This R1bn fund is helping township & rural businesses survive Covid-19 shocks, here’s how it works

As the economic fallout from the Covid-19 pandemic continues to impact businesses across South Africa, Ubank CEO Lutando Vutula has announced the establishment of a 1 billion-rand fund to support small businesses in township and rural areas. The fund, established in partnership with the Black Business Council, aims to provide financial assistance to entrepreneurs who may find it challenging to access funding through traditional channels. Vutula highlighted the need for increased support for small and medium enterprises (SMEs) in order to stimulate economic growth in the post-Covid era. Vutula emphasized that while members of the Black Business Council will receive preferential treatment, the fund will also be open to other entrepreneurs in townships and rural areas. The initiative seeks to address the financing gap faced by businesses in these underserved regions and complement existing government schemes such as the national guarantee scheme. The meeting with the Black Business Council will focus on outlining the criteria for fund disbursement, including sector-specific priorities such as information and communication technology (ICT), agriculture, and retail. Vutula underscored the importance of simplicity in the application process, with online submissions encouraged to facilitate easy access to funding. In addition to Ubank's commitment of 1 billion rand, the Black Business Council has pledged an additional billion rand to bolster the fund. Vutula expressed hope that other institutions and government entities would contribute to further increase the fund's size to better meet the financial needs of SMEs operating in township and rural economies. Despite the challenges posed by the pandemic, Ubank remains steadfast in its commitment to supporting a diverse range of businesses beyond the mining sector. Vutula noted the bank's efforts to expand its focus to include blue-collar workers from various industries, such as education, healthcare, and law enforcement. By diversifying its risk and extending support to SMEs, Ubank aims to enhance its sustainability and contribute to broader economic recovery. While acknowledging the impact of Covid-19 on Ubank's balance sheet, Vutula expressed optimism about the opportunities for growth and expansion in the SME sector. The bank's liquidity and deposit ratios are strong, providing a solid foundation for financing initiatives aimed at driving economic empowerment and job creation. In conclusion, Vutula highlighted the importance of collaboration and partnership in advancing SME development and revitalizing the economy. By working together with stakeholders across sectors, Ubank is committed to providing vital support to entrepreneurs in township and rural areas, ultimately fostering sustainable growth and resilience in South Africa's business landscape.