R2b fund for small business start ups

Friday, December 14, 2018

Government has on Friday launched a R2 billion fund to help small business start-ups that are geared towards creating employment opportunities and contribute towards the growth and development of the economy.

The Project Development Partnership Fund (PDP) has been established through a joint venture between the Public Investment Corporation (PIC) and Unemployment Insurance Fund (UIF) – an entity of the Department of Labour.

Minister of Labour Mildred Oliphant, speaking at the launch of the fund in Pretoria on Friday, said the fund is expected to create and support over 10 000 jobs.

There is evidence that small business sector is the backbone of any economy and contributes significantly in the Gross Domestic Product of any country. SMEs represent a considerable 40% of all businesses in South Africa and it has been estimated that by 2030, 90% of the jobs will be in this sector,” said Oliphant.

However, while an entrepreneur could come up with a ground-breaking new product, it is worthless if it is not converted into a commercial commodity that generates revenue.

“The value of a thriving small business sector cannot be undermined, and that is why as government we welcome the introduction of new ventures such as the Project Development Partnership Fund,” the Minister said.

The PDP fund will be directed specifically at performing the following roles:

  • Offering funding to create and grow small businesses, therefore creating new companies;
  • Create companies in specific sectors such as agribusiness and bio-science, mining and beneficiation, manufacturing and ICT, social infrastructure, water and related services, financial services, and youth innovation; and
  • The fund will also be investing in PIC Youth Fund, affordable housing and infrastructure funding.

The Minister said the fund will also be focused on investing in projects which are focused on addressing South Africa’s socio-economic challenges through technologically advanced value propositions which are aligned to 4th industrial revolution.

“New and transformed fund managers will also be created through this process. Through a transparent and competitive process; specialised black-owned fund managers will be selected to drive investments across the sectors.

“This will create new black-owned fund managers in an industry where only 24% of players have a BEE score better than level 4.  Furthermore, there will be an emphasis on black youth and women-owned businesses at the underlying investment level,” said Oliphant.

The funding gap in the early stage venture capital space, limits the growth of innovative and high value businesses.  The Minister said government recognises that closing this gap, requires all to work together as partners.

The Labour Activation Programme (LAP) is designed to create real employment opportunities by offering training and upskilling to those who are unemployed or those at risk of losing their jobs.   

Support training programmes have demonstrable prospects of providing jobs.  “We have long gone passed the stage where training was done for its own sake.  Skills that we seek to create are those that are needed in the economy. Therefore, UIF seek to create synergy between the PDP and Labour Activation Programmes through among other things; establishing [an] incubation program through the LAP aimed at supporting and training entrepreneurs and small businesses.  Entrepreneurs would be trained in different skills and key elements that are important for running a business. The PIC would assist the UIF in facilitating this program through the PIC Academy for incubation.”

The Minister said the LAP also introduces a skills enhancement program for youth, in order to equip youth with relevant skills that are required in the economy; it further sourced business opportunities for those on the programme.

“We believe these initiatives will enhance the UIF’s role as it will be embarking on taking proactive measures towards creating employment and improving employability of its beneficiaries.  

“This simply put, is that the UIF is shifting from being a player when people are already unemployed to a role where it prevents that from happening.  Most importantly, the fund is now playing a visible role in providing employment opportunities by leveraging its resources,” said the Minister. – SAnews.gov.za