The South African government plans to launch a Youth Fund of R2.5 billion—that's about $135 million—in loans aimed at supporting small businesses run by young people. The first phase of the loans available is slated to begin this Friday. The initiative is led by the National Youth Development Agency (NYDA) and it's expected to be unveiled by Deputy President Paul Mashatile.
The provision of this loan is for the purpose focusing on youth employment—youth-owned small enterprises—as part of the government’s drive to reduce one of the world’s highest unemployment rates and provide larger, equity-based investments and loans to businesses owned by young people.
Statistics South Africa has shown that close to 50% of people in South Africa between the ages of 15 and 34 are jobless, and this is a persistent problem in the country. Efforts like this fund aim to bridge the gap between young people and viable business opportunities or sustainable jobs.
The National Youth Development Agency Deputy Chairperson—the person of Mr. Bonga Makhanya—said in an interview that the fund aims to address unemployment by supporting high-potential small and medium enterprises.
The loan—instead of grants—signals a push toward business creation, enterprise growth, and potentially longer-term sustainability of jobs. The timing suggests the government is under pressure to deliver more concrete actions on jobs, not just promises.
According to Deputy President Makhanya, the Youth Fund has long existed in law but was never put into action. He explained that the agency is now shifting its focus from micro-grants to supporting youth-led enterprises that demonstrate growth and strong potential for success.
It's worth noting that the NYDA’s earlier programs provided grants of up to 250,000 rand. But under the new model, funding will range between 750,000 and 2 million rand per business, depending on the strength of each business proposal. The support will be offered through a combination of loans and equity investments.
According to Makhanya, the goal is to back youth-owned small and medium-sized businesses with real potential to expand—possibly even reaching the scale to list on the Johannesburg Stock Exchange in the future.
To finance the initiative, the NYDA is contributing 1.2 billion rand from its reserves, with additional funding from provincial governments such as KwaZulu-Natal, Mpumalanga, and Gauteng.
The agency is also seeking collaboration with major development and investment institutions, including the Industrial Development Corporation, Development Bank of Southern Africa, Public Investment Corporation, and several mining companies interested in supporting youth enterprises.
This fund will be channelled into these sectors: renewable energy, mining, agriculture, and industrial manufacturing. These are areas that can drive long-term economic growth and help young entrepreneurs gain a foothold in industries critical to South Africa’s development.
Eligibility and Criteria of the Loan
The criteria is simple. Unlike previous efforts that focused mainly on informal trade and retail ventures, this loan is available to businesses operating manufacturing industry, agriculture, renewable energy, and mining.
However, what remain unclear is the loan terms: the loan interest rate, repayment schedule, and if collateral will be required are yet known. It's also worth noting that the fund is expected to interact with other job-creation policies, macro-economic growth, sector dynamics, and the informal economy.
The youth labour market in South Africa has long been weak; policies have tried enterprise development, learnerships, and enterprise-fund models. The previous efforts, such as the Jobs Fund, have aimed to create sustainable jobs and train young people.
But for the fund to succeed, it will need to align with economic growth, skills development, and private sector job absorption—not simply pump money into enterprises without market demand. What do you think about this development? Let's know your opinions in the comments section below.
