The room at this year’s SME Funding Summit had heard some version of this talk before. Access to capital. Barriers to entry. The funding gap that keeps small businesses small.
So when Thabang Hleza, Executive Head of Investments and Business Development at Old Mutual’s Masisizane Fund, took to the stage, the audience could be forgiven for expecting another familiar pitch on where entrepreneurs should go cap in hand next.
Instead, Hleza opened with a paradox that reframed the entire conversation. South Africa, he pointed out, is not short of capital. The country has sophisticated financial institutions, deep pools of liquidity, and no shortage of funders competing for good deals. And yet the vast majority of SMEs remain underfunded, undercapitalised, or fail outright within their first five years of trading. If the money is there, he asked, why isn’t it working?
“The question you often ask is why are SMEs not funded? But I’ll argue that’s the wrong question. The real question is, ‘Why are they not fundable?’” asks Hleza.
His answer is quite blunt: the constraint was never really capital. It’s capacity. A cheque, on its own, does not build the systems, governance or management discipline a business needs to absorb growth without breaking under it.
It’s a reframe with real consequences for how South Africa funds – and fails – its small businesses. And it’s the thinking behind a shift already underway at Old Mutual’s Masisizane Fund, which Hleza leads from writing cheques to becoming, in his words, a capacity partner.
The Old Model: What “Cheque-Only” Funding Actually Looks Like
The current funding model works on a capital-only model. This means funders are providing capital but no business support, mentorship, network introductions or operational help. This leaves SMEs completely alone to manage execution, financial stress and strategic decisions.
And while most SME founders would say that’s fine, there is something inherently wrong with that approach, especially from funders. An SME with funding without appropriate support in place does not work and will lead to failure.
Hleza says, “Imagine taking a Formula 1 engine and dropping it into a cardboard box. All that horsepower and nothing around is strong enough to hold it. That is exactly what happens when capital arrives before the business is ready to carry it.”
The more capital deployed into weak operating models; it creates an inescapable trap for SMEs where failure is magnified rather than reduced. For lenders, SMEs come across as businesses without credible data, management routines, compliance discipline and risk profiles that entrepreneurs cannot talk their way out of.
“When funding is deployed without the supporting architecture, capital often outpaces capability. Small operational leaks – the missed invoices, the reconciliation that’s suddenly not done, the stock that’s no longer tracked – they don’t stay small. They compound, and they eventually show up to the fund as a loan default,” says Hleza.
For most people, this might present as a funding problem, but it’s not; it’s a design failure.
The Real Constraint: South Africa’s Capacity Problem, Not a Capital Problem
Capital supply and SME success do not automatically translate into each other. Capacity determines whether funding becomes an asset or a liability. If funding scales faster than systems, businesses experience “capital shock”.
What is Capital Shock?
Capital shock is a sudden, unexpected large change in the financial reserves or equity of a business, bank, or insurance company. It is triggered by adverse loss experiences, poor investment performance, or sudden shifts in macroeconomic capital requirements.
To counter ‘capital shock’, Hleza says capacity building along with funding support is the answer. Capacity building means fixing the internal plumbing: governance, financial discipline, operating systems and management capability.
“The reality is money or lack of it didn’t fail businesses. The absence of capacity building does,” expresses Hleza.
Reframing Support as Risk Management, Not Charity
To demonstrate how business support can be used as a financial derisking mechanism, Hleza outlined three areas in which improvement can be seen: governance and financials, operational continuity, and strategic cushioning.
Governance and Financials: Support ensures accurate, reliable information. Lenders can move from doing guesswork to being sure of the true cash flow position of the SME.
Operational Continuity: Robust systems, people depth and routines reduce further founder dependency, significantly reducing lower keyman risk.
Strategic Cushioning: Advisory support improves anticipation of shocks, strengthens contingency planning and provides protection to debt service.
“Financiers don’t fund businesses: they fund managed risk. And structured support helps turn unmanageable risk into predictable risk. We need to move away from viewing business support as a cost but rather as a portfolio protection mechanism,” he explained.
