While some institutions are hesitant to offer loans to previously disadvantaged entrepreneurs, Woolworths’ start-up funding model enjoys great success.
Ninety eight percent of the black-owned small to medium enterprises, financed by Woolworths, repay their soft loans on schedule, Woolworths announced today.
This effort is part of the retailer’s enterprise development programme, designed to support emerging black-owned businesses. The scheme’s loan book currently stands at R41.6-million. The up-and-coming entrepreneurs in the scheme have earned R770-million in business from Woolworths, in just three years.
Supplier development ‘in Woolworths DNA’
Zinzi Mgolodela, Woolworths Head of Transformation, explains: “Enterprise development comes naturally to us. Unlike many of our peers, we make our products; we don’t just buy and sell them. For this reason, it has always been our preference to identify promising entrepreneurs, partner and grow them for the long-term.”
She continues, “Over the years, we have learnt that you can’t just fund black start-ups and small businesses and walk away. We’ve learnt that they need a suite of tools to succeed, including a range of financial interventions, for example, shorter payment terms, to help them with much needed cash flow, guaranteed business, mentorship and targeted up-skilling.
“This total package sets up the entrepreneurs for success in the long-term and has long been a part of Woolworths’ DNA.”
Quality over quantity
In all, Woolworths currently has 47 small, micro and medium-sized enterprises (SMMEs) in its enterprise development programme. These range from bakeries to footwear companies, fruit and vegetable farmers – and other food producers – to clothing manufacturers and service providers. These companies currently have created a total of 808 new jobs.
Many more SMMEs have graduated from the five-year program and are deemed sustainable Woolworths suppliers.
“We could score B-BBEE points by offering many more previously disadvantaged entrepreneurs less comprehensive assistance. But, that’s just not how we do business. We want to make our supply chain more accessible to previously disadvantaged entrepreneurs and this goal requires the level of commitment reflected in our enterprise development programme.”
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