16 Apr IDC announces Gro-E Youth scheme
18 April 2013
Businesses owned by youth are set to benefit from the Industrial Development Corporation’s (IDC) Gro-E Scheme. Under the scheme, the IDC offers financial support to start-up businesses with the main aim of contributing towards sustainable job creation.
The R10 billion Gro-E-Scheme was launched in 2011 to facilitate job creation. To date, R3.5 billion has been approved to 114 companies, and is expected to create 23 800 jobs, according to IDC CE Geoffrey Qhena.
As part of the signing ceremony of the Youth Employment Accord in Soweto, the IDC has earmarked R1 billion of the remaining R6.5 billion of the Gro-E scheme to businesses owned by young people (age less than 35).
This fund provides loans at prime less 3% to businesses that operate in industries falling within IDC’s mandate and are creating new jobs. The funding is available to South African citizens and the minimum amount for finance is R1 million.
Qhena says young entrepreneurs play an important role in the economic development of the country.
“It is important that we recognise the role that young people play in developing the country’s economy and the fund will go a long way in helping youth grow their businesses. The fund will also contribute in reducing the current levels of unemployment.”
“This specific fund will support the youth to become part of the solution to curb unemployment. Young people are very enterprising. However, access to funding has been one of the greatest challenges,” says Qhena.
The following existing criteria and terms of the scheme (Gro-E-Scheme) apply:
- start-up businesses, including funding for buildings, machinery and working capital;
- existing businesses for expansionary purposes;
- businesses that demonstrate economic merit and have prospects of acceptable profitability to be able to service their obligation;
- for the duration of the funding period, businesses whose maximum cost per job does not exceed R500 000 relative to the total funding required;
- Broad-based Black Economic Empowerment certification from an accredited verification agency, where applicable;
- businesses operating or expanding in South Africa;
- The funding period will be structured to meet the cash flow needs of the business;
- Appropriate capital and interest payment holidays will be applied depending on the financial needs of the business; and
- There is no prescribed minimum for owner contribution.
In addition, the scheme is aimed at companies with a shareholding by youth of more than 50%.
Qhena says the IDC will work very closely with other institutions such as the National Youth Development Agency (NYDA), Small Enterprise Development Agency (SEDA), Small Enterprise Finance Agency (sefa) and sector bodies to ensure that the fund is well marketed.
“A partnership approach among all these institutions is essential in ensuring that we achieve the desired outcome,” adds Qhena. “We appeal to experienced entrepreneurs to join with the youth in establishing businesses to ensure that these new entrepreneurs are coached and mentored.”
Direct applications to the IDC can be made at any of its regional offices or the Pre-Investment Business Centre at its Sandton head office. Qhena says there is another easier option for those applying for funding. He says entrepreneurs can make use of IDC’s online application facility, accessible via its website on www.idc.co.za.
For more information contact:
Public Relations Manager – IDC
Tel: +27 (0) 11 269 3282