Businesses owned by young people are set to benefi from the Industrial Development Corporation’s (IDC) Gro-E Scheme.
The scheme offers financial support to start-up businesses with the main aim of contributing towards sustainable job creation.
Launched in 2011, the scheme has to date approved R3.5 billion to 114 companies and is expected to create 23 800 jobs.
As part of the signing ceremony of the Youth Employment Accord, the IDC has earmarked R1 billion of the Gro-E Scheme for businesses owned by young people.
This fund provides loans at prime less 3 per cent to businesses that operate in industries falling within the 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.
Geoffrey Qhena, the CEO of the IDC, said 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 to 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,” explained Qhena.
Applicants for the Gro-E Scheme must be:
- Start-up businesses needing funding for buildings, machinery and working capital.
- Existing businesses that want to expand.
- Businesses that demonstrate economic merit and have prospects of acceptable profitability.
- Businesses whose maximum cost per job do not exceed R500 000.
The funding period will be structured to meet the cash flow needs of the business. Qhena said appropriate capital and interest payment holidays would be applied depending on the financial needs of the business. There is no prescribed minimum for owner contribution.
In addition, the scheme is aimed at companies with more than 50 per cent youth ownership.
Qhena said the IDC would work very closely with institutions such as the National Youth Development Agency, Small Enterprise Development Agency, Small Enterprise Finance Agency and sector bodies to ensure that the fund is well marketed.
“We appeal to experienced entrepreneurs to join with the youth in establishing businesses to ensure that these new entrepreneurs are coached and mentored.”
Applications to the IDC can be made at any of its regional offices or the Pre-Investment Business Centre at its Sandton head office. Entrepreneurs can make use of IDC’s online application facility, accessible via its website on www.idc.co.za
*Mandla Mpangase works for the IDC