Massmart and Absa have partnered to assist a black-owned milling company to expand its operations and create 40 permanent jobs.
Lethabo Milling, a participant in the Massmart Supplier Development Programme, acquired a mill in Ventersburg, Free State, and will receive an order from Massmart to produce 10 000 tons of Massmart’s house brand Econo Super Maize Meal as part of the deal.
The partnership marks an important shift in focus for Massmart Supplier Development, said programme executive Mncane Mthunzi. “We recognise that reviving key industries and developing much needed skills continues to be an important mandate in the South African context.
Massmart has entered into a mutually beneficial partnership with Lethabo and Absa that will result in black representation in a key industry, create jobs and also put our Econo house brand on the shelves,” he added.
The deal is worth R9.8-million, comprising an R8.2-million loan provided by Absa Enterprise Development. Massmart has acted as guarantor for 50% of the loan and has additionally issued a R1.6-million grant to Lethabo to upgrade the facilities and put a new packaging line in place. Lethabo will use the loan to purchase the mill, equipment and upgrades. Absa has also set up a working capital facility to assist with the initial cost of the setup.
“This deal has managed to cut out all the administrative barriers most small businesses face when attempting to secure financing agreements” said Lethabo Milling CEO Xolani Ndzaba. “It is difficult to obtain finance for these kinds of projects without production commitments from big companies such as Massmart. We will also be milling our own Lethabo brand and we hope to distribute our products across the country in the coming years.”
Speaking about Absa’s involvement, “Absa recognises the importance of the SME sector as an engine to drive economic growth, which in turns leads to job creation,” said Head of Business Banking Barclays Africa, Roy Ross.
“As the financial partner of the Massmart Supplier Development programme, Absa will serve the needs of the SME suppliers involved by making funding available to them. In addition to this, we will provide market access and business linkages through our Procurement Portal and provide non-financial support through our network of Absa Centres of Entrepreneurship located across the country”, further attributed Ross.
