Helping hand for young entrepreneurs

Helping hand for young entrepreneurs

A joint initiative set up by the IDC and its partners has a treasure chest of R3-billion to fund businesses owned by the youth. Non-financial help is part of the deal, to ensure they can become active participants in the economy and create jobs….

helping handA joint initiative set up by the IDC and its partners has a treasure chest of R3-billion to fund businesses owned by the youth. Non-financial help is part of the deal, to ensure they can become active participants in the economy and create jobs.

Youth-owned businesses will have smoother access to funding through a joint venture between the Industrial Development Corporation, the National Youth Development Agency (NYDA) and the Small Enterprise Finance Agency (Sefa), which was introduced in Eastern Cape on 28 February.

It was the first in a series of roadshows at which the three agencies will promote the fund, to increase its uptake. The R3-billion youth fund was launched in Pietermaritzburg in late 2013 to target businesses owned by young people. It was established in light of the fact that “obtaining finance from conventional commercial lenders is a very real challenge for the majority of young South Africans”, noted NYDA acting chief executive Khathu Ramukumba.

“Often young aspiring entrepreneurs are rendered ineligible for finance due to their financial backgrounds, coupled with stringent funding criteria.”

The partnership will ease access to funding for youth-owned businesses, making them active participants in the national economy and job creation. The fund was launched following the Youth Accord, which was signed in 2013 by the government and its social partners.

The IDC has set aside R1-billion from its Gro-E Scheme for the youth fund. Chief executive Geoffrey Qhena said that creating an enabling environment would help to unearth the potential of youth entrepreneurship. “It is important that the youth take advantage of the opportunities that are created through this partnership and contribute to both the growth of our economy and job creation.”

Growing the economy

Youth-owned businesses have the potential to create jobs and keep the country growing, believe the IDC, the NYDA and Sefa. This confidence was behind the decision to team up to form the fund, which was specifically set up to make it easier for young entrepreneurs to get finance either to start a business or expand an existing one.

People between the ages of 18 and 35 who own their own business or plan to start their own business can apply for financing from the IDC, NYDA or Sefa. As part of the agreement, they will receive professional coaching and mentoring through the three institutions.

The IDC, a parastatal, was established to provide finance for industrial development projects. It plays a catalytic role in promoting partnerships across industries in South Africa and beyond, so driving regional economic growth.

According to the three partners, the fund is designed to provide entrepreneurs “with the necessary financial and business support that will help you establish a business or expand your existing business, with the main aim of contributing towards sustainable job creation”. They said R1-billion had been set aside “to kick-start young entrepreneurs like you who are willing to make their dreams a reality”.

“This fund provides loans at attractive interest rates to businesses that operate in industries falling within our funding mandate. The funding is available to South African citizens.”

Industry focus

Businesses in the following industries are the main focus of funding from the IDC:

  • Green industries;
  • Agricultural value chain;
  • Manufacturing activities;
  • Strategic high-impact projects;
  • Mining value chain;
  • Tourism and high-level services;
  • Media and motion pictures;
  • Knowledge economy; and,
  • Business support.

Sefa, a 100% IDC-owned agency, was set up on 1 April 2012 to provide finance for small businesses and co-operatives that sought funding of up to R5-million. It aims to foster the establishment, survival and growth of small medium and micro enterprises and contribute towards poverty alleviation and job creation through its nine regional offices, set up across the country.

“Our partnership with the IDC and the NYDA is a catalyst for the development of viable youth entrepreneurship,” explained the chief executive, Thakhani Makhuvha. “Through this collaboration we continuously seek to assist and to empower the youth by giving them business support and access to finance. We further encourage young entrepreneurs to venture into the productive sectors of the economy.”

The NYDA will provide all pre-investment business support services for qualifying clients. They will only need to make a small contribution to post-investment business support services. Young people whose business ideas qualify for the Grant Programme, depending on their individual needs, will also qualify for some of the NYDA’s non-financial support services, including:

  • Mentorship;
  • Voucher Programme;
  • Market linkages;
  • Entrepreneurship;
  • Development Programme;
  • Youth co-operatives;
  • Development Programme; and,
  • Other business support services.


Forgotten Password?