A three way deal signed yesterday by three development finance institutions promises to step up youth economic empowerment in South Africa.
The Industrial Development Corporation (IDC), the Small Enterprise Finance Agency (sefa) and the National Youth Development Agency (NYDA) signed a cooperation agreement with an expressed aim of helping youth-owned businesses.
The feature of the NYDA in the agreement will be welcomed by many stakeholders as representing signs of a turnaround for the youth development agency. Since establishment from the merger of Umsobomvu Youth Fund and the National Youth Commission in 2009, the NYDA has been hobbled by politics and allegations of financial mismanagement. Its mandate of fostering youth development has largely suffered.
A statement released by the three entities say the agreement will result in a coordinated approach to providing funding and support services to youth enterprises.
“Emerging entrepreneurs will be able to approach any of the DFIs for funding and business support initiatives offered by each institution,” said the statement.
The statement added that the cooperation agreement between the IDC, sefa and the NYDA is a follow-up to the signing of the Youth Employment Accord on 18 April 2013, where government and its social partners made a commitment to prioritise youth employment and skills development.
“The Youth Employment Accord is one of a series of social pacts intended to help achieve one of the New Growth Path goals of creating five million new jobs by 2020. In terms of the Youth Employment Accord, government has promised to support initiatives, giving young people opportunities as entrepreneurs, as employees and as trainees”.
When the accord was announced on 18 April 2013 the IDC announced it had set aside R1-billion from its Gro-e-Scheme to fund businesses owned by young entrepreneurs. As part of the accord, the IDC will work closely with sefa and the NYDA to market the fund.
“In signing the cooperation agreement, all institutions are throwing their weight behind promoting youth entrepreneurship. By prioritising youth economic development we are stepping up the fight against youth unemployment,” said Geoffrey Qhena, chief executive officer for the IDC.
Qhena said that youth-owned businesses will benefit from the partnership through development funding, coaching and mentoring provided by these institutions.
The NYDA will serve as a conduit for the screening and recommendation of young entrepreneurs to access the financing offered by the IDC and sefa. The NYDA provides business development support through its voucher programme and grant programme, this will complement the funding offered by IDC and sefa.
Acting NYDA CEO, Ayanda Makaula, said “We are incredibly excited about this unique partnership and are confident that the launch of this new programme will serve as a vital opportunity to facilitate the growth and development of young entrepreneurs”.
Sefa CEO Thakhani Makhuvha said “It is a well-known fact that small businesses often face challenges in accessing funding and business support from the various institutions that exist. Sefa has allocated R1.7-billion towards youth-owned businesses over the next five years.”
Sefa, a 100% IDC-owned agency was set up to provide access to finance for small businesses and co-operatives seeking funding of up to R5-million.