Background
South Africa has made remarkable progress since a democratic system of governance replaced Apartheid 15 years ago. New opportunities are reaching millions of South Africans in health, education, business and improved services (including water, housing and electricity). However serious problems still remain: the official unemployment rate stands at 23.5% (unofficially at approximately 34.3%) 1st Quarter 2009; poverty affects nearly half the population; and the country has one of the most unequal income distributions in the world.
Sustainable Employment
The economic growth program mirrors the South African Government’s strategy for job creation and growth with equity, focusing on creating employment and income for historically disadvantaged persons through the development of small and medium, size enterprises (SMEs) in the, manufacturing, services and agricultural sectors. The program is based on a business linkages model which builds commercial trade ties between historically disadvantaged SMEs and larger, more established businesses in South Africa, the Southern Africa region and the U.S. In addition to facilitating these market linkages, the program provides targeted technical assistance to participating SMEs to help them meet the requirements of the global market.
The enhanced business linkages programme aims to build the competitiveness of black enterprises through improvements in management, use of modern technology, productivity & quality, and linking them to domestic and international markets in sustainable business relationships.
The business linkages program further aims to:
Financial Sector
The Financial Sector Program (FSP) is aimed at expanding access to financial services and lowering the cost of financing for small and medium enterprises (SMEs) through reforming the legal and regulatory framework affecting the financial sector and the business environment, as well as improving the commercial viability of lending to historically disadvantaged SMEs in South Africa. These efforts intend to expand SME access to a range of high quality and affordable financial services.
South Africa is emerging as a hub for innovative entrepreneurs wherein small businesses represent 54 percent of registered businesses and provide 53 percent of the country’s private sector jobs. However, SME growth is constrained by a number of factors, including onerous collateral and compliance requirements, limited management capacity, and difficulties in gaining access to much-needed finance. Many SMEs rank a lack of access to finance as their greatest barrier to growth. Often SMEs in South Africa get caught in the “missing middle”: the loans they need are too large for micro-loan agencies and too small for banks. In addition, financial institutions often struggle with SMEs that are ill prepared for the lengthy process of applying for a business loan. Lack of education and business skills result in a limited number of small business owners equipped with the skills necessary to develop a sound business plan with realistic financial statements. Entrepreneurs are unaware of available business development services, which could build their capacity to establish creditworthiness.
FSP’s activities are designed to contribute to improving access to financial services for SMEs by improving the internal management systems and processes of financial intermediaries’ (FIs’), developing new products, stimulating credit via Development Credit Authority (DCA) guarantees, supporting the enabling environment and assisting in improving the bankability of SMEs via improved financial literacy and the provision of more appropriate financial business development services (fBDS). To that end, FSP has established working partnerships with both private and public stakeholders collaborating to strengthen and support the credit access systems for SMEs, especially black empowered SMEs.
Workforce/Skills Development
The objective of the program is to assist South Africa to create and sustain career-enhancing education and training programs that are responsive to the current and future labor needs of South Africa’s local, regional, and international employers. The focus of the program and activities is on the Further Education and Training (FET, formerly technical/vocational colleges) sector, through FET colleges and their learners, educators, and support staff, in collaboration with the Department of Education (DoE) and private sector organizations. Support will be provided to selected FET colleges in consultation with the DoE and the colleges themselves. The aim is to increase employability of students and create a better match between skills offered by the FET colleges and those needed by future employers including supporting youth in colleges to be further engaged in HIV and AIDS prevention and treatment measures. This program is in the initial stages of implementation.
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