The symbol of the South African economy today is no longer the miner in a hard hat of the mid-1980s. Toilers of the 21st century are found in call centres, or on the streets doing piece-work as part of the burgeoning, one million-strong informal economy.
The person standing at the traffic lights with a poster board saying ‘No Job” is also a symbol of the worker of today, testimony to the fact that one in three economically active South Africans is unemployed.
The changing face of labour poses enormous challenges for the government, which has the unenviable task of balancing the need for economic growth in a globalising world and fulfilling its promises to the jobless at traffic lights and on street corners.
It is the survivalist community-based organisations, larger NGOs, trusts and donor agencies that are attempting to provide some supplementary support to the government by picking up the pieces of the growing skills shortage and flourishing unemployment.
The Swiss South African Youth Cooperation Initiative (SSACI) is one such organisation. It is a South African donor agency funded by Swiss and South African companies with interests in both countries and by the Swiss government’s Agency for Development and Cooperation.
The SSACI’s aim is to ‘alleviate and promote community development by providing financial and other support to projects that open up educational and vocational opportunities for disadvantaged young South Africans”. It focuses on people aged between 16 and 26, because it is this age group that is the hardest hit by unemployment levels.
The 2001 census figures show that about 47% of all young people under the age of 30 are unemployed and they constitute 70% of all unemployed people (41,6%). Of the 300 000 new entrants into the job market each year, only 15 000 are absorbed into the formal economy. Depressingly, about 20% of unemployed youth in South Africa believe that they will never find a job.
Crucial to the SSACI’s decision about whether to fund a project is its capacity to provide comprehensive post-training to support graduates that will help them set up their own micro-enterprises or be absorbed into the formal employment sector.
Says Richard Duncan, the SSACI’s programme manager: ‘Essentially SSACI focuses on employment. But there is another angle to it: we also aim at employability, which is why every single project that we are involved with must have a training component and not just a trading component. In other words, it must help to place people or to set up small businesses.”
Each year the SSACI selects a limited number of projects for funding and these receive assistance for up to three years and a maximum of R800 000 a year. Grants for longer periods or larger amounts are considered in exceptional cases.
To date 33 projects have been funded by the SSACI. Five have run to completion, four are in a second phase of funding and 24 are still in the first phase. According to Duncan, the total amount of money committed to the projects is about R29-million and R22-million has been disbursed so far.
This money comprises an equal contribution from the Swiss Agency for Development and Cooperation and Swiss-South African corporate companies. These include Alpha, Credit Suisse, Swiss Re and Xstrata.
The Investing in the Future judges praised the SSACI for its positive, practical investment in the future of South Africa’s youth. ‘This is the kind of initiative that these awards were set up to honour — and in the process, hopefully, encourage other outfits to invest in similar worthy initiatives,” said the judges.
The SSACI funds projects that serve out-of-school youths and incorporate strong technical or vocational training (this is in line with the country’s national human resource development strategy, which was launched by the ministers of labour and education in 2001 to improve the country’s skills level).
Projects must have an efficient management structure and low-overhead costs, they must have the potential to be replicated and must operate in one of the provinces on which the SSACI is concentrating — Limpopo, North West, Gauteng, KwaZulu-Natal and the Western Cape.
The SSACI is registered as a Section 18a public-benefit trust in South Africa — ‘a group of people [board of trustees] that administers certain property or funds for the benefit of other people”. Trusts like this are exempt from tax, but have to give grants to public-benefit projects or ‘activities of a philanthropic or benevolent nature”.
A special focus area of the SSACI is the further education and training (FET) sector, which offers education and training between grades 10 and 12 and is a critical player in addressing the massive skills shortage in South Africa. This training — predominantly technical and vocational — takes place after compulsory schooling (grade 10) but before higher education.
Examples of projects the SSACI has funded are the Business Skills and Development Centre in Cape Town, a FET college training in business and office skills; the Association for the Physically Disabled in Soweto, which offers FET training in welding or catering; the KwaZulu-Natal Poultry Institute, which helps people start small businesses; and Zenzele Training & Development in the Western Cape, which offers training in entrepreneurial skills and help in setting up micro-enterprises.
‘SSACI, as a funding agency, does not implement. We fund intermediary organisations, referred to as project holders, to implement projects on our behalf,” says SSACI programme officer Bheki Mchunu.
Projects are regularly evaluated by external evaluators and are expected to produce quarterly reports with audited financial statements.
To date 1 950 youths have enrolled in projects funded by the SSACI and 686 have completed vocational training. About 350 of these are in full time wage employment, 140 are self-employed, six are studying full-time and 48 are unaccounted for. According to Duncan, 42 micro-enterprises have been created to date.
‘This figure doesn’t look that high, but when you think of how high the international failure rate is [for setting up micro-enterprises] these are the ones that have come through the fire,” says Duncan.
Internationally more than 70% of youth-owned enterprises fail within the first two years.
In a Global Entrepreneurship Monitor (GEM) survey in 2001, South Africa was ranked 14th out of 29 countries in terms of total entrepreneurial activity, but only 25th in terms of new firms — the lowest of any of the developing countries surveyed. This GEM research showed that less than a third of all start-up businesses in South Africa pay salaries for more than three months, indicating a high failure rate.
Among young South Africans in the 18 to 34 age group, total entrepreneurial activity was only 5,7% — compared to an average of 13,4% in other developing countries.
Duncan explains the reason for this: ‘Most young entrepreneurs don’t have the life experience to run a business and they quite often have unrealistic expectations. They say, ‘I’m starting my business today so I’ll have a Mercedes tomorrow.’
‘SSACI is looking at pathways to ensure successful entrepreneurial businesses that take into account that successful entrepreneurs hardly ever succeed first time around. Young people need to learn from experience and may fail three or four times before they hit the right formula.”
The SSACI was set up in 2001, with a pledge from its donors of five years’ support of the project. ‘An external evaluation will be conducted at the end of five years to determine [the SSACI’s] impact and the second phase of the project will be decided on that basis — there is an intention among the corporate companies involved to continue supporting SSACI as part of their corporate social responsibility,” says Mchunu.
Duncan says other options to ensure the trust’s sustainability include ‘priming the pump” — using the income generated from the sale of trainees’ products or services — and ‘tapping into the perennial income stream offered by the National Skills Fund”.