Lessons learnt from Nkwe enterprise finance

Nkwe Enterprise Finance, a financial service to fund microenterprises in the North West province, suspended its operations after just over two years of lending. This happened against the background of three significant events. First, a new apex for pro-poor microfinance was designed, which resulted in the need to reconsider the nature of Khula's ongoing role as wholesaler to microfinance institutions. Second, the Financial Services Charter was signed in October 2003, in which banks committed to targets for so-called empowerment lending, including black small and medium enterprises. Third, a large number of microfinance initiatives continued to fail to reach sustainability and scale. This article investigates the reasons for the suspension of Nkwe's activities and draws conclusions on the lessons that should be learnt for the future development of microenterprise funding in South Africa.