The financial sector has committed R100bn over the next five years to support black businesses, as the country battles to boost growth and reduce unemployment, President Cyril Ramaphosa announced on Thursday.
Addressing the Jobs Summit, Ramaphosa said much needed to be done to lift the economy out of its slump, which led to a recession in the second quarter.
"The financial sector, as part of its transformation code, will invest R100bn over five years in black-owned industrial enterprises," said Ramaphosa.
"Government will work with the financial sector to develop facilities for financing at preferential rates and extended repayment terms."
The summit, the third of its kind, is a collaboration between business, labour and government, and aims to find ways to address the country's stubbornly high unemployment rate, currently 27.2%.
Invest in human capital
Ramaphosa stated that for the economy to grow and for jobs to be created, a "substantial increase in domestic demand" would be essential. This would create new jobs and support existing ones, he argued.
As part of stemming the jobs bloodbath, Ramaphosa said all stakeholders had committed themselves to concrete steps to avoid retrenchments and support struggling companies.
"There is agreement that all possible alternatives and opportunities need to be explored before retrenchment is considered, including executive salary sacrifices and the foregoing of dividends.
"The extreme unemployment in this country is the product of an economy that for several decades has been starved of any meaningful investment in its human capital, where most people have been denied the opportunity to own assets or develop skills," he said.
A group of companies including Adcock Ingram, Edcon, Mondi, Sappi, Sasol and Tsogo Sun have committed to dedicating a portion of their procurement budget to locally made goods.
The summit follows the announcement of a R50bn economic stimulus by Ramaphosa last month, aimed at boosting the economy by injecting capital into several labour-intensive industries such as agriculture and infrastructure development.
The unemployment rate has worsened to 27.2%, from the 26.7% rate recorded in the first quarter of the year. The highest the unemployment rate has been over the past 10 years is 27.7%, as recorded over three consecutive quarters in 2017.
Critical industries such as mining and manufacturing have been shedding jobs at a large scale in recent years, and business confidence has been falling.
The government signed a framework agreement which is expected to create 275 000 jobs annually, over five years and over and above government's previous commitment to create 300 000 jobs every year, in what Ramaphosa said would provide an opportunity to "develop trust and forge cooperation".
"Through this framework agreement we are demonstrating that we are capable of developing a new social compact for jobs, growth and transformation."
Ramaphosa acknowledged the role state capture had played in the current economic decline, saying the looting of public coffers undermined growth and public trust.
"State capture and corruption has undermined investor confidence and public trust, eroded key institutions of the state and diverted resources intended to support development," he said.
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