South Africa’s Industrial Development Corporation (IDC) on Tuesday launched a R10-billion scheme to tackle the country’s chronic unemployment problem.

CEO Geoffrey Qhena said at a media briefing that the scheme was aligned with the government’s New Growth Path and its latest Industrial Policy Action Plan (IPAP2).

The South African government plans to create five-million new jobs over the next decade, thereby reducing unemployment by 10%. The country currently has the highest unemployment rate on the African continent.

Companies would be able to access funding of between R1-million and R1-billion.

CFO Gert Gouws said that the scheme would be able to create an additional 40 000 to 50 000 employment opportunities, at an average of R250 000 to R300 000 for every job created.

He added that the cost per job created or saved may not exceed R500 000.

The funding would be available to entrepreneurs across the IDC’s mandated sectors at prime less 3% over a period of five years.

Some of the sectors highlighted for funding included the green economy, manufacturing, the mining value chain, agriculture and infrastructure.

Qhena said that businesses and entrepreneurs applying for funding should have economic merit, show good potential for job creation, be broad-based black economic empowered accredited and operate within South Africa.

Last year, the IDC set aside R6,1-billion for companies hit by the global economic recession, but businesses were slow on the uptake, with only R3,7-billion of the funds currently being committed.

Gouws believed that there would be a faster uptake of the R10-billion scheme, as it came at much cheaper rates. “With this scheme we are actually lending below our borrowing rates, as the fund will be subsidised from dividends earned from the corporations assets.”

Qhena added that the IDC would also be willing to go to the market and borrow or sell some of its existing shares if needed.

“If we want to expand South Africa’s production capacity and create additional jobs, we cannot continue doing business as usual, we need to be creative in order to develop new industries,” he said.

DISTRESS FUNDING

The IDC also announced a R750-million fund for businesses that were affected by recent droughts and floods in the country.

Of this, R500-million would be made available at prime less 3% for businesses falling within the IDC mandate.

The balance would be loaned to the Land Bank to primarily assist agricultural businesses that fall outside of the IDC mandate.