Saving jobs takes hard work

The Unemployment Insurance Fund (UIF) is a vital part of the South African economic landscape. Providing assistance to people who have lost their jobs is a critical function in the current economic environment.

As part of its operations, the UIF has to invest the money it receives in order to achieve maximum efficiency.

In 2009 the UIF placed a R2-billion bond with the IDC to provide funding to businesses that will create and save jobs.

Of the now R3.5-billion available in this fund, the IDC has approved R2.9-billion since 2010, saving 18 463 jobs and creating 16 255 jobs. The total number of jobs both saved and created is 34 718.

Labour Minister Mildred Oliphant said that the cooperation between the IDC and the UIF demonstrated a serious commitment by government to deal with unemployment.


The UIF/IDC bond provides funding to both existing and start-up businesses.

Expansionary acquisition
IDC chief executive Geoffrey Qhena said the funding is targeted at start-up, expansionary acquisition and expansions of existing businesses.

"It is important that we partner with government to address unemployment in the country. This is a fundamental and sensible cooperation between government agencies," said Qhena.

The initial R2-billion UIF/IDC bond, which was offered to businesses at a fixed concessionary rate, will mature in 2015.

UIF commissioner Boas Seruwe said the good performance of the initial bond prompted the UIF to invest an additional R2-billion with the IDC, in four bonds of R500-million each.

"South Africa needs to create more job opportunities and investing in the IDC is a sure way of ensuring that the economy expands and creates more opportunities for employment. This is part of the UIF's contribution to government initiatives of getting South Africa to work by saving and creating jobs," he said.

This means, Seruwe said, that more revenue is contributed to the organisation and fewer claims are paid out to beneficiaries – a move he said will ensure the UIF's financial stability.

The focus of the fund has also shifted to assisting applicants outside Gauteng, the Western Cape and Kwazulu-Natal, as the remaining six provinces are the poorest in South Africa.

Under the original rules of the scheme the maximum amount per transaction was R100-million, but this has now been reduced to R50-million so that as many rural beneficiaries as possible may be assisted.

The criteria for funding under the IDC's UIF fund are:

  • A maximum cost per job of
  • R450 000;
  • R50-million cap per transaction;
  • Jobs must be created or retained in South Africa;
  • Only debt instruments are being considered;
  • Transactions can be funded on a stand-alone basis or on a co-funding basis with IDC or other institutions;
  • Clients are expected to make their first drawdown within seven months after approval; and
  • Pricing to clients is fixed at 6% for a period of time, after which it reverts to a concessionary rate linked to prime.

 All 12 of the sectors supported by the IDC qualify for funding under the scheme with companies in all sectors having taken advantage of the fund. However, companies from the metals, chemicals and textiles sectors make up 61% of the portfolio in numbers and 52% in the value of approvals.

 

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Advertising

Subscribers only

How lottery execs received dubious payments through a private company

The National Lottery Commission is being investigated by the SIU for alleged corruption and maladministration, including suspicious payments made to senior NLC employees between 2016 and 2017

Pandemic hobbles learners’ futures

South African schools have yet to open for the 2021 academic year and experts are sounding the alarm over lost learning time, especially in the crucial grades one and 12

More top stories

Zuma, Zondo play the waiting game

The former president says he will talk once the courts have ruled, but the head of the state capture inquiry appears resigned to letting the clock run out as the commission's deadline nears

Disinformation harms health and democracy

Conspiracy theorists abuse emotive topics to suck the air out of legitimate debate and further their own sinister agendas

Uganda: ‘I have never seen this much tear-gas in an...

Counting was slow across Uganda as a result of the internet shutdown, which affected some of the biometric machines used to validate voter registrations.

No way out for Thales in arms deal case, court...

The arms manufacturer has argued that there was no evidence to show that it was aware of hundreds of indirect payments to Jacob Zuma, but the court was not convinced.
Advertising

press releases

Loading latest Press Releases…