What a Capacity Partner Actually Does: The Four Pillars
Ask ten different funders what “business support” means, and you’ll likely get ten different answers – a mentorship session here, a workshop there, a generic toolkit handed to every SME regardless of what’s actually keeping that business up at night. It’s precisely this vagueness that Hleza takes aim at. “One of the industry’s shortcomings,” he told the summit, “is that we treat business support as an undifferentiated offering.”
At Masisizane, that undifferentiated approach has been replaced with something more surgical: four distinct pillars, each mapped to a specific weakness a business might be carrying. The logic is straightforward – a business bleeding cash because of poor stock control needs a very different intervention to one that’s financially sound but has no governance structure, which in turn needs something entirely different from one that’s already in financial distress. Treating all three the same way, Hleza argues, is how well-intentioned support programmes end up doing very little.
Pillar 1: Technical Assistance
This is the operational engine room, the unavoidable work of getting the basics right. It covers things like ERP systems, compliance processes, operational efficiency and skills transfer, all aimed at one outcome: making sure a business can actually produce and deliver at the standard and volume its funding or contracts demand.
It’s often the least visible pillar, but it’s frequently the one standing between a business and its ability to fulfil the very opportunity that got it funded in the first place.
Pillar 2: Strategic and Advisory
Where technical assistance fixes how a business operates day to day, strategic and advisory support fixes how it’s run. This pillar is about institutionalising a business, building governance structures, embedding proper management practices, and giving founders decision-making frameworks that don’t rely entirely on instinct or founder memory.
It’s the difference between a business that runs because one person holds it all together and one that could survive that person taking a step back.
Pillar 3: Market Access and ESD
Capacity means little if there’s no demand pulling a business forward, which is why this pillar focuses outward rather than inward. It connects SMEs to real commercial opportunity – procurement pathways, contract-backed growth, and enterprise and supplier development (ESD) relationships that give a business a credible route to off-take.
Hleza is emphatic elsewhere in his talk that no amount of internal capacity matters if there’s no market pulling the product through; this pillar is the practical mechanism for making sure that market access materialises rather than staying aspirational.
Pillar 4: Turnaround and Rescue
Not every business Masisizane engages with is scaling; some are already in distress, and for these, more debt alone would only worsen the position. This pillar is about restructuring and stabilisation: intervening to steady a business before growth is even back on the table. It’s a recognition that “support” doesn’t only mean acceleration – sometimes it means triage.
What ties all four pillars together is diagnosis before dosage. None of them is meant to be applied wholesale, and none are meant to run indefinitely regardless of what a business actually needs.
“Support should follow a diagnostic approach, not a blanket programme design,” he said. “That’s why you often hear SMEs saying, ‘We’re tired of being over-coached, over-mentored, over-trained, and put in one programme after another.’”
Conclusion: Fixing the Capacity Gap to Shrink the Financing Gap
Bring it back to where Hleza started, and the thread holds together cleanly. South Africa was never short of capital; it was short of businesses ready to carry it. “Capital without systems creates risk,” he told the summit. “Structured support reduces that risk and, when applied correctly, helps transform SMEs into investable assets.”
It’s a line that reframes everything covered above – the four pillars, the shift from cheque-writer to capacity partner, and the deliberate targeting of “star candidates” – not as add-ons to the funding conversation but as the mechanism that makes the funding conversation possible in the first place.
For an industry still inclined to treat support as a nice-to-have, Hleza is honest about where it now sits: “This is no longer just a developmental question for us; it’s a capital allocation question.”
For years, the default question in South African SME finance has been: how do we get more capital to more businesses? Hleza’s closing argument suggests that’s been the wrong question all along.
“We need to stop asking how we can provide more funding and start asking how we make SMEs more fundable,” he said, “because if we fix the capacity gap, the financing gap will shrink naturally.”
If funders across the ecosystem start asking that second question instead of the first, the shift from cheque-writer to capacity partner won’t be a niche innovation at Masisizane; it will be the new baseline for how South Africa funds small business altogether.
