Government’s R10 billion job creation fund goes quiet

The Democratic Alliance says that the government is no closer to the launch of a R10 billion venture capital fund earmarked for job creation.

The focus of the fund is to provide “venture” capital-type funding and mentoring to target groups, especially black entrepreneurs.

In replies to parliamentary questions from the DA, neither Minister of Finance Pravin Gordhan nor Minister of Small Business Development, Lindiwe Zulu, could provide details of a launch date for the fund announced by President Jacob Zuma more than two months ago.

Zuma and his deputy Cyril Ramaphosa chaired a meeting of chief executive officers of major companies and leaders of labour unions to discuss long and short term measures to grow the economy and create job opportunities.

The SABC reported that the meeting agreed to the setting up of the R10 billion fund to boost small and medium enterprises.

“There is a need for some concrete initiatives which ensure a turn-around in the country economic fortunes,” said President Zuma.

“The first initiative is a joint private and public sector fund for small business support. It will be established with roughly 50:50 contributions by the partners.

“The focus is to provide “venture” capital-type funding and mentoring to the target groups, especially black entrepreneurs,” Zuma said in a statement on 9 May 2016.

“While business claims to have stumped up R1.5 billion to inject into the fund, government has yet to show its hand so the fund is waning,” said Toby Chance, DA Shadow Minister of Small Business Development.

“This means that the job creation promised by this venture capital fund will be stalled because of government’s hollow commitment to placing job creation at the apex of its agenda.”

The DA said it understands that a big sticking point holding things back is the extent to which government will have the ultimate say over the fund’s mandate and investment strategy.

“Delays over the venture capital fund launch suggest internal disagreements between National Treasury and other departments. The Treasury is under pressure to implement major structural economic reforms which will ease the cost of doing business and reduce uncertainty holding back investment desperately need to jump-start our economy and create jobs,” Chance said.

The DA said that the press briefing was ‘hastily arranged’ and ‘ timed to get maximum attention from the ratings agencies’ which made visits the country in May and June.

A reply from Treasury read:

“The details of the co-investment fund have as yet not been finalised.  There is a commitment from government to play a role in the fund and to have representation on the board.

“The details  about how much funding government will provide, if any; how the funding will be structured; and  the date of the launch of the fund will be determined in the near future.”

The department of Small Business Development said:

“The date of operationalizing the fund has not been finalised as the parties are still dealing with the details of setting up the fund and therefore it is envisaged that the dates will  be announced once all systems are in place.”

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Government’s R10 billion job creation fund goes quiet