28 May 2014 New milling company enters the market

Massmart, in partnership with Absa, has announced a R9.9m funding deal which will see the two companies assist Lethabo Milling acquire a mill in Ventersburg, Free State, and supply the Walmart-owned group with maize meal.

Lethabo is a participant in the Massmart Supplier Development Programme, which has deployed funding to 193 black-owned suppliers since its inception in 2011.

Local procurement and enterprise development projects within the retail sector are proving key engines for job creation in South Africa, where unemployment is rampant.

Massmart’s R242m fund, which was a volunteered condition when it merged with the US giant, is focused on assisting small to medium-sized enterprises that are either black owned, black empowered, or are a local manufacturer of products.

Last month, in Stutterheim, Eastern Cape, local company Ikusasa Green began manufacturing cooler boxes for Massmart’s private label, Camp Master.

The Massmart-Absa deal, which will lead to the creation of 40 permanent jobs, is made up of an R8.2m loan provided by Absa Enterprise Development.

Massmart has acted as guarantor for 50% of the loan and in addition has issued a R1.6m grant to Lethabo to upgrade facilities, invest in laboratory equipment and install a new packaging line.

“Lethabo … will receive an order from Massmart to produce 10,000 tons of Massmart’s private label Econo Super Maize Meal as part of the deal,” the company said.

The product is expected on the shelves by the end of July.

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.

Massmart supplier development executive Mncane Mthunzi said the move had introduced the first black player in South Africa’s milling industry.

Lethabo Milling CEO Xolani Ndzaba said the deal had cut out all the administrative barriers most small businesses faced when trying to secure finance. Lethabo is 100% owned by Ndzaba, his wife Thembi and two business partners.

Source: BDLive

Lethabo Milling: www.lethabomilling.co.za/