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- Alef Meulenberg set out to assist about 50 businesses which were destroyed in last year’s unrest.
- He ended up raising R140 million to support 1,400 businesses and save about 4,000 jobs.
- Once it got funding for the RTE, NGO Afrika Tikkun screened applicants.
- The money was paid directly to the suppliers of these applicants.
- Meulenberg thinks this model can now be used to support other township businesses.
- For more stories go to www.BusinessInsider.co.za.
All Afrika Tikkun Foundation CEO Alef Meulenberg wanted to do was assist about 50 businesses which were destroyed in the unrest in Gauteng and KwaZulu-Natal in July last year.
Instead, the foundation ended up raising R140 million to support 1,400 businesses and save about 4,000 jobs.
Now Meulenberg has a good story to tell, but at the time of the unrest, he says his usual optimism about the country’s future had given way to despondency in the wake of the destruction wrought by the unrest.
“This really deflated me.”
Aside from his personal feelings, he was also concerned that the damage done to township businesses would have a detrimental impact on the surrounding communities.
“Some of the people who started these businesses were the lifeblood of these communities, and overnight, their businesses were gone.”
Meulenberg knew some of these people well, as the Afrika Tikkun Foundation had got to know them as it had been running personal development programmes in townships for a few years.
He wanted to help them and asked his executive committee whether Afrika Tikkun could provide some assistance.
They agreed to help 50 businesses, but he would have to source the funding to assist them through its Reviving Township Economies (RTE) initiative.
More money. More help
This led Meulenberg to meet with FNB, which agreed to provide R2,5 million – enough to back 80 businesses.
The Industrial Development Corp heard about what they were doing and gave a further R10 million.
The Solidarity Fund and other backers like Absa also provided funding bringing the total amount raised to about R140 million.
Once it got funding for the RTE, the next step was coming up with a way to screen applicants and disperse money to them.
The screening process saw Afrika Tikkun asking the applicants to provide documentation like management accounts and bank statements to verify the existence of these businesses, as well as before and after pictures of the business premises.
It also went through a know-your-customer process with FNB, to ensure people were who they said they were, were not involved in suspected fraud, and if the documentation provided was authentic.
A novel support model
Once this was done, they dispersed the money, but not by paying the applicants directly. Rather, the money was paid directly to the suppliers of the applicants.
For example, if a street vendor or a spaza shop needed to get stock, Afrika Tikkun would buy a voucher at a cash and carry wholesaler. The items would already be pre-selected, and the business owner would just have to pick them up or even have the supplier drop them off.
The scale of the assistance provided by Afrika Tikkun included spending R5,000 to replace a trolley for someone who sold bags of coffee in Everton Mall, in Soweto, to Zinhle’s All Things Sweets getting R100,000 to reopen its store in the KwaMnyandu Shopping Centre, in Umlazi.
A bittersweet return
Zinhle Maphanga, who owns Zinhle’s All Things Sweets says she was devastated by the looting of her store.
“They took everything. Even today, I’m still sad about it.”
The assistance provided by the RTE initiative, however, was a game changer for her. The single mother, who was also supporting her extended family and employing seven people could start operating her business again.
Afrika Tikkun had not only paid for her stock but also the fitting out of a new store.
Maphanga praises Afrika Tikkun for not only how quickly they assisted her, is but also grateful that her suppliers were directly paid. She says if the money went directly into her bank account, it would have been eaten up by bank costs related to unpaid debit orders.
Though her business is up and running, Maphanga says it still has a long way to go to recover to where it was before last year’s unrest. The recent flooding in KwaZulu-Natal also has not helped as it damaged her store and ruined some stock.
She has once again asked Afrika Tikkun for help but has yet to get a response from them.
A new development model
Meulenberg says the success of the RTE initiative has been an eye-opener for him. Not only has it restored his optimism in South Africa, but it has also inadvertently shown him how to help small township-based businesses.
He agrees with Maphanga in that buying stock on behalf of business owners is a way to free up cash flow to fund other activities.
The funding part of the initiative, along with the other forms of business support that Afrika Tikkun provided, also demonstrated that some of these businesses could grow quickly.
“Some of the businesses, like Zinhle’s can grow quite quickly. If she’s supported in the right way she can even franchise her business.”
Meulenberg’s encounters with people like Maphanga taught him something about the types of people running township-based businesses, and why they should be backed.
“They are all bootstrappers, all go-getters, in an environment that is often not conducive to commercial activities.”
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