EMPLOYMENT CREATION FUND OVERVIEW
PRESENTATION TO THE WESTERN CAPE
PROVINCIAL DEPARTMENT OF ECONOMIC
DEVELOPMENT AND TOURISM
19 July 2011
1
Agenda
1. Background
2. Purpose
3. Funding Criteria
4. Way forward
Page 2
Economic context
• South Africa faces a number of structural constraints that
has resulted in high levels of inequalities, unemployment
and poverty
• The economic crisis has worsened the jobs and
economic outlook
• The government has taken practical steps to address
these challenges including reorientation economic
towards creation of employment or decent jobs
• In the current administration more emphasis has been
put on implementation rather than development of new
policies and strategies
3
Unemployment trajectories
Unemployment trajectories
Unemployment rate trajectories
4,600
26%
Growth 3.5%
4,400
24%
9
20
1
8
20
1
7
6
20
1
20
1
5
4
20
1
3
9
20
0
19
20
18
20
17
20
16
20
15
20
14
20
13
20
20
20
20
12
12%
11
3,000
10
14%
09
3,200
GDP growth
(2015-19)
6.5%
20
1
16%
20
1
18%
2
3,400
Growth 4.5%
Low
Core
Medium
High
1
GDP growth
(2015-19)
6.5%
20%
20
1
3,600
Growth 4.0%
0
3,800
Growth 4.5%
22%
20
1
Low
Core
Medium
High
unemployment rate (%)
4,000
20
unemployment (000s)
4,200
Growth 3.5%
20
1
Growth 4.0%
Assumes:
1% growth p.a. in working age population
Labour force stays at 55% of working age population
44
Growth, employment and inequality
•
Absorption rate = 50% = Employment of 16.5 million
•
Absorption rate = 45% = Employment of 14.9 million
GDP growth
2010-12
A
B
C
D
E
F
•
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
2013-14
4.0%
5.0%
5.5%
6.0%
7.0%
8.0%
EE = employment
elasticity
Employment (EE=0.7)
Employment (EE=0.4)
Growth
Number Absorption Growth
Number Absorption
2010-14 (2010-14) (2014)
rate
(2010-14) (2014)
rate
3.4%
3.8%
4.0%
4.2%
4.6%
5.0%
2.4%
2.7%
2.8%
2.9%
3.2%
3.5%
14.5
14.7
14.8
14.9
15.1
15.3
43.9%
44.5%
44.8%
45.2%
45.8%
46.4%
1.4%
1.5%
1.6%
1.7%
1.8%
2.0%
13.8
13.9
14.0
14.0
14.1
14.2
41.8%
42.1%
42.3%
42.4%
42.7%
43.0%
Growth of 3% p.a. 2010-12 and 4% p.a. 2013-14
•
Employment growth = 2.2%p.a. or 1.6 million = absorption rate of 43.9%
•
Absorption rate of 45% requires employment growth of 2.9% p.a. … GDP growth to average
4.1% p.a. for 2010-14
•
Absorption rate of 50% requires employment growth of 5% p.a. … GDP growth to average
7.1% p.a. over 2010-14.
•
An employment elasticity lower than 0.7 places much greater demands on growth – more
growth needed for the same number of jobs!
55
Role of ECF
• The ECF was established to support the implementation
of the Economic Sectors and Employment Cluster
(ESEC) programme of action (POA)
• It seeks to enhance interdepartmental coordination
• Facilitate piloting and implementation of high risks
projects whose concept still needs to be tested
• Enhance cooperation between government and none
state sector
6
ECF key results areas
• The ECF seeks to support the projects that will have
positive impact on:
– Creating more jobs for the economically marginalised
– Improving business enabling environment
– Increasing capacity and skills in the productive sectors of the
economy
7
ECF Approach
• What does the ECF Fund?
– The ECF provides gap and risk funding to government departments and
entities, specifically at a national and provincial level
– Applicants must be national or provincial departments or public entities
– Municipalities can only be supported via provincial applications or other public
sector development agencies in order to ensure a wider take up of the proposed
initiatives, even if the initiative is to be piloted in a single municipality
• The ECF will fund projects at research and conception phase;
feasibility and development phase; start-up phase and initial
implementation phases. The ECF will therefore fund:
– research, feasibility / pilot studies, programme set-up costs, project / programme
establishment and management, incentives and immediate economic
infrastructure supporting the project in question
8
ECF Approach…
• It should be noted that:
– Projects must demonstrate that if viable, budget or other funding will be
available on an ongoing basis (i.e. once the ECF funding is completed)
– Projects that demonstrate co-funding will be more favourably assessed
by the ECF
• The Fund is not meant to compete or crowd-out any of
the existing public sector funding initiatives
• The intention of the ECF is to complement, help crowd-in
other funding and enable new initiatives that require offtake
9
ECF criteria
• The Fund was established to support the implementation
of government’s economic programme, including
projects that have:
– Positive impact on employment creation, skill development and capacity
building and the Second Economy;
– Support Improving business enabling environment
– Interdepartmental co-operation and implementation;
– Alignment to the Delivery Agreements that fall within the economic
sector; and
– Visible and profile enhancing interventions.
