Guide to NYDA Funding

The National Youth Development Agency’s (NYDA) funding and support interventions work to improve the lives of South Africa’s massive youth population. Youth currently make up about 34,7% or 20,66 million of the 59,62 million South African population – this number is projected to reach about 62 million by 2023 and grow to 66 million by 2025. The NYDA is tasked with encouraging this fast-growing segment to actively participate in the economy through the creation of jobs, skills development and entrepreneurial opportunities.

The role of the NYDA has come into greater focus as more young people look to start businesses as a way out of unemployment and poverty. Of particular interest is the NYDA’s various funding interventions that help to address high youth unemployment and low levels of youth entrepreneurship.

Youth Unemployment and Entrepreneurship

The youth statistics paint a somewhat dire picture. Youth continues to bear the brunt of unemployment with young people between the ages of 15 and 24 accounting for 66,5% of the country’s unemployment. This is higher than any other segment of the population.

While youth entrepreneurship is touted as the solution to the country’s high youth unemployment rate, business ownership among young people is, however, worryingly low. Additionally, South Africa’s youth entrepreneurship propensity, which measures the likelihood of starting businesses, is the lowest in Africa, according to the 2014-2015 Global Entrepreneurship Monitor (GEM) report.

Some of the barriers to entrepreneurship that have been identified by the report range from limited access to youth business funding opportunities, to a lack of specific business skills. Moreover, young people often have less experience in leadership and management, all of which contribute to the high startup failure.

The NYDA works to remove the barriers that young people face through its various programmes.

We list all the NYDA’s unique interventions designed to increase the sustainability of youth-owned businesses.

The NYDA was established primarily to address challenges faced by the nation’s youth and to unlock the full economic participation of youth.

The agency’s full mandate, as outlined by the NYDA Act, is as follows:

• Develop an integrated youth development plan and strategy for South Africa;
• Develop guidelines for the implementation of an integrated national youth development policy and make recommendations to the President;
• Initiate, design, coordinate, evaluate and monitor all programmes to integrate the youth into the economy and society in general.

The agency supports three broad categories of young people that include:

• Unskilled and unemployed. These are largely young people who may have matric or dropped out of school but with no vocational skills;
• Skilled and unemployed; employed but unskilled; and those in skills programmes;
• Skilled and employed and those in self-employment.

These categories of young people are supported by the NYDA through the implementation of the following programmes:

• National Youth Service Programme
• Education and skills
• NYDA Grant Programme
• NYDA Voucher Programme
• Business Management Training
• Mentorship
• Market Linkages
• Sponsorships and Thusano Fund
• Solomon Kalushi Mahlangu Scholarship Fund

See also: Business Funding Opportunities for Youth in  South Africa 

The NYDA Grant Programme is the agency’s best-known intervention. It has over its existence provided over a thousand youth-owned enterprises in the township and rural economy with support, training, mentorship, funding and education.

Grant Eligibility Requirements

The three categories of people who may apply for NYDA funding and support – individual entrepreneurs, individual business owners and members of cooperatives.

Other requirements include:

• Must be under the age of 35 at the time of application.
• Have the necessary skills and experience or a potential skill appropriate for the enterprise that they conduct or intend to conduct.
• Be involved in the day-to-day operation and management of the business.
• At least one or more of the members must be full-time employees of the business, especially the main applicant.

Exceptions

The following exceptions exist to access NYDA funding: your businesses may not have an annual turnover exceeding R 750 000 (except for cooperatives whose annual turnover must not exceed R 1 million).

Furthermore, an individual or business shall not receive a cumulative grant amount above R 200 000 from NYDA during their lifetime except for cooperatives (for agriculture and technology-related projects the maximum cumulative value is R 250 000).

The NYDA supports enterprises across all sectors, from agro-processing to retail. Some of the most common types of businesses supported by the NYDA are street vendors, small-scale recycling, cleaning services, hair salons, car washes, repair services, plumbers and motor mechanics.

The NYDA grant can be used to cover startup costs, and also any of the following activities:

• Purchase movable and immovable assets;
• Bridging finance;
• Shop renovations;
• Working capital paid directly to the grantee;
• Co-funding with legal entities only.

