The Industrial Development Corporation (IDC) has pledged R1bn towards youth enterprise funding in a move that formed part of the Youth Employment Accord signed in Soweto yesterday.
The R1bn comes out of the IDC’s Gro-E Scheme which offers financial support to start-up businesses with the main aim of contributing towards sustainable job creation. The R10 billion Gro-E-Scheme was launched in 2011 to facilitate job creation.
The fund provides loans at prime less 3% to businesses that operate in industries falling within IDC’s mandate and are creating new jobs. The funding is available to South African citizens and the minimum amount for finance is R1 million.
IDC CEO Geoffrey Qhena said the Gro-E-Scheme has to date approved R3.5 billion has to 114 companies and was expected to create 23 800 jobs.
Qhena said young entrepreneurs play an important role in the economic development of the country. “It is important that we recognise the role that young people play in developing the country’s economy and the fund will go a long way in helping youth grow their businesses. The fund will also contribute in reducing the current levels of unemployment.”
Added Qhena “This specific fund will support the youth to become part of the solution to curb unemployment. Young people are very enterprising. However, access to funding has been one of the greatest challenges”.
The following existing criteria and terms of the scheme (Gro-E-Scheme) apply:
· start-up businesses, including funding for buildings, machinery and working capital;
· existing businesses for expansionary purposes;
· businesses that demonstrate economic merit and have prospects of acceptable profitability to be able to service their obligation;
· for the duration of the funding period, businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required;
· Broad-based Black Economic Empowerment certification from an accredited verification agency, where applicable;
· businesses operating or expanding in South Africa;
· The funding period will be structured to meet the cash flow needs of the business;
· Appropriate capital and interest payment holidays will be applied depending on the financial needs of the business; and
· There is no prescribed minimum for owner contribution.
In addition, the scheme is aimed at companies with a shareholding by youth of more than 50%.
Qhena said the IDC will work very closely with other institutions such as the National Youth Development Agency (NYDA), Small Enterprise Development Agency (SEDA), Small Enterprise Finance Agency (sefa) and sector bodies to ensure that the fund is well marketed.
“A partnership approach among all these institutions is essential in ensuring that we achieve the desired outcome,” adds Qhena. “We appeal to experienced entrepreneurs to join with the youth in establishing businesses to ensure that these new entrepreneurs are coached and mentored.”
Direct applications to the IDC can be made at any of its regional offices or the Pre-Investment Business Centre at its Sandton head office. Qhena says there is another easier option for those applying for funding. He says entrepreneurs can make use of IDC’s online application facility, accessible via its website on www.idc.co.za.