The National Youth Development Agency (NYDA), Industrial Development Corporation (IDC) and the Small Enterprise Finance Agency (SEFA) have launched a R2.7 billion ($250 million) Youth Fund aimed at fostering entrepreneurship among South Africa’s youth.
Sefa has set aside R1.7 billion for the fund, with IDC contributing the remaining R1 billion.
The NYDA would play the role of screening and recommending young entrepreneurs offered by IDC and Sefa, CEO of NYDA Khathutshelo Ramukumba said.
He urged young people to aim higher and apply for funding in the production sector of the economy in order to amass enough wealth to generate large scale jobs.
“We want more young people to enter the space of manufacturing because we want these young people to be industrialists of tomorrow.”
“If you look at the reason why our economy today is not able to provide the necessary jobs that are required to take the majority of our people out of the poverty situation, it is because we have not created new industries in the main.
“The industrial landscape has not necessarily changed much from the pre-1994 situation,” he said.
Sefa CEO Thakhani Makhuvha invited young people to apply for finance. He said, unlike commercial banks, the agency was a developmental institution that does not require collateral to grant an applicant finance.
It offers funding of between R500 to R5-million to proposals that can demonstrate a sustainable business model.
Applicants would be afforded a maximum of 12 months to start paying back any loan.
“You don’t have to have collateral, you just have to demonstrate that your business can project sustainability,” Makhuvha said.
Makhuvha also said Sefa recently studied various models of agencies from other countries that offer development support to small businesses, including Brazil’s successful business agency, Sebrae.
Recent media reports revealed that small and medium enterprises provide a little over half of all jobs in Brazil, while the sector also accounts for about 70% of all new jobs in the country.
Makhuvha said Sefa aims to achieve similar results that Sebrae achieved, adding that his agency will push to have at least 56% to 61% jobs created by small businesses.
Recently, Small Business Development Minister Lindiwe Zulu said the National Development Plan (NDP) envisaged that 95% of all jobs will come from small and medium enterprises by the year 2030.
She said the R1.7-billion was meant to support entrepreneurs under the age of 35. She said a further R6.5-billion was available over the next five years for those who were 35 and older.