Jobs Fund: briefing

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Finance Standing Committee

11 March 2015
Chairperson: Mr Y Carrim (ANC)
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Meeting Summary

The Jobs Fund, housed under the umbrella of the National Treasury, briefed the Standing Committee on Finance on its progress since inception in the 2011/2012 financial year. During discussions, Members raised questions about the costs incurred to create permanent jobs and whether those costs were worthwhile and justifiable. Members queried why the presentation focused primarily on the agricultural sector. Other issues included a bias towards projects that sought to create jobs for women, youth and military veterans. Questions were raised about the organisational structure of the Fund and what criteria applicants needed to fill in order to receive funding. In addition, the Jobs Fund was asked to elaborate on how it monitored the effectiveness of its investment in its successful candidate companies and non government organisations.

Meeting report

The Standing Committee on Finance met to hear and discuss a presentation on the performance status of the Jobs Fund. The Fund head, Ms Najwah Allie-Edries, led a delegation of two supporting officials, Mr Xavier Edziwa Project Director: Jobs Fund and Mr Vuyo Tetyana, Manager: Monitoring and Evaluation. Members raised concerns that the Chairman of the Jobs Funds was not present to brief Members. The delegates were asked to convey the Committee’s sentiments that he should have been present.  

Presentation
Allie-Edries said the Job Fund’s governance and implementation approach addressed five barriers to employment over the medium terms. These were:
a)    An efficient mechanism that incentivised the private, public and non government organisation (NGO) sector to partner to create jobs;
b)    Addressing risk and cost barriers when testing the innovativeness of new models and projects;
c)    Looking at the missing critical economic infrastructure that caused high-potential job creation projects to be side-lined;
d)    Addressing the mismatch between the skills set of unemployed work seekers and available opportunities for employment; and
e)    Mobilising public institutions that could help to facilitate job creation but which had weak expertise and poorly designed programmes.

The Jobs Fund performance since inception, between the 2011/12 and 2014/15 financial years, was highlighted.
 

Ms Allie-Edries said four calls for proposals had been completed, 89 projects had been approved and as at February 2015, 79 projects were in full implementation. R4.66 billion had been committed and R1.9 billion in grants had been disbursed for the implementation projects.

Projects had created 37 239 new permanent jobs and 19 949 people had been placed in jobs. In addition, 11 092 short term jobs had been created and 86 301 people had received training.

The average cost per permanent job created was R52 864.

Across the provinces, the majority of new permanent jobs were created in KwaZulu-Natal (28%), followed by the Eastern Cape (24%). The fewest jobs created were in the Free State with 1%. No jobs were created through the Fund in the Northern Cape. In the youth employment category for permanent jobs, a total of 37 239 positions (37%) had been created as a result of funded initiatives.

The presentation focused on projects funded in the agricultural sector.

There were four challenges to the disbursement of funding. These were compliance with provisions of the grant agreement, projects with capacity issues, encouraging projects to match funding per quarter to cover unforeseen events and improving the contracting process.

Discussion
Dr D George (DA) said it seemed expensive that that R1.9 billion had been disbursed at a cost of R52 000 per job. Internships and training amounted to R36 000. What happened to the people after the training was done.

Dr B Khoza piggy-backed on Mr George’s question and asked whether the cost to create a job was worthwhile. Should the Fund not just be dishing out the money instead? She said there was no detail in the presentation which addressed inequality and demographics and asked if the Fund was primarily focused on the agricultural sector. If not, what was the situation in other sectors?

Dr Khoza also asked for more information on the creation of jobs for entrepreneurs. With the changing economic landscape were skills, level of employment and achievements being looked at? What had the impact been?

She asked what the Fund was doing to support African industrialists. It was something that needed to be focused on.

Ms D Mahlangu (ANC) commented that as a former public servant who had made a contribution to the Jobs Fund she was not getting a sense of what had happened to her contribution. What did job performance look like and were Statistics SA reports and the specifics thereof considered when considering applicants.

She said if the Committee was to do proper oversight over the Jobs Fund then it needed a more in-depth presentation. In addition, why had Members only received the document on the day of the presentation? An indication had been given about youth employment but there were no figures for how many women had benefited.

