Minister Mildred Oliphant: Launch of Project Development Partnership Fund

14 Dec 2018

Remarks by the Minister of Labour, Mildred Oliphant, on the ocassion of the official launch of the Project Development Partnership Fund held in Tshwane Gauteng

Programme Director
Director General of the Department of Labour, Mr Lamati
The Chairperson of the UIF Board, Mr Welcome Nzimande
Members of the Board
Commissioner of the UIF, Mr Maruping
Acting CEO of the PIC, Ms Mmatshepo More
Distinguished Guests
Members of the Media
Ladies and Gentlemen

Good Morning;

It is remarkable that at the very least, ANC-Led government has succeeded to put in place policy instruments to bring real meaning to the values of the Freedom Charter; the vision that became the soul of our constitutional democracy. The guiding light of our programme to reconstruct and develop our country after centuries of colonialism and apartheid.

The ANC Government has also safe-guarded and entrenched the hard-won rights of workers, including trade union organisational rights, collective bargaining, equal pay for work of equal value, health and safety, affirmative action, skills development, minimum wages for workers in vulnerable sectors, the right to strike, and the right to peaceful protest. The creation of decent work and sustainable livelihoods remains the primary and overriding objective when we shape government policies.

We can say without fear of contradiction that from the Labour Relations policy perspective, the ANC has delivered on the vision and aspirations of our people and heeded the call from the Congress of the people under the theme - there shall be work and security. Today we have the labour legislative instruments that talk to all the 6 worker rights demands of the Freedom Charter.

We recognise that the Republic of South Africa is one of the most unequal societies in the world and that there are huge disparities in income in the national labour market; we fully embrace the need to address unemployment, poverty and inequality in our society;

We also acknowledge the need to promote fair and effective competition in the labour market and labour market stability and recognise the constitutional obligation on the State and employers to promote and fulfil the right to fair labour practices;

What makes the labour relations policy formulation process unique in South Africa, is the high degree of participation by our social partners in shaping the architecture of the final product. At the centre of what we do, is to strive to prevent and/or at best, minimise conflict using the policy instruments at our disposal. The revolution to put in place worker friendly policies, has by and large been accomplished; the next revolution is to ensure optimum compliance with the labour laws.

Whilst these are core to our mandate and remit as the department of labour, we are not bystanders when it comes to taking concrete steps in the country’s efforts to address unemployment.  Our efforts include providing social security to our beneficiaries in times of distress, even intervening in imminent retrenchments in order to save jobs.  We pursue these through various labour market institutions.

CCMA is not only there to prevent and resolve labour disputes, it has also assumed the responsibility of saving jobs when dealing with Section 189 processes. 

Productivity South Africa intervenes in companies that are face the possibility of shedding jobs through its Workplace challenge and Business turn-around interventions. The Unemployment Insurance Fund has also made resources available to intervene in companies that find themselves in economic distress.  This they do through the training Lay-off scheme.  Labour activation programme on the other hand, which also funded by the Unemployment Insurance Fund, enrolls job seekers in training programmes that are designed to facilitate their re-entry into the labour market.

This brings me to today’s event.  There is evidence that small business sector is the backbone of any economy and contribute significantly in the gross domestic product of any country. SMEs represent a considerable 40% of all businesses in South Africa and it has been estimated that by 2030, 90% of the jobs will be in this sector. 

However, those who know better have said, an entrepreneur could come up with a groundbreaking new product, but it is worthless if it is not converted into a commercial commodity that generates revenue. We have witnessed that in countries where small businesses are phenomenally successful such as in Malaysia, the government plays a pivotal role in supporting those businesses. 

The value of a thriving small business sector cannot be undermined, and that is why as government we welcome the introduction of new ventures such as the Project Development Partnership Fund.  At the centre of this Fund is to help small business start-ups that are geared towards creating employment opportunities and contribute towards growth and development of our economy. 

The PIC has established the Project Development Partnership Fund, which is aimed at supporting and creating jobs through creating and funding small businesses.  Whilst this function is located primarily in the Department of Small Business, which we respect, we felt the need to lend a hand and make a contribution.

To this end, an allocation of R2 billion would be directed towards the PDP Fund, and this allocation would be funded by UIF through the already existing Social Responsible Investing (SRI) mandate.

