The eThekwini Municipality intends entering into a three-year partnership with the Ithala Development Finance Corporation (IDFC) on various small, micro and medium enterprises (SMME) development interventions.
The Municipality and the IDFC have previously entered into a memorandum of agreement (MOA) to embark on various projects.
At a Full Council meeting in December, the municipality stated that both parties intend intend to cooperate with each other, to support SMMEs with financial and non-financial support services, and to continue with the long-term relationship between the parties.
Now controversy surrounds the IDFC. The Pietermaritzburg High Court is set to witness a high-stakes legal battle, beginning on Friday, as Ithala Bank prepares to face the Prudential Authority (PA) over claims of alleged insolvency and non-compliance.
In the municipal report, the city and Ithala are expected to provide R20 million each year, for SMME development programmes.
The programme aims to provide collective and efficient support to SMMEs to ensure that the entrepreneurs are competitive in the markets and participate positively in the mainstream economy.
The report stated that the purpose of the MOA is to establish a working relationship between the IDFC and the municipality which will set out the mechanisms for the implementation and monitoring of the areas of collaboration for SMME development.
The MOA also aims to enhance the commitment of both parties to realise the objectives of strengthening the participation of SMMEs in the mainstream economy.
The municipality will avail a budget of R20 million per financial period for three years which will be transferred directly to the IDFC who will then administer the funding to provide SMMEs with financial and non-financial support services, SMMEs will apply directly to Ithala Bank.
The programme also aims to integrate women and youth-owned businesses in rural and township areas into the SMME development programmes.
Addressing council, Democratic Alliance Councillor Sanelisiwe Chebure affirmed the DA’s unwavering commitment to the growth and development of small businesses.
“We have long championed the critical role SMMEs play in driving economic growth, creating jobs, and contributing to GDP. Empowering small businesses is not just an investment in individuals but an investment in our community and our collective future,” Chebure said.
She added that the DA supported the intention behind this initiative but expressed concerns regarding its implementation and oversight.
“Let us not mistake intentions for outcomes. Allocating funds alone is not sufficient. We must ensure that every rand spent delivers tangible, meaningful results for the people we serve,” she said.
One glaring issue is the state of the properties that SMMEs are expected to use, Chebure said.
She added: “This raises a critical concern: if the municipality is investing R20 million annually to support entrepreneurs, it must ensure that Ithala does not short-change these entrepreneurs by offering them unusable properties.”
Chebure said the municipality must play a vigilant oversight role, ensuring that every property allocated to the small businesses is suitable, functional, and conducive to their growth.
Another concern, Chebure said, was the pervasive lack of accessibility and transparency surrounding funding. She said far too many entrepreneurs, especially young people with innovative ideas, are being excluded from the opportunities.
“There are too many barriers—complex application processes, bureaucratic red tape, and an opaque system that appears to benefit only a select few,” she said.
Entrepreneurs need guidance, training, mentorship, and access to spaces that are not just functional but conducive to growth, she added.
“Regular audits and impact assessments are essential to ensure that funds are being used effectively and that the intended beneficiaries are truly reaping the benefits. We cannot afford to let mismanagement or negligence derail this initiative,” she said.
Also speaking at council, ANC councillor Philly Ndlovu the deputy chairperson of the Economic Development and Planning committee, who said the ANC support the MOA.
“We are more excited because it will focus on SMMEs, both young and old, and those living with disabilities. As councillors, we need to take oversight together. We will visit beneficiaries on an annual basis. If we say that we want to play a role in unemployment we believe that such initiatives are the ones that play a role to ensure we create job opportunities,” she said.