Mr D van Rooyen (ANC) asked how the contribution process was managed and what the organisational structure of the Fund was. Could he have more information on the job creation initiatives by other government departments and their collaboration with the Fund.

He said the President had encouraged departments to address the plight of military veterans. Was there any bias in favour of them as most were destitute?

Ms P Kekana (ANC) asked if, with the Deputy Minister of Finance as the Chairman of the Jobs Fund, there was a link with National Treasury and assisted support for NGOs to get match-funding. The Fund’s contribution was also a once-off one, did the entity monitor its contribution over three to five years?

She asked whether certain provinces were able to access the opportunity considering that some had lagged behind. How did the Fund interface with the provinces? What was the relationship like with traditional leaders in terms of land restitution? People were getting laid back and following the call by the President to diversify the economy was it not an opportunity to assist traditional leaders to exploit the land? Could more detail on military veteran job creation be given when it came to youth and was there an opportunity to work with the National Youth Development Agency?

Mr Carrim commented that the slide presentation was too busy and the briefing had been too fast. Parliamentary staff had received the presentation ahead of time and it should have been made available earlier.

He said his questions may not necessarily be useful ones so it was up to the Fund as to whether they wanted to answer them or not. He was “cool” either way. It was obvious that the Fund wanted to create durable jobs. A key aspect was industrialisation, was the Fund looking at where government was taking its policy, particularly the Industrial Policy Action Plan.

In response, Ms Allie-Edries said anyone who had an great job plan to create jobs could apply to the Fund, but a their track record in business was considered. One of the criterion was innovation and the Investment Committee within the Jobs Fund was the only body that made the decision as to whether funding would be made available or not. An open-to-anyone road show was conducted in every province. There was no bias to the agricultural sector but it had yielded a higher level of job employment. Generally, the application for funding was a very competitive process.

She said the cost incurred per permanent job created excluded the Fund’s operational costs. It was more complex to accurately calculate the specific costs. It was not easy and very difficult to create a new job in the economy. Sustainability of a business and its ability to create jobs was key. While the Fund could not predict how successful a company could be, it did look at potential.

Ms Allie-Edries replied that when it came to interns, the Fund did not support short training interventions. Training had to translate to a permanent job.

Regarding the impact, she said the Jobs Fund on its own was not the solution. Other job creation projects needed to assist. Positive impact was measured in part by whether a person had purchasing power and could provide for a family. It was not easy to quantify impact as the Fund was still in its infancy. Many projects were still in their implementation phase. There were good stories as evidenced by Shanduka and Awethu.

Funding was provided through an allocation from the Budget not through member contribution.

She said the new funding model was informed by research and the Jobs Fund would provide Members with the details of he number of women supported through the initiative.

Evidence of job creation was drawn from quarterly financial statements and proof that money had been spent on the areas where it had been allocated. A team of accountants looked through these. In the case of inconsistencies, recommendations would be made.

She said the organisational structure of Fund was subject to internal performance management and external independent evaluation.

Military veterans who applied for funding were assessed on the same basis as other applicants.

Traditional leaders had not been approached directly but in cases where they had been involved in land being used that was under their control, then meetings had taken place.

She said the tax incentives scheme was just another incentive to improve job opportunities. It was part of the bouquet of the other interventions.

Mr Vuyo Tetyana, Jobs Fund Manager: Monitoring and Evaluation, said the Fund approved finance in terms of, but not excluded to, a business’s end goal, sustainability and progressiveness.

In terms of job creation for women, since inception there were 37 000 new permanent jobs and of that 56% went to women. Rounded off this equated to 21 000 jobs.

Mr Xavier Edziwa, Project Director for the Jobs Fund, said the Shanduka and Awethu projects were examples of successful contributions to entrepreneurs.

In a second round of questions, Ms Mahlangu said the Fund needed to be commended for doing a good job.  

Mr Carrim said he understood that the Jobs Fund was helping durable and sustainable businesses. What was it doing to facilitate the formation of industrialists? The Department of Trade and Industry (DTI) was meant to be leading and while the Jobs Fund could not account for the DTI's goal of "100 industrialists in three years", perhaps it might be able to make an input.

He suggested to Members that a joint committee meeting with the Trade and Industry Portfolio Committee should perhaps be considered to discuss the issue.

The meeting was adjourned.

 

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