With a massive R1bn set aside specifically t support new entrepreneurs the only thing this initiative needs is some direction and solid support from entrepreneurs themselves. Who better to support new and starting businesses than those who are running successful businesses themselves. Stop spending these valuable resources on fat cat salaries and bureaucratic management structures, and use it for what it is intended:

Ben

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Semeyi Zake reports from JHB

With a government grant of about R1bn, the Umsobomvu fund responded to the lack of business skills among young South Africans by introducing voucher programmes, giving budding entrepreneurs vouchers for services -- for example, legal or marketing advice or help in compiling business plans -- which they could redeem with service providers.

However, the voucher programme has come under some criticism. South African Youth Commission general secretary Benjamin Mokgothu says that with 60% of the vouchers spent on developing business plans, there is less money available to start a business.

Gerrie van Biljon, executive director at Business Partners, says there is a bias towards producing business plans: "There is a big responsibility with service providers to provide feedback and explain the potential, or lack thereof, of a project."

Rajdhar agrees this can be a problem, adding that inexperienced people often did not know what was contained in a document.

"The reality is that they don't have the necessary business skills."

Citing a lack of adequate support as one of the many reasons why businesses fail, Xolani Mbanga, CE of the Youth Development Trust, says attention needs to be given to "skilling the youth as a bridge between SA's two economies".

Mokgothu says secondary level curriculums, and to a certain extent tertiary institutions, do not prepare young people to be creators of employment. "Instead, they are prepared to be job seekers."

Historically, the private sector has focused on white business and black empowerment transactions, but Umsobomvu has tried to change this by using its funding as a catalyst to attract private sector funding through partnerships.

First National Bank's (FNB's) initial investment of R20m may seem insignificant from a financial giant but Umsobomvu saw it as an opportunity to partner and inculcate the culture of youth development.

In April last year, FNB increased its contribution in the fund to R240m, which, together with Umsobomvu's R80m, brought the fund to R320m.

Umsobomvu and Business Partners, through their franchise fund of R125m, have helped establish 107 businesses, with only seven failing to date. The fund has invested R66m, with a further R35m to be invested in this year.

It has funded about 7000 businesses, mostly through unsecured loans. The major part of the funding has gone to the micro sector, where 6800 business have been financed, with about 15% defaulting.

Of the 200 medium enterprises which received funding, about 10% have defaulted.

The Youth Development Trust, which connects youth to opportunities and offers advice and mentorship, has established three operational businesses funded with R460000 procured by the organisation but Mokgothu says some of these are not sustainable.

Van Biljon says the failure of a business is mainly due to a lack of experience and, sometimes, commitment. A lack of an entrepreneurship culture and expertise also puts new businesses at a disadvantage.

However, Thulasizwe Buthelezi, national chairman of the IFP Youth Brigade, says that while they mean well, youth development organisations have no impact where it matters most, adding that the majority of people can't access their services.

"The organisations are misplaced and misguided," he says.

Rajdhar says, given the magnitude of the problem, funding is never going to be enough, but he is convinced they are making a difference.

"If you want to look at the impact we have made, you need to look at the number of sustainable businesses, jobs created and the way we have influenced lending practices."

Van Biljon says role players in the business world, and in particular franchisees, should come to the party in terms of entrepreneurship development by providing business opportunities to the youth.

Rajdhar says it should be the job of the private sector to fund small business -- not government.


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