Employment minister pulls plug on R5 billion investment in unproven scheme

[Nat Quinn]

Employment and labour minister Thulas Nxesi has pulled the plug on a R5 billion Unemployment Insurance Fund (UIF) investment in Thuja Capital Fund, Times Live reports.

This comes after the publication discovered that the department and UIF planned to invest in Thuja Capital Fund despite the company having no premises, website, or track record.

The Department of Employment and Labour (DEL) and UIF also planned to do so against the advice of their own adjudication structures.

Without completing due diligence, the department and UIF had planned to pay R2 billion of its workers’ money to Thuja Capital Fund by March 2023.

The remaining funds would be invested by the end of the year.

However, Nxesi told Times Live that he had instructed the director-general and the commissioner of the UIF to halt the project until concerns over the investment are addressed.

Productivity SA chairperson Mthunzi Mdwaba owns Thuja Capital Fund. Employment and labour department director-general Thobile Lamati wanted to go ahead with the project despite the risks involved.

“We decided that instead of being risk-averse, we would go ahead with the project because of its potential,” Times Live quoted Lamati as saying.

“We may be wrong or we may be right, but we think young people need employment.”

Critics described the project as a “get-rich-quick” scheme, adding that it appeared as if critical regulatory processes had been side-stepped.

The deal would see the UIF receive a 19% stake in Thuja’s investments, including R1 billion earmarked for investment in an unnamed bank and insurance firm.

It would split the remaining R4 billion into R2.5 billion destined for South Africa’s unemployed to start businesses and R1.5 billion to provide loans to businesses.

Thulas Nxesi, Minister of Employment and Labour

The UIF was also in the spotlight recently for spending R221 million in three months training people who already had jobs.

It paid R344 million to a company called Fuze Institute for Humanitarian and Development Praxis to train the workers.

The training initiative formed part of the UIF’s Employability Initiative programme aimed at creating 65,669 permanent jobs in the country. UIF insiders reportedly described the project as a “free for all”.

It saw 14,771 workers in KwaZulu-Natal trained to cook and provide meals for students in the province that benefit from the School Nutrition Programme.

However, it was discovered that the workers were employed on 24-month contracts long before their training began.

A senior official at UIF said training for all 61,000 food handlers who were set to benefit from the programme could have cost a third of the R344 million spent.

The money was reportedly spent as follows:

• R22 million on overalls, hats, aprons, and masks;

• R17 million on unspecified “tools of trade”;

• A stipend of R1,050 a month for three months for the workers;

• A R24 million project-management fee; and,

• R14.7 million for support.

Fuze said it views the training programme as a success, describing the employment of the 14,771 food handlers as a “win” for the institute.

It added that final close-out reports submitted to the UIF-LAP all backup its belief that the project was a success.

“The UIF-LAP has commended Fuze on a job well done during this phase of the training,” Fuze said.

[Author]

Posts