The PDP Fund would be directed specifically at performing the following roles:

  • Offering funding to create and grow small businesses, therefore creating new companies
  • Create companies in specific sectors such as Agribusiness and Bio-science, Mining and beneficiation, Manufacturing and ICT, social infrastructure, Water and related services, Financial services, and Youth innovation.
  • The Fund will also be investing in PIC Youth Fund, Affordable housing and infrastructure funding

The Fund will also be focused on investing in projects which are focused on addressing SA socio-economic challenges through technologically advanced value propositions which are aligned to 4th industrial revolution.  It is expected to create and support over 10 000 jobs.

New and transformed fund managers will also be created through this process.

Through a transparent and competitive process; specialized black-owned fund managers will be selected to drive investments across the sectors. This will create new black-owned fund managers in an industry where only 24% of players have a BEE score better than level 4.  Furthermore, there will be an emphasis on black youth and women-owned businesses at the underlying investment level.

The 2billion rand allocation towards this Fund, demonstrates government’s commitment to investing in small businesses.  The funding gap in the early stage venture capital space, limits the growth of innovative and high value businesses.  We recognise that closing this gap, requires us to work together as partners.

Another general challenge facing businesses in South Africa, is the skills miss-match.   We have identified the need to address this by helping businesses, including SMEs, in upskilling their employees, while ensuring that these programmes are easy to access.

The Labour Activation Programme (LAP), on the other hand is designed to create real employment opportunities by offering training and upskilling to those who are unemployed or those at risk of losing their jobs.  

This done not for its own sake, or because training has become a fashion, but we only support training programmes that have demonstrable prospects of providing jobs.  We have long gone passed the stage where training was done for its own sake.  Skills that we seek to create are those that are needed in the economy. Therefore, UIF seek to create synergy between the PDP and Labour Activation Programmes through among other things;

  • Establishing incubation program through the LAP aimed at supporting and training entrepreneurs and small businesses.  Entrepreneurs would be trained in different skills and key elements that are important for running a business. The PIC would assist the UIF in facilitating this program through the PIC Academy for incubation.
  • Introducing Skills enhancement program for youth, in order to equip youth with relevant skills that are required in the economy.
  • Sourcing business opportunities for those on the programme.

We believe these initiatives will enhance the UIF ‘s role as it will be embarking on taking proactive measures towards creating employment and improving employability of its beneficiaries. 

This simply put, is that the UIF is shifting from being a player when people are already unemployed to a role where it prevents that from happening.  Most importantly, the fund is now playing a visible role in providing employment opportunities by leveraging its resources.

Given the magnitude of these interventions, the fund could should become the Employment and Unemployment Insurance Fund.

The department has demonstrated that it is not a by-stander in the efforts to lift South Africa out of its social and economic challenges.  The Department through its entities has become a catalyst and a game-changer on many fronts.  UIF and the Compensation Fund leverage their Investment Portfolios in the Public Investment Corporation to stimulate economic growth. The make-up of the Funds’ is spread over various asset classes including invest government bonds, listed equity, money markets, listed property and in social responsible investments. A huge percentage of the investment in bonds is in Government and parastatals.  These bonds contribute significantly in the infrastructure development programme of the country.

UIF has also played an important role in the National efforts to facilitate access to education. Through the investments in Eduloan which provides financial support and investments in South Point and Educor organisations that provide student accommodation. The Compensation Fund Investment portfolio is equally diverse and has significant footprint in the economy. 70% of the total portfolio is in bonds with 80% of it, in Government and Parastatal bonds, 20% in equities and about 10% in money markets. 

The sum total of this picture confirms that indeed the Department of Labour with its entities, is not a by-stander in the economy, but a significant player in every respect. The department is not only concerned about protection of workers, but contributes and play a meaningful role in the national efforts to grow the economy. I am very pleased that today, the PIC has partnered with the Department of Labour, in setting up this much-needed initiative.

Those who know better say, if you are part of the solution, then you are part of the problem.  Let’s join hands and as a collective confront our challenges hands-on.

Let me take the opportunity to wish you all the best, an enjoyable festive season and a prosperous 2019.  Those who will be driving during this time, drive safely remember the ANC needs your vote in 2019.

I thank You

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