the EIB, said: “The venture is an integral part of the EU’s private sector support programme working in close cooperation with the DTI. This is crucial funding for a key sector of the economy and a good opportunity for practical cooperation between the Commission and EIB in South Africa.”