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Old Mutual and South Africa’s Department of Trade and Industry (DTI) Launch $12.9m Microfinance Initiative, Isivande Women’s Fund (IWF)

Guest post by: David Satterthwaite

Article Overview: The Department of Trade and Industry of South Africa has teamed with Old Mutual Group’s Masisizane Fund to launch the Isivande Women’s Fund (IWF), financing women-run enterprises in the country. The new fund is the result of a 2006 study conducted by the DTI’s Gender and Women Empowerment Unit, the International Finance Corporation (IFC), and FinMark. The study found that although women are more responsible managers of credit than men, they only receive 30 percent of loans, with black women receiving the least funding.

Old Mutual and South Africa’s Department of Trade and Industry (DTI) Launch $12.9m Microfinance Initiative, Isivande Women’s Fund (IWF)

Yet the data indicate that it is this particular group that is becoming increasingly important to the South African economy: approximately one million black women are self-employed, running mostly informal businesses (often referred to as “hawking”). This latest project targets this group with the goal of legitimizing informal businesses through finance.

The Isivande Women’s Fund will serve small- to medium-sized enterprises in the South African market. According to a press release and accompanying literature from DTI, IWF will provide loans of between USD 39,000 and USD 260,000 to small- and medium-sized enterprises that are more than 60 percent-owned by women, based in rural or semi-urban areas, and have been in existence for at least two years. To qualify, the business’ staff profile must be at least 60 percent women and 75 percent black, it must employ people living with disabilities, and must demonstrate a sustainable operation. The maximum repayment term will be five years. The Masisizane Fund will match the value of each loan and will also provide training and mentorship to the recipients.

The launch of IWF follows Old Mutual’s recent announcement to finance the Women’s Development Bank (WDB) via a USD 710,000 donation from the Masisizane Fund. The Masisizane Fund came into being in 1999, when Old Mutual became a publicly listed company. When share holders were issued free stock in the company, two percent of shares went unclaimed. Old Mutual dedicated part of the after-tax profits from these shares development initiatives in South Africa and Masisizane was founded in order to undertake these objectives. Over half of the funds are distributed to investing in women-owned businesses in particular, the Masisizane Fund aims to invest in businesses that stimulate job creation and enterprise development as well as technical support and mentoring, especially in urban areas.

Prior to its public listing, Old Mutual had a history of 150 years in South Africa’s mutual fund market. According to current financial data and its 2006 annual report, Old Mutual has an operating budget of USD 3.4 billion and net profit of USD 3.8 billion, experiencing exponential growth in 2006 following its takeover of Swedish insurer Skandia. The company’s financial products and services include investment, insurance, asset management, banking, and health care for corporations, businesses, and individuals. Although originally based in South Africa, Old Mutual now operates in the United Kingdom, Western Europe, United States, India, China, as well as other African nations. The Managing Director of South African operations is Paul Hanratty.

South Africa’s Department of Trade and Industry Gender and Women Empowerment Unit consists of the South African Women Entrepreneur’s Network (SAWEN) and the Technology for Women in Business (TWIB) initiative. Both are aimed at enhancing women’s ability to own and operate small-, medium, and macro-enterprises (SMMEs) in South Africa. SAWEN is a registered non-profit organization operating under a USD 258,000 annual budget. It conducts research, provides women with business networks, and lobbies the government. TWIB improves women entrepreneurs’ access to industry-appropriate technology. In his address launching IWF, South Africa’s Minister of Trade and Industry noted that although 42 percent of black women in South Africa are left out of financial products altogether, “there is a view that women are the driving force of the African Economy.” Wantfully, the launch of IWF will ease these inequalities, empowering women entrepreneurs to realize South Africa’s development potential.

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Article Tags: business staff, development initiatives, informal businesses, iwf, launch, living with disabilities, medium sized enterprises, mentorship, people living with disabilities, project targets, repayment term, share holders, small and medium sized enterprises, south african economy, staff profile, sustainable operation, tax profits, usd 260, wdb, women owned businesses



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