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 SME fund launched to meet shortcomings in SA educational system

 

 Specialist risk finance company for formal small and medium enterprises (SMEs), Business Partners Limited (BUSINESS/PARTNERS), today announced the launch of its R150 million Education Fund, a SME Risk Capital Fund aimed at providing existing and aspiring entrepreneurs in the educational sector with finance and support to meet the growing need to improve and expand the sector.

The Business Partners Limited Education SME Fund will finance businesses such as privately owned schools, colleges, educational buildings and student accommodation, and provide support for entrepreneurs who want to augment the shortcomings in the South African education system.

Nazeem Martin, Managing Director of BUSINESS/PARTNERS, says that education remains a major challenge in South Africa and has a direct impact on the current skills shortage in various facets of the local economy. “Aspiring learners have lost out on many opportunities due to a lack of physical infrastructure and access to good schools and this in turn is negatively affecting the country’s economy.”

He points to the Statistics South Africa Poverty Trends in South Africa report released earlier this year, which revealed a strong correlation between increased levels of education and decreased levels of poverty. It states that in 2011, two-thirds of respondents with no education were living in poverty, in comparison to 44% who had secondary schooling, and 23.6% who had completed matric.

The Business Partners Education SME Fund aims to make funding available to entrepreneurs who want to present further quality schooling opportunities for aspiring learners, thereby increasing their knowledge and skill set, says Martin. “The objective of the fund is to provide finance and mentorship to profit-driven enterprises within the education field, which in turn ensures that skills development continues in the country.”

Martin adds that the country’s education system is currently under pressure, and faces various challenges, such as shortage of schools infrastructure and high learner to teacher ratio. “These challenges have created a demand for private education at all levels, from pre-school through to tertiary education.”

According to the Education Statistics Report 2012, released in January 2014 by the Department of Basic Education which focuses on the overview of the education system in South Africa, between 2009 and 2012 learner numbers showed a net increase of 1.6% (12 227 963 to 12 428 069), while the number of schools decreased by 0.3% (25 906 to 25 826). Martin says that a survey conducted by the SA Institute of Race Relations (SAIRR) also reported that the number of public schools declined by 9% between 2000 and 2010.

“This highlights the tremendous pressure on the public schooling system in the country and the need for private, independent schooling. In the department’s preliminary document – School Realities 2014 – it was revealed that there were 1 681 independent school nationally at the beginning of the year, with an enrolment of 538 421 learners, compared to 1 584 independent schools and 513 804 enrolled learners in 2013.

“The objective of the fund is to bridge this gap by ensuring that entrepreneurs that want to introduce independent schools in communities have access to finance and mentorship to provide the service,” says Martin.

Martin adds that there is also currently only student accommodation for 100 000 of the 530 000 tertiary student population, according to the Department of Higher Education. “As the country’s student population increases, the demand for student housing also rises. Both this, and the many other challenges, presents excellent business opportunities for entrepreneurs.

“The Fund, which forms part of BUSINESS/PARTNERS’ square peg movement, therefore aims to unleash South Africa’s SMEs that operate within the industry so that they may play their rightful role of generating wealth, growing our economy and creating jobs for many by seizing the opportunities the sector offers,” concludes Martin.


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