South African government has launched a $140 million 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, 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 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.