The latest fund would be managed by the Development Bank of Southern Africa and would not seek repayment, Gordhan said, warning, however, that government reserved the right to reclaim funds that were not spent for the intended purposes or were misappropriated.

The fund would be focused on established public and private sector enterprises, rather than smaller entrepreneurial companies.

“The aim is to limit the scope for dependency and market distortion, and to support good ideas, investment and innovation. This draws partly on international experience with ‘challenge funds’, a development financing mechanism which has been successfully used by donor agencies on the African continent across a range of sectors and linked to a variety of objectives, and has recently been piloted in the South African context by the Business Trust, in the form of the Shared Growth Challenge Fund,” elaborated Gordhan.

To ensure real ownership and share risk, private company applicants would have to match funding on a one-to-one ratio. “However, for public sector applicants, there would be a reduced own contribution as they were likely to have less resources and rewards were not likely to be financial in nature,” said Gordhan.

The new fund would consider proposals in enterprise development, infrastructure investment, support for work seekers, and institutional capacity building.

“Projects should demonstrate potential for self-sustaining job creation with a particular focus on opportunities for young people to acquire skills and improve their long-term employment prospects,” said the Minister.

The fund opened for applications from Tuesday and the first round would close on July 31. The National Treasury has set aside R2-billion for the fund in the current financial year.

The process would largely be done electronically, including applying for the fund, which would then be assessed by an investment committee.

“Reducing unemployment is one of government’s key priorities and the launch of this jobs fund is definitely another step in the right direction to bring down persistent high levels of unemployment,” commented Gordhan.

Government plans to create five-million new jobs over the next decade, thereby reducing unemployment by 10%.

The country has one of the highest unemployment rates globally at 25% and it is estimated that more than a million jobs were lost during the global economic crisis.

Trade union federation Cosatu general secretary Zwelinzima Vavi warned this week that South Africa’s high level of unemployment, especially among the youth, was a “ticking time bomb”.