10
ECF criteria..
• Proposals submitted should also:
–
–
–
–
clearly illustrated capacity to deliver the programme/project;
have milestones and impacts that are defined and measurable;
have a monitoring and evaluation system in place; and
show sustainability once ECF support comes to an end.
11
ECF eligibility
• Funding proposals are to be submitted by government departments /
entities to the ECF Secretariat utilizing the prescribed templates.
• Municipalities can apply through provinces or developmental
agencies such as DBSA and IDC
• The Accounting Officer and the CFO of the requesting department /
entity are required to sign-off on a proposal in order to verify that the
proposal has their support
• Sign-off should occur prior to submission to the ECF, but where
such a signature cannot be secured in time, signature will be
required prior to the finalization of an MoA
12
ECF application process
• The current process makes provision for two types of submission:
• A concept development where there is an idea or concept that still
needs further work or research to develop a comprehensive
business case
• A business case which clearly defines the project to create
employment.
• ECF Secretariat can provide technical assistance to departments
them develop business cases subject to receiving an application for
concept development
• This technical assistance will not prepare proposals for departments
but rather assist in ensuring that proposals are sound and meet the
criteria.
13
Screening and approval process
• Once proposals are prepared and submitted for consideration, the
ECF Secretariat will review them compliance
• Compliant proposals will be submitted to the Evaluation Panel which
will review and assess them against the criteria noted above before
making recommendations to the Directors-General.
• The ECF Secretariat will liaise with the requesting departments /
entities where required in order to ensure that any queries or
matters for clarification are resolved
• The final short list of approved proposals will be submitted to the
Cluster (Directors-General) for final approval.
• Following a successful decision, the ECF Secretariat will prepare a
Memorandum of Understanding with the relevant department / entity
outlining requirements for delivery on project milestones and
reporting as well as any other special conditions the Evaluation
Panel may determine.
14
Conditions of funding
• Terms and conditions will be placed on funding made
available for approved programmes / projects, including:
– Financial transfers for the approved programme / project will be
done in tranches aligned to the project milestones and minimum
expenditure thresholds;
– Should money not be spent according to the agreed milestones,
the Secretariat reserves the right to withdraw funding or clawback unspent monies;
– Minimum quarterly and annual financial and performance
reporting requirements.
15
Technical assistance
• As indicated above the ECF provides technical support
to develop business cases where that supported is
needed (under its Cluster Support Facility)
• The ECF will utilize the Technical Assistance Unit
(National Treasury) to secure professional services for
applicants to prepare fundable business cases
• Funding for this purpose will be limited to a maximum of
R 350,000 per application.
16
ECF Governance
Cluster
Cluster Departments
Evaluation Panel
Cluster Departments &
External
Secretariat
DTI
Technical Assistance
Technical
Assistance Unit
Other External
Expertise
Purpose:
• Governance oversight; High
-level strategic direction;
Project approvals; Programme structuring approvals
Composition:
• DGs from DTI, DPE, DST, EDD, NT and DRDLR
Purpose:
Project proposal evaluation; Project awards
Composition:
• DDGs / Chief Directors (Policy) from DTI, DPE, DST, EDD,
NT and DRDLR;
• Supported by the technical team comprising of TAU, NT Public
Finance Oversight Unit
Purpose:
• Administration of programme; Management of proposal
calls; Project identification; Fund management
• Secretariat support to Governance and Evaluation
structures
Composition:
• DTI staff dedicated to ECF
Intermediaries
(for Municipalities)
Provinces
DBSA
IDC
Other ..
17
Summary and conclusion
• ECF is the Economic Sectors and Employment Cluster
fund targeted to support projects that will have positive
impact on employment
• Only state entities can apply although partnership with
private sector is encouraged
• ECF seeks to complement existing sources of funding
and minimise the risks attached to piloting and start-up
phases
18