Glenda Daniels
Not a cent of the government’s R1-billion Umsombomvu Fund has been used for job creation in the two years since it was set up, and the fund is to be shifted from the Department of Finance to the Department of Labour “because of lack of capacity”.
Minister of Finance Trevor Manuel announced in his 1999 budget speech that a job-creation fund for young people would be set up from taxes levied on the demutualisation of Sanlam and Old Mutual. The original assets of the fund, R850-million, have grown to R960-million in the intervening period.
Both ministries said they were aware of the impending shift from finance to labour, but are awaiting Cabinet approval. It is estimated that there are six million unemployed young people in South Africa.
A Section 21 company, the Umsombomvu Youth Fund was established last year to carry the project forward, but according to CEO Malose Kekana, the appointment of staff and establishment of an office were finalised only in August this year. Two projects have been approved, says Kekana, adding that the money earmarked for them will be disbursed next year.
The decision to move the fund to the labour department was made at ministerial level. Department of Finance official Mmakogoshi Phetla says the rationale is that “finance deals with macroeconomic issues and the labour with skills development, job creation and the youth”. Phetla confirms no money has been disbursed from the fund.
Kekana believes Manuel probably announced the fund too early, before the necessary systems were in place. He adds that in any event “nearly R1-billion won’t create jobs for six million unemployed youth”.
Because Umsombomvu is a Section 21 company an amendment to the memorandum of incorporation will also have to take place before final transfer.
Department of Labour Director General Rams Ramashia confirms an “in principle agreement” that the aims of Umsobomvu will be better served if oversight of the fund is transferred to the department of labour. “We are its logical political home.”
Sceptical of how a one-off fund can create sustainable jobs, business analyst Reg Rumney says: “I’d be fascinated to see how this fund can create jobs. Special one-off funds are not the answer.”
Rumney argues that it is preferable to increase social welfare spending, or “put the money into the transport department so that roads can be built and employment created in that way”.
“It’s all very well for Manuel to have announced Umsombomvu two years on, nothing’s happened. Clearly there is a capacity problem that has still not been sorted out.”