South Africa's high level of unemployment has prompted the Industrial Development Corporation (IDC) and the Unemployment Equity Fund (UIF) to launch a R2-billion fund to assist local industries to create new permanent jobs and to preserve permanent jobs.

The fund would be capitalised by the UIF through a five-year listed private placement bond that would be registered with the JSE and which would mature in 2015.

The IDC would manage the facility and would assess applications for loans on a case-by-case basis.

The fund would be made available to start-up companies, to provide a debt portion of expansionary acquisitions for existing businesses and to facilitate working capital funded expansions.

Companies could borrow between R1-million and R100-million from the fund.

IDC CEO Geoffrey Qhena told journalists in Pretoria on Wednesday that this fund would assist the IDC in strengthening its capacity to facilitate development and entrepreneurship through the Industrial Policy Action Plan.

He noted that the IDC would specifically use the funds to ensure the development of key sectors of the economy, which were more labour intensive.

However, it would not limit the funds to any specific sectors.

Qhena commented that the outflows of the fund would contribute to changing the economic landscape of South Africa.

UIF Commissioner Boas Seruwe also expressed his confidence that the R2-billion in funds would go a long way in creating new jobs and curbing further retrenchments.

Nearly 900 000 South Africans had lost their jobs in 2009 as a result of the economic downturn.

Seruwe said that the UIF had, in the past financial year, paid out R5,8-billion in benefits, compared with R3,8-billion the year before.

The number of benefit claims lodged had significantly increased to more than 800 000 in the past financial year, with about 60 000 applications being submitted each month.

Meanwhile, Economic Development Minister Ebrahim Patel welcomed the creation of the fund, saying that it was time to start getting people back to work.

He pointed out that as many as 5,8-million people were currently without work, with many having become discouraged from looking for work.

The Minister noted that access to capital and the cost of capital remained two of the biggest challenges for companies wishing to expand or to start up.

To that end, the IDC would be able to provide better loan terms to companies, as the capital was provided to the IDC at a lower cost than general financing terms.

It was also provided to the IDC at a fixed interest rate, which would allow the IDC to pass on further benefits to those who qualified.

Both Patel and Qhena expected the fund to be particularly helpful to small and medium-sized enterprises.