• Home
  • /
  • Business
  • /
  • Nedbank creates R10m fund to back green businesses

Nedbank creates R10m fund to back green businesses

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 15 May 2024
The Indalo Fund’s principles are premised on businesses meeting environmental and social targets.
The Indalo Fund’s principles are premised on businesses meeting environmental and social targets.

Nedbank has introduced the R10 million Indalo Fund, which aims to transform the way entrepreneurs are funded, creating a pipeline of viable “green” businesses that will be able to attract high-ticket investment.

This comes as social-conscious capital gains momentum on the continent, as funders and venture capitalists specifically search for start-ups that have high environmental, social and corporate governance standards.

The fund was launched this morning at the Indalo Inclusive Symposium at the Council for Scientific and Industrial Research.

Nedbank says it is reinforcing its commitment to investing in environmentally-friendly businesses to promote a carbon-free future and raise awareness of the fight against climate change.

The fund is based on a target-focused system that will see businesses receiving funding according to how they prioritise sustainability within their operations.

According to Nedbank, the first phase of the Indalo Fund will run for 18 months, during which its entire capital of R10 million will be disbursed.

The fund will further need recapitalising and will run for a further 36 months. Nedbank and Indalo Inclusive will conduct a comprehensive impact assessment at the end of this five-year period, it says.

Poovi Pillay, executive head of corporate social responsibility at Nedbank, explained that the Indalo Fund builds on the successful partnership between green economy investment firm Indalo Inclusive and Nedbank, which has seen the creation of 215 enterprises, with an average income of R5 933 283 each.

Many of these enterprises are now at the stage where they can become eligible to attract larger investments from commercial lenders to scale significantly.

“When we launched our commitment to a green economy that works and delivers on the United Nations Sustainable Development Goals, we were clear that we wanted to make a significant positive impact to help create a new type of economy,” noted Pillay.

“Building on our experience over the past three years, we have decided to enhance the funding model in the final phase by introducing incentive- and performance-based grants. This has important implications. For us, it means that we can fund more enterprises with the same capital. For the enterprises, it validates their status as investment-worthy businesses.”

In 2021, Nedbank channelled 80% of its corporate social investment spend into projects that link environmental sustainability and the economic growth SA desperately needs.

According to the big-four bank, this green economy corporate social investment strategy aims to develop an ecosystem of partners working together towards common goals, with a focus on sustainable economic growth that empowers rural and semi-urban communities in particular.

The Indalopreneur Programme is key to this strategy, linking job creation and inclusive economic growth with the development of a new generation of environment-friendly businesses.

These companies are identified and mentored, and successful enterprises will receive R250 000 grant funding, notes the bank.

“In terms of Indalo Fund’s newly-introduced funding principles, enterprises receive 50% of the R250 000 grant at the outset if they commit to creating a minimum of five full-time jobs at the minimum wage. They will also have to reach a number of targets relating to their environmental, social and economic impact,” says Nedbank.

Those enterprises that exceed their targets by 100% within 12 months are rewarded with the payment of the remaining 50% of the grant. Those that achieve only 50% above the job-creation target will receive only half of the remaining 50%.

Announcements will be made in due course on how businesses can apply.