Retail group Shoprite Holdings (SHP), the largest retailer on the African continent, has unveiled the details of its innovative sustainable business venture with the Department of Trade and Industry's credit facilitation agency for small, medium and micro enterprises (SMMEs), Khula Enterprise Finance Limited, as part of the company's wider support for black economic empowerment (BEE).

The agreement signifies the start of a long-term association between Khula and the Shoprite group, which will offer entrepreneurs from previously disadvantaged communities a singular opportunity to enter the retail trade.

Shoprite group CEO Whitey Basson said the treaty would create positive spin-offs for BEE in South Africa by granting successful SMME applicants a number of OK Franchise concessions on negotiable terms.

Dual guidance by OK Franchise and Khula in terms of outfitting, training and mentorship of the SMMEs promised to deliver maximum viability for the new businesses.

The treaty would also create a precedent for future cooperation between enterprising government structures like Khula, and the retail trade.

"The issuing of a limited number of franchises by Shoprite will serve as the initial pilot project on whose successes and lessons the future expansion of this project will rest," Basson explained. "The strategic importance for SMMEs lies in their access to retail space in Shoprite's multi-national retail chain."

Managing Director of Khula, Xola Sithole, said the treaty signified Khula's commitment to help entrepreneurs from previously disadvantaged communities enter the mainstream economy. Khula would be launching similar joint venture initiatives across different industries like mining and petroleum.

"This partnership with Shoprite is a model for future partnerships between government agencies like Khula and the private sector in addressing the economic challenges facing our country," Sithole said.

Shoprite and Khula would share the capital investment and risks associated with promoting the BEE initiative, whereby Khula would accord loans to the concession holder for the payment of equipment and the outfitting of stores.

Shoprite, meanwhile, would supply the stock without the solicitation of securities from the concession holder, as well as longer-term repayment provisos, especially on first consignment.

Furthermore, Shoprite had undertaken to support the concession holder with training and support in lieu of concessionaire affairs, while Khula would apply its mentorship programme to provide generic business and financial instruction for the SMME.

The granting of franchises by Shoprite to deserving and qualifying persons or entities with an emphasis on BEE would not as its objective disqualify other deserving applicants, the retailer noted. However, the emphasis of the programme was on the creation of successful business models in line with Shoprite and Khula's commitment to sustainable development.

I-Net Bridge 29 April 2004