Closing the Gap

Emerge Group In collaboration with National Treasury

Introduction and Background

In 2011 National Treasury introduced The Jobs Fund. The primary objective of the South African Government funding is aimed at employment creation facilitation by supporting initiatives that generate employment in innovative ways. The Fund offers grants in the areas of enterprise development, infrastructure, support for work seekers and institutional capacity building.

 

The Jobs Fund awards grants to organisations through a competitive project application process where only the best ideas are funded. Operating on challenge fund principles, the Fund ensures that funding allocations are transparent, open and competitive, and are made by an independent Investment Committee. The Jobs Fund accepts applications from the private, public and non-governmental sector during calls for proposals. Project partners are required to share both risk and costs by matching the grant fund allocation.

The Jobs Fund

The Jobs Fund creates jobs by supporting initiatives that generate employment in innovative ways. The R9 billion Fund offers once-off grants in the areas of enterprise development, infrastructure, support for work seekers and institutional capacity building.

Established by the South African government in 2011, The Jobs Fund awards grants to organisations through a competitive process where only the best ideas are funded. By doing so, it aims to create 150,000 permanent new jobs in South Africa by 2015.

Achievements to date

Since its inception in June 2011, the Jobs Fund had a target of creating 150 thousand permanent jobs. By December 2018, the Fund had created 170 thousand permanent jobs, 55 thousand short term jobs, 20 thousand internships and trained 220 thousand beneficiaries. The Fund operated on challenge fund principles, necessitating applications from private projects seeking government funding, which had to be matched. National Treasury noted the role of externalities beyond the fund’s control in this low expenditure, and was confident the Fund’s ratio of expenditure would return to acceptable levels in the medium term.

Closing the gap: in-house SME funding

Emerge Group (Pty) Ltd and The Business Place NPC jointly conceptualized an on lending fund that could assist existing and budding entrepreneurs with financing and business support training with the intention of creating full term employment opportunities. An application was extended to The Jobs Fund managed by the Treasury Government Technical and Advisory Committee (GTAC). 

On 19 February 2020, the National Treasury of the Government of the Republic of South Africa acting through GTAC entered into an agreement with Emerge Group (Pty) Ltd.

Access to Funding

Through the Jobs Fund Agreement, Emerge Group will institute the specific goals of the Fund by providing mechanisms in terms of systems, policies and procedures that are designed to identify and fund innovative job creation solutions for a better functioning labour market. Furthermore, to overcome identified short-term barriers to job creation. These constraints limit the growth potential of SMMEs that could create sustainable employment. The constraints can be narrowed as follows:

 

  • Lack of access to development funding at low cost;

  • Lack of access to market and market linkages;

  • Lack of risk appetite by financiers resulting in potentially good projects not been funded;

  • Lack of entrepreneurial training and support; and

  • Delays in funding resulting in lost opportunities for SMMEs.

 

Emerge Group aims to catalyse innovation in job creation through structured and strategic private and public sector partnerships. Initiatives which demonstrate the growth potential and capacity to create jobs will receive funding.

Target Market

Through the Jobs Fund Agreement, Emerge Group will institute the specific goals of the Fund by providing mechanisms in terms of systems, policies and procedures that are designed to identify and fund innovative job creation solutions for a better functioning labour market. Furthermore, to overcome identified short-term barriers to job creation. These constraints limit the growth potential of SMMEs that could create sustainable employment. The constraints can be narrowed as follows:

 

  • Lack of access to development funding at low cost;

  • Lack of access to market and market linkages;

  • Lack of risk appetite by financiers resulting in potentially good projects not been funded;

  • Lack of entrepreneurial training and support; and

  • Delays in funding resulting in lost opportunities for SMMEs.

 

Emerge Group aims to catalyse innovation in job creation through structured and strategic private and public sector partnerships. Initiatives which demonstrate the growth potential and capacity to create jobs will receive funding.

Selection Criteria

The Project endeavors to focus on 100% Previously Disadvantaged Individuals of which 65% of the beneficiaries are women and 50% youth. 

To qualify, beneficiaries should at least meet the following criteria:

  • SMME must commit itself to undergo training and business development support;

  • Selected beneficiaries must demonstrate potential to grow their turnover;

  • Selection criteria will prioritise SMMEs with high labour absorptive capacity;

  • The client must meet the definition of black as per DTI and the Revised Financial Sector Code;

  • The client must have at least 51% black ownership, managed and controlled;

  • The client must have direct involvement in the business operations;

  • The client must have the ability to create new and sustainable jobs;

  • The business should have a well-detailed business plan;

  • Client must have a strong track record evidenced by business performance and/or strong expertise in their industry;

  • SMME’s committed to good governance and has strong financial and management systems in place;

  • Businesses looking at using the credit for between 0-3 years;

  • Clients whom are responsible, co-operative, transparent, and of sound integrity;

  • First time entrepreneurs whom demonstrate the ability to start and manage a business and have suitable experience;

  • Repayments will be in the form of debit order payments from the client’s business account and are to be made monthly;

  • SMMEs must be committed to good governance and have strong financial and management systems in place as well as demonstrate financial viability and sustainability of the business