Picture: ALAN EASON/DAILY DISPATCH
Picture: ALAN EASON/DAILY DISPATCH

The government has still not released funds to support the Job Creation Trust, which was set up by the country’s big trade union federations more than two decades ago to address the unemployment crisis.

The government had made an undertaking to release funding by end-July. The delay has resulted in the trust’s company being unable to pay creditors, who have now filed for the company to be liquidated.

The trust was founded by members of Cosatu, the Federation of Unions of SA and the National Council of Trade Unions after the national presidential job summit in 1998.

It owns Creative Designs, a company trading as Nilaflex, which employees 300 people — who could all lose their jobs if it is liquidated. Nilaflex has been waiting for about R12m in payment from the department of trade & industry that has been outstanding for more than a year. ​

DA MP and trade & industry spokesperson Dean Macpherson wrote a letter to Treasury director-general Dondo Mogajane at the weekend calling for urgent action to save the company.

The Treasury has not made the outstanding payment “despite every requirement being met by the company and the department of trade & industry in terms of audit and compliance”, Macpherson wrote.

“It is simply unthinkable that this bureaucratic bungling has gone on for this long. I would request that you take a personal interest in this matter along with the director-general of [the trade & industry department] to urgently finalise this so that we can save this company and keep people employed,” the letter reads.

The Treasury and the department could not be reached for comment.

Donor funding

In a recent letter of demand addressed to the ministers of finance, and trade & industry, the trust’s lawyers refer to a memorandum of understanding entered into by the trust and the department.

Under the agreement, the minister of finance also entered into a technical assistance arrangement with international organisations to receive donor funding intended as developmental financial aid to SA.

The donor funding was managed in terms of the Reconstruction & Development Programme Fund Act, which provides for the establishment of a fund to manage donor money. The department of trade & industry was designated as a spending agent of the Reconstruction & Development Programme Fund in terms of the act.

“The memorandum of agreement further records that the Employment Creation Fund of the department, responsible for the administration of the fund, has adjudicated and approved a sum of R24m to be paid to our client to support their factory capacity for garment manufacturing, embroidery, panel printing and garment knitting of babywear,” the trust’s lawyers wrote.

The department of trade & industry has paid the trust only  R12m.

“Since the signing of the agreement our client has attempted to obtain, without success, the above-mentioned funding. In our client’s several communications with [the department], it has been conceded and agreed by the department that our client, having duly satisfied both the internal processes of [the department] and an external audit firm’s processes, is entitled to the balance of R12m, which is still due to it,” the letter reads.

phakathib@businesslive.co.za