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Development finance institution, the Eastern Cape Development Corporation (ECDC) today announced that it has approved some R25million for disbursement to 27 companies in the first two windows of application as part of the Eastern Cape Jobs Stimulus Fund.
 
ECDC, which opens the third window of applications today for the fund, says R6,7 million has already been disbursed to 16 approved companies. It is currently waiting for the balance of the approved entities to meet set conditions for disbursement. In total, about 2 450 jobs will be created, saved and/or retained by the 27 businesses.
 
Launched in October 2011 with a budget of R39 million, the Jobs Fund was touted as the first scheme of its kind in South Africa. Managed by ECDC, the fund was set up to drive the job creation by incentivising businesses across targeted sectors to create new jobs.  ECDC’s role is to manage the funds, as well as perform all administrative functions including receiving, processing and adjudicating applications.
 
“A total of 90 applications were received and processed in the first two windows, of which 27 companies were approved for funding. ECDC approved R12,1 million from the first window of applications and R12,4 million in the second window. A total of 19 companies were approved in the first window of applications followed by 8 in the second window. The approved companies mainly operate in the Business Process Outsourcing, Agroprocessing, Services and Manufacturing sectors.
 
“There are certain conditions that have to be met by the approved businesses before disbursement takes place. These conditions include the submission of a memorandum of agreement signed between ECDC and the approved company, all employment contracts and certified copies of identity documents for the employees for whom the application was made; a current and compliant tax clearance certificate, proof of banking details and a copy of payroll,”explains jobs fund manager Thabo Shenxane.
 
The conditions also include a declaration by the entity that it complies with the Public Finance Management Act in terms of having  suitable financial management systems in place”
 
Qualifying businesses will be paid R10 000 per job created. The fund is meant to create sustainable new jobs located within the Eastern Cape by attracting sector-specific investments across the value chain. Applicants to the fund are measured according to the strategic impact of the jobs created, sector prioritisation, location and on skills development. All successful applicants are expected to sign a contract with ECDC before any funds may be disbursed.
 
Shenxane says that of the 27 companies, two have since withdrawn citing reasons of an economic meltdown in their respective business environments. The two withdrawing entities were approved for a total of 18 jobs. He says the majority of the applicants who failed were start-up companies with no start-up capital.
 
“Most of the unsuccessful applications were not operating at the time of the application. Others were not legislatively compliant or had insufficient financial information to test solvency and sustainability or were basic business ideas.
 
“We are seeing a significant interest in the fund and anticipate the submission of more quality applications. In the last month and a half, the Jobs Fund team has engaged organized business structures and particularly the private sector to take advantage of this opportunity,” adds Shenxane.
 
The incentive is only be available to businesses which operate within the province. The businesses which apply for the incentive are required to create at least 10 new jobs in the Eastern Cape. The company will be expected to maintain each job for a minimum of a year from the date of employment.