The Industrial Development Corporation (IDC) will be making available R4.5 billion over the next three years to help tackle the “ticking time bomb” that is youth unemployment.
IDC CEO Geoffrey Qhena has placed youth participation in the economy at the centre of the development finance institution’s strategies and actions.
“What is urgently needed is a concerted, sustained effort to create an environment that produces jobs, allows young people to acquire skills and allows them to branch out on their own through entrepreneurship,” he said.
Speaking at the IDC National Youth Enterprise Conference, which took place in Midrand on Tuesday and Wednesday, Qhena said the institution was best placed to help fund youth-owned enterprises that create jobs as it had more appetite for risk than the private commercial lending sector.
“It is no secret that access to funding is one of the major stumbling blocks for new businesses. Because of the IDC’s mandate of stimulating the economy, we are able to take a more patient approach and, within specific funding schemes, offer preferential lending rates compared with commercial banks,” he said.
Under the theme “Driving SA’s competitiveness through youth entrepreneurship”, the conference was attended by young entrepreneurs that have been funded by the IDC and those seeking opportunities to kick-start their businesses. Speakers at the two-day indaba included Economic Development Minister Ebrahim Patel; his deputy, Madala Masuku; IDC chairperson Busi Mabuza; NEF divisional executive Setlakalane Molepo, Telkom and Transnet CEO’s.
The IDC has pioneered the #SAUnder36 initiative through which it aims to identify enterprises owned by those who are below the age of 36, that are innovative, have the potential for high growth and can help stimulate the economy and provide employment to young people.
“Given our role as a development finance institution, we take these businesses under our wing to ensure that they receive all the necessary financial and nonfinancial support to help them achieve success. Ultimately, our success is measured by the success of the businesses that we fund,”
Patel told the conference that there were 3.5 million young people under the age of 34 who live in townships and are ready to work, but there were not opportunities available to them.
“If you focus on the townships you will find around 3.5 million young people ready to work, available to work, keen to work but unable to find work. That is the challenge that we are going to have to deal with. If we formed ‘Unemployment Must Fall’, we would do well,” he said.
Patel said developed countries had recognised the importance of investing in young entrepreneurs who are leading some of the fastest-growing sectors of the world economy.
“The economy needs young people, maybe even more than young people need the economy. When I meet with investors and travel the world, the most exciting and fast-growing sectors of the economy are the ones led by young people. Why should we deprive ourselves of that energy and that capacity?”
Patel said contracts awarded by government through its infrastructure development programme for the upgrading of roads, bridges, dams, railway lines and power stations stipulated that at least half the workforce on these sites had to be young people. He said focus should be on channelling more young people towards technical and vocation education training colleges, where they will be able to acquire skills they can use to enter the workforce faster.
“When you are a plumber, your chances of getting a job are greater than when you are a graduate in History or English,” said Patel.
Mabuza noted that IDC subsidiary – the Small Enterprise Finance Agency – had disbursed R1.3 billion in start-up and expansion funding to 69 000 small, medium and micro enterprises. She said, however, that more needed to be done to increase the number of young people entering the mainstream economy.
“The significance of support to the small business sector is that these are the enterprises that have been shown to be significant job creation drivers. But funding alone is not a long-term solution to youth entrepreneurship challenges. We need concrete solutions to bring millions of unemployed young people into formal economy,” Mabuza said.