14 Apr IDC and UIF announce R2 Billion fund to create employment
The Industrial Developmental Corporation (IDC) of South African Limited and the Unemployment Insurance Fund (UIF) today announced that they will launch a R2bn investment aimed at creating and sustaining jobs. The investment will be through a bond issue which will be subscribed by the UIF and the Facility sourced at a fixed and concessionary rate of interest. The UIF and IDC will launch the fund at the Union Building in Pretoria this afternoon.
The fund will be capitalized by the UIF through a private placement bond and the UIF’s CSI fund.
IDC CEO, Geoffrey Qhena said: “This unique collaboration between government entities underlines the IDC’s partnership approach fulfilling its mandate as an enabler of government’s developmental agenda – promoting coordination of economic activities in pursuit of job creation and balanced, shared and sustainable economic growth. These funds will specifically be applied to job creating and saving transactions and the benefit of this concessionary facility will be passed on to businesses that comply with the fund’s investment criteria as well as IDC’s usual developmental funding requirements. The loan issuance and the objectives thereof are in line with the IDC’s long standing mandate of facilitating development and entrepreneurship in South Africa through the IPAP.”
The facility will be managed by the IDC, and it is expected that the benefit of the lower rate to transactions will facilitate significant preservation/ creation of permanent jobs in South Africa. The fund will be available to start-up companies; to provide a debt portion of expansionary acquisitions for existing businesses; and to facilitate working capital funded expansions. The minimum borrowing per transaction will be R1million and the maximum will be R100 million and in the case where a transaction is in excess of R100 million, the IDC will fund the excess from its normal funding.
UIF Commissioner Boas Seruwe said:” The economic challenges brought about by the global economic recession demanded innovative solutions and in partnership with the IDC I believe we have responded accordingly.
“We hope that the financial muscle that the UIF has made available through the IDC will inspire confidence to existing and aspirant entrepreneurs to take up the loans in order to expand their businesses or to create new industries.
“Our partnership has contributed to enabling financial conditions. We therefore appeal to businesses to rise to the challenge and assist the country in curbing job losses and in creating new jobs.”
The management and the board of the UIF have responded to the demands of South Africans for decent jobs and used the enabling provisions of the UIF Act to partake in efforts to alleviate the negative effects of joblessness and poverty on South African workers.
“We therefore anticipate that the workers of South Africa will benefit through increased employment opportunities as a result of this initiative,” Seruwe added.
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Notes to Editors:
The IDC is a self-financing, South African state-owned national development finance institution that provides finance to promote industrial and entrepreneurial development. Its primary objectives are to contribute to balanced sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of all citizens of the African continent. The IDC identifies and funds projects in partnership with others and focuses on promoting and investing in viable new industries and differentiates itself through risk taking and flexibility in structuring, particularly in promotion of BBBEE, SMEs, regional investment diversification and job creation.
Unemployment Insurance Fund (UIF)
The Unemployment Insurance Fund was established in terms of section 4 (1) of the Unemployment Insurance Act, 2001 (Act 63 of 2001) as amended. The act empowers the UIF to register all employers and employees in South Africa. The Unemployment Contributions Act, (2002 Act 4 of 2002) empowers the SARS Commissioner to collect monthly contributions from both employers and workers. Section 9 of the Unemployment Contributions Act, empowers the Unemployment Insurance Commissioner to collect monthly contributions from all those employers who are not required to register as employers in terms of the fourth schedule to the Income Tax Act and who are not liable for the payment of the skills development levy in terms of the Skills Development Act, 1999 (Act 9 of 1999). These contributions are used to pay benefits and any other expenditure reasonably incurred to the application of the UIF Act. Therefore, the UIF provides short-term relief to workers, subject to certain conditions, when they become unemployed, or are unable to work because of illness, maternity or adoption leave and also provides relief to the dependants of deceased contributors.