The Jobs Fund

Ashburton Investments: Putting Pension Funds to work

The Ashburton project aims to create 9 635 jobs over a three-year period by providing SMEs with access to funding. Using a guarantee mechanism to partially cover investment losses, the project will encourage the private sector (pension funds, corporates and other institutional investors) to invest in SMEs, which are perceived as risky, but have the ability to create jobs.

Financing for the project comprises R75 million from the Jobs Fund and R1.3 million from Ashburton Investments. A portion of the Jobs Fund investment will be used to fund the guarantee mechanism. The guarantee mechanism is expected to leverage a further R298.7 million of investor funds, which will be invested via a fund managed by Ashburton (credit enhanced guarantee fund). The Fund will on-lend to intermediaries. The intermediaries will in turn support SMEs with medium- to long-term loans. These loans will be extended to SMEs at varying interest rates depending on loan negotiations with intermediaries.

The guarantee mechanism mitigates the risk of investing in SME growth and job creation. It will also reduce the SME financing gap and encourage formal financial institutions to include market segments historically excluded from accessing their services.

The project began on 1 October 2014 and will end on 30 September 2017.

The diagram below illustrates a process flow of funds and impact.

Development impact

The project will target labour-intensive sectors, including low-income housing; agriculture; financial services and waste management, to maintain a high cost per job ratio.

Investments will target previously disadvantaged individuals, particularly female small business owners. Intermediaries will provide technical assistance to these business owners. If the project is successful, it could change investors’ perceptions about the risk profile of such investments and encourage others to create similar investment products. Over time, SMEs will develop the successful track record they need to access capital without the use of these mechanisms.

Project outcomes
The project has committed to the following deliverables:

Number of new permanent jobs: 9 635
Number of beneficiaries trained: 7 709
Funds leveraged from the guarantee mechanism: R298 690 340
Compile an impact measurement and tracking report
Compile a report on guarantee mechanisms as a tool to attract capital from traditional asset owners.



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