Finance minister Pravin Gordhan yesterday unveiled the Government’s jobs fund in parliament yesterday. The fund of R9 Billion will be administered by the Development Bank of South Africa and will operate by means of grants. The aim of the fund is to encourage business to invest in creating jobs , so depending on the profile and risk of an undertaking the Jobs Fund will provide business with a grant of up to 50% of the  costs. A lesser contribution may be required from non-private sector applicants.

This is a big response fro a major crisis facing the country – levels of unemployment especially amongst South Africa’s youth are at unacceptable levels and if this problem isn’t addressed we could all be faced with social and other problems.  It is believed that 42% of South African’s between the ages of 18 and 29 are unemployed. This initiative hopes to address this problem. For more information on applying you can visit the  Jobs Fund website .

This is a positive development from Government and there are some huge upside benefits for small business entrepreneurs. If you considering an expansion to your current operations or planning a new venture you should consider applying for a grant. You will need to motivate in your application exactly how many jobs you are likely to create. Specifically targeting young employees should make it a lot easier to succeed with the application.

The fund has the potential to help create many badly needed jobs in South Africa however in our opinion there are possible pitfalls that could hamper the creation of jobs by the Jobs Fund:

• Poor allocation of grants that don’t take into account the job creation potential of a particular project. The way in which Government awards tenders comes to mind
• Administrative bottlenecks and red tape at the application phase
• Lack of suitable skills in evaluating projects
• Lack of skills and work ethic amongst the targeted group – one of the major causes of unemployment in South Africa is the skills shortage. Its a fact that you need talented skilled people to create jobs.
• A focus on funding projects by large corporations , the key to growing the South African economy is to encourage SME development. Leveraging this sector can reduce unemployment is a short time. Corporates are notorious for actually destroying jobs and a major concern is that the Jobs Fund may target larger applicants as they perceive this as a way of generating more jobs.

If Government is to succeed with its employment targets over the next few years it will have to energetically empower the SME sector which could be a major engine of growth , using the Jobs Fund successfully will help with this objective.