Greater Good South Africa

On Tuesday, 7^th June 2011, Finance Minister Pravin Gordhan launched a R9-billion jobs fund aimed at creating 150 000 new jobs over the next three years. The fund is positioned as an integral delivery vehicle of government’s drive to reduce unemployment.  The first round of applications is now open until 31^st July.

Time-bomb

South Africa has one of the highest unemployment rates globally at 25% and it is estimated that more than a million jobs were lost during the global economic crisis. Government plans to create five-million new jobs over the next decade, thereby reducing unemployment by 10%. Trade union federation Cosatu general secretary Zwelinzima Vavi warned this week that South Africa’s high level of unemployment, especially among the youth, was a “ticking time bomb”.

Grants not loans

The fund, which was announced in President Jacob Zuma’s State of the Nation speech in February, is distinct from existing development financing instruments, such as the R10-billion Industrial Development Corporation (IDC) loan facility, as it will provide grants rather than loans.

The IDC jobs scheme, which was launched in April, mainly targets entrepreneurs and seeks to create 50 000 jobs. The latest jobs fund would be managed by the Development Bank of Southern Africa and would not seek repayment, Gordhan said, warning however, that government reserved the right to reclaim funds that were not spent for the intended purposes or were misappropriated.

Eligibility

The Fund will consider co-financing proposals from private sector, non-governmental organisations, municipalities, government departments and municipalities that show economic development potential linked to sustainable job creation. The Fund will not limit investments to specific sectors or geographic regions. However, it will seek to support projects that contribute to addressing identified social and economic objectives.

Projects will have to satisfy both eligibility and impact criteria. Eligibility criteria will be used to determine whether or not applicants conform to the core pre-requisites of the fund. Impact criteria will measure the relative merits of each application in relation to all others under consideration. Only those applications with the highest impact scores will be accepted for consideration.

The new fund would consider proposals in enterprise development, infrastructure investment, support for work seekers and institutional capacity building.

“Projects should demonstrate potential for self-sustaining job creation with a particular focus on opportunities for young people to acquire skills and improve their long-term employment prospects,” said the Minister.

Ownership

To ensure real ownership and share risk, private company applicants would have to match funding on a one-to-one ratio. “However, for public sector applicants, there would be a reduced personal contribution as they were likely to have fewer resources and rewards were not likely to be financial in nature,” said Gordhan.

The National Treasury has set aside R2-billion for the fund in the current financial year.  “Reducing unemployment is one of government’s key priorities and the launch of this jobs fund is definitely another step in the right direction to bring down persistent high levels of unemployment,” commented Gordhan.

For further information

www.jobsfund.org.za I  [email protected]  I  0861 00 3272

Deadline for submission: 31 July 2011