Jobs Fund calls for R3bn from Treasury’s already constrained fiscus in a bid to keep youth employed

The rate of unemployment remains persistently high in South Africa at 32.7%, and rising above 60% when it comes to youth aged 18-35.

The rate of unemployment remains persistently high in South Africa at 32.7%, and rising above 60% when it comes to youth aged 18-35.

Published May 31, 2023

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The Jobs Fund has requested an additional allocation of R3 billion from the National Treasury's already constrained fiscus in a bid to keep the youth employed as the prevailing economic climate in South Africa has dealt private sector businesses a significant blow over recent years.

This comes as the Jobs Fund on Monday said it was looking for experienced private and public sector organisations and NPO intermediaries to submit applications for its 11th funding round titled: Breaking Barriers: Future Proofing South Africa’s Employment Options.

The Jobs Fund was started more than 10 years ago with a R9bn recapitalisation, and co-finances projects by public, private and non-governmental organisations that will significantly contribute to job creation.

This involves the use of public money to catalyse innovation and investment on behalf of a range of economic stakeholders in activities that contribute directly to enhanced employment creation in South Africa.

The rate of unemployment remains persistently high in South Africa at 32.7%, and rises above 60% when it comes to youth aged 18-35.

Jobs Fund monitoring and evaluation manager Vuyo Tetyana yesterday told Parliament that a number of external factors had historically negatively impacted on the Fund’s ability to disburse and create jobs.

Presenting before the Standing Committee for Finance, Tetyana said these included slow economic growth, which averaged 0.6% between 2016 and 2022, and resulted in reduced demand for SMME goods and services, thus shrinking markets.

"This impacts on partners’ ability to request further grant disbursements, which in turn hinders the pace of job creation. Higher levels of economic growth of at least 5%-plus per annum are needed in order to make a meaningful dent on unemployment," Tetyana said.

He said the drought was also a factor in the Fund's underperformance as the Jobs Fund has a big agriculture portfolio that was affected by the multi-year drought conditions that had prevailed since 2015.

Tetyana said the drought conditions crashed agricultural outputs, including crop yields and meat production.

"This has had a knock-on effect on farmers’ ability to maintain production levels, thus impacting on their revenue streams.

“Slowing agricultural activity impacted on disbursements to the portfolio, as payments are linked to performance," he said.

While rainfall had improved, climate scientists have cautioned that increased climate variability will expose South Africa to more frequent and prolonged droughts.

Tetyana said the conditions that gave rise to the establishment of the Jobs Fund continued to prevail, and in fact had worsened in the past 10 years.

He said the government, therefore, needed to continue to play a leading and enabling role in the market by partnering with initiatives that remain committed to effect meaningful change in the unemployment crisis in the country.

"The Jobs Fund has requested an additional R3bn allocation for the roll-out of new funding rounds. The requested amount is in addition to the R9bn initially allocated to the Jobs Fund in 2011," he said.

"Informed by the historic cost per funding round, as administered by the Jobs Fund, is inclusive of a 10% allocation which involves value-added services such as governance and technical support. This cost structure is still significantly more competitive compared to other global Challenge Funds, which have operational costs of 15% to 33%."

According to the Fund, there are currently three significant job creation areas that it has identified, including the informal economy, digital economy and business process outsourcing.

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