The Business Doctor Keitumetse Lekaba Dispatch | G20 Insights: Rethinking Funding for a Changing World

Dear Changemakers,

Yesterday, 21 July, I had the honour of participating in a global conversation, the G20 Finance and Investment Task Force, where the world is grappling with a fundamental truth: our funding systems are outdated, and entrepreneurs of today can no longer wait for yesterday’s solutions. Across the world, and right here in South Africa, we’re witnessing a growing mismatch between the funding tools that entrepreneurs are offered and the kind of businesses we’re building. I was quite fascinated by the themes that emerged. I mean, they weren’t just rich; they were also real.

Let’s unpack them and explore what they mean for our entrepreneurs and ecosystems.

1. Production Proficiency & Access to Market: The reality is that capital means nothing without capability

Too often, funding is seen as the main barrier. But money without the muscle to produce and compete is a missed opportunity. In South Africa, we’ve seen countless SMMEs secure funding, only to struggle with delivery due to various reasons: Lack of technical skills and certifications (e.g. SABS approvals for manufacturers), inability to meet supply chain standards for big retailers like Shoprite, Woolworths, or Pick n Pay, and not forgetting inadequate systems to track costs, manage cash flow, or meet tax compliance. The reality is, we don’t just need money; we need technical assistance and supplier development that gives entrepreneurs the capacity to deliver at scale.

2. Thinking Beyond Traditional Funding Instruments: The Rise of Alternative Capital

The world is moving toward blended finance, revenue-based lending, and outcome-linked instruments. In South Africa, traditional bank finance still dominates, yet it excludes many businesses that are high-potential but non-traditional. The truth is, we have to look at alternative funding solutions outside of the traditional bank finance... Frankly, SMME funding was never their thing. They know home loans, car finance, etc They were actually never built for such a time. A challenge for them, though, to adapt.... and eventually join the party.

The alternatives I'm currently seeing work in South Africa are:

• Purchase Order Financing: A lifeline for SMMEs with orders but no working capital. The impact my team and I have seen come from PO funding has been incredible.

• Crowdlending Platforms: Tapping into peer-to-peer support is a saver for those who don't have personal networks.

• Revenue-based Financing: Where repayments flex with the business’s income have been a game changer from a cash flow perspective. This one is also ideal for seasonal businesses.

• Venture philanthropy is often seen in social enterprises getting support from donors and investors. The uncles and aunts we all need.

• Fintech funding solutions: these offer fast, accessible funding for small businesses, helping entrepreneurs grow without the typical funding timelines and admin nightmare. The best part is that funding is linked to your revenue generation - the process is fair.

These alternative funding instruments speak to the lived reality of entrepreneurs globally: fluctuating revenue, informal trade, and limited collateral. It's actually encouraging that funders have started matching their financial instruments to the rhythm of the businesses we serve.

3. Legacy Funding Models Are Clogging the System

Many of our existing funding models were designed in a different era. Six-month delays, rigid disbursement milestones, and mountains of paperwork had historically become the norm. For an entrepreneur, this is death by admin. For example, our South African DFI have good intentions but often lacks speed and efficiency, and funding application processes require more documents than some court cases, to be honest!

Our government is also challenged to build funding models with agility and trust baked in, using technology, streamlined due diligence, and phased accountability. If we don’t, our systems will keep producing pipeline projects with no water at the end.

We need to go further. Imagine a world where:

• Municipalities de-risk township infrastructure projects for local businesses

• Banks co-fund alongside stokvels and community savings schemes (WOW!!!!!)

• Corporates incubate suppliers not just with funding but guaranteed offtake (DOUBLE WOW!!!)

  
  

That would certainly give us development with depth. But hey, entrepreneurs also have a responsibility too. When it comes to funding, you honestly can't do spray and pray approach. Before you even apply for funding, ask yourself:

• Am I fundable or ready to be funded? (Will I be able to pay back this money? The answer must come from your numbers and pipeline, and not wishes!)

• Do I understand which funding instruments suit my stage and business model?

• Am I tracking key metrics (gross margin, cash flow, ROE) that show I’m investment-ready?

• Am I building relationships in both the public and private sectors?

  
  

Changemakers, the world is changing. Funding is changing. The continent (the world) is calling for business funding creativity. It's everyone's responsibility to help build ecosystems that give funding with context, money with muscle, and funding with freedom to grow.

The old instruments and methods are obviously not working to the entrepreneur's advantage. But what are the new ones that will?? Share your thoughts.

Yours in Development,

The Business Doctor Keitumetse Lekaba