South African Jobs Fund gets off the ground

In February this year, during his State of the Nation address, President Jacob Zuma announced a jobs fund that would help combat South Africa’s unemployment levels. On 7 June the country’s finance minister, Pravin Gordhan, announced that the fund was open and that interested parties could start submitting their applications.

The fund, which stands at R9 billion, is good news for South African employers and employees who face concomitant to a high unemployment rate, albeit from different perspectives. SMEs, and even some larger corporations, often can’t afford to employ the number of personnel they need to run their businesses properly. Conversely, there are millions of people who have become so despondent about their continued lack of employment that they have given up looking.

The Development Bank of South Africa is tasked with managing the jobs fund. R2 billion has been made available for the rest of this financial year, but before business owners rush to apply they should be warned that there are certain risks and criteria that need to managed and met before any money is released.

For starters, anyone who thinks they will just be given money to employ people is sorely mistaken. Applicants are expected to share risks and costs. Gordhan says that there will be a matched funding ration of 1:1 for the private sector. The non-private sector is also expected to carry its weight, although the ratio will be considerably lower.

The fund aims to create 150 000 jobs over a three-year period. This might sound impressive, but it’s a drop in the ocean compared to what is needed.

150 000 jobs isn’t enough

Mike Schussler says that South Africa needs to create 10 million jobs over the next 10 years, that is 83 000 jobs per month. For some perspective consider that Schussler says only 350 000 jobs have been created over the past 11 years.

Brian Whittaker, who is deputy chair of the job fund’s investment committee, acknowledges that the fund is not a panacea; instead he says the hope is that it will release a degree of creativity that has been lacking in the employment sector.

“It will enable us as a country to be bolder on some of the initiatives than we have before and to take some risks,” he said.

Eligibility criteria

Applicants have to get passed three committees before they see any funding:

1. The Advisory Committee oversees the development of funding strategies.
2. The Investment Committee approves funding.
3. The Technical Evaluation Committee assesses proposals and makes recommendations to the Investment Committee.

Proposals must be related to:

• Enterprise development, which includes product development, local procurement, marketing support, equipment upgrades and enterprise franchising.
• Infrastructure investment, which includes local projects relating to light manufacturing enterprise zones, local market and business hub facilities, critical transport and communication links and upgrading infrastructure services.
• Support for work seekers, including job search projects, training activities and career guidance and placement services.
• Institutional capacity building, which is for projects that will improve, enhance or strengthen institutions that facilitate job creation.

Eligibility criteria are similar (but not exactly the same) across the private, non-private, infrastructure, work seekers and institutional capacity building windows, for example:

• Due diligence with regard to tax compliance.
• At least a two-year track record. No start-ups will be considered.
• Private sector applicants must fall within the definition of private sector enterprises – that is they must be for profit.
• Private sector applicants must have a commercial basis.
• Applicants must not be waiting on any government or legal decisions.
• Applicants must be willing and able to share the funding risk.
• There must be the potential for job creation.
• Initiatives must be innovative and new and not extensions of existing programmes sorely in need of funding.
• Applicants must prove that the initiatives proposed would be possible without the incentives offered.
• Initiatives must be sustainable beyond the funding period – that is longer than five years.
• Applicants must be able to realistically implement their plans and initiatives.

People wanting more information should go to the Job Fund website or call 0861 003 272.

The first round of funding applications closes on 31 July 2011.

(Image by kipcurry, stock.xchng)