Gauteng Enterprise Propeller struggling to collect loans

Ashor Sarupen MPL

DA Gauteng Spokesperson on Provincial Owned Entities

The DA is concerned that the Gauteng Enterprise Propeller (GEP) is struggling to collect repayments from businesses that it has made loans to.

The loans were issued to assist start-ups and small businesses in Gauteng to grow, gain access to capital not available through regular market channels and be recovered over time to re-invest and continue the investment cycle.

However, this has not been the case. According to a response to written questions, the default rate on loans in the past financial year was 22%, down from 25,5% in 2012/13, and up from 21% in 2011/12. This amounted to over R21 million in loans being defaulted upon.

The response also indicated that none of these amounts had been written off and none of the firms invested in have gone out of business.

This of course raises questions as to why collection did not occur and why credit control measures have not been put into place.

While the outstanding amounts have not been written off, the Auditor-General did indicate that it considered R5 million unrecoverable in 2012/13.

Furthermore, in the GEP’s 2012/13 annual report, the AG found huge deficiencies in the way the entity handled its finances. The AG found inappropriate and ineffective steps to collect outstanding monies and prevent irregular expenditure, that it was awarding contracts to bidders who were not SARS compliant and that it had awarded contracts to bidders who had been doing business with the state.

Public funds invested in the economy can and do create jobs, but it is imperative that government owned entities manage those funds with due diligence.

Entities must be financially viable and able to recoup monies owing to it, instead of seeking additional funding from the state when their own funds are not effectively managed.