The NYDA does not fund businesses that require any of the following:

• Funding for prototyping except for cell phone application development;
• Seed capital for research and development;
• Funding for patent registration;
• Funding to purchase exclusive business/distribution rights.

Funding for individuals or enterprises ranges from R 2 000 to R 200 000 (for agriculture and technology-related projects the maximum funding value is R 250 000).

Below are the Different Levels of Grants

Threshold 1
Idea generation and Survivalist
Grant: R 1 000 – R 10 000

Threshold 2
Start-ups, Pty and cooperatives
Grant: R 10 001 – R 50 000

Threshold 3
Growth stage Pty and cooperatives
Grant: R50,001 – R100,000

Threshold 4
Expansion stage Pty and cooperatives
Grant: R 100 001 – R 200 000

Young people whose business ideas qualify for the Grant Programme, depending on their individual needs, will also receive some of the NYDA’s non-financial support services that include:

• Mentorship
• Market linkages
• Voucher programmes
• Business management training programmes
• Entrepreneurship and youth cooperative development programmes
• Other necessary business support systems

Mentorship

The NYDA’s Volunteer Enterprise Mentorship Programme facilitates the transfer of business skills and knowledge among South African young entrepreneurs with the goal of increasing the sustainability and growth chances of youth businesses.

Young entrepreneurs are matched with mentors who support them to increase the growth of their startup or existing businesses.

How to apply for Mentorship

The mentee application is accessible on the NYDA Portal.

Business Management Training Programmes

The Business Management Training courses are designed to support young entrepreneurs in all stages of the businesses: pre-start, survivalist, start-up, early development and growth and expansion. Through the programmes, young entrepreneurs gain to access relevant entrepreneurship skills and knowledge for their businesses.

These training courses are offered as a 3-6 day training course depending on the specific needs of the young person and the level of the business. They are :

• GYBI – Generate Your Business Idea (enables potential entrepreneurs to develop a concrete business idea)
• SYB – Start Your Business ( enables potential entrepreneurs to develop a bankable business plan and enhance their skills and knowledge)
• IYB – Improve Your Business

Who is eligible for Business Management Training?

• South African citizens, between the ages of 18 and 35;
• A valid South African Identity document;
• The business must be 100% youth owned;
• Young entrepreneurs wanting to access a grant or voucher and do not meet the requirements of the programme;

Voucher Programme

The Voucher Programme is a business support programme that helps young entrepreneurs to access quality business development services through NYDA-approved business consultancy service providers thereby enhancing their participation in the mainstream economy.

Participants receive one-on-one business development support, between the values of R 6 600 and R 19 800, from an NYDA-accredited service provider.

The vouchers can be used to purchase business support services from approved service providers, including, but not limited to:

• Business plan development;
• Business feasibility;
• Bookkeeping and financial administration;
• Business re-engineering;
• Website development and hosting;
• Business operations manuals;
• Marketing strategy and plan.

Who is Eligible for a Voucher?

Applicants must be between the ages of 18 and 35, be a South African citizen or a permanent resident and must be willing to attend entrepreneurship development training if they do not have an entrepreneurial or business management background and or qualification.

All members of the business entity must be between the ages of 18 to 35 and the business must be 100 percent youth-owned and operate within the borders of South Africa.

How to apply for a voucher

• The applicant must obtain an application form from www.nyda.gov.za or from any NYDA full-service office.
• They must then visit the nearest NYDA branch and submit the completed application form, along with certified copies of the IDs of members and business registration documents (if registered).
• An assessment is conducted to assess the application and determine if the business matches the services being applied for.
• If approved, the applicant needs to select an accredited service provider from the service provider directory (not supplier directory).
• On receipt of the voucher, the selected service provider provides the service and the applicant endorses the voucher on completion of the project.
• The service provider then submits the final product to the NYDA for payment.

Market Linkages

The programme works together with the NYDA’s other interventions, including the grant, voucher and volunteer enterprise mentorship programmes.

Any young person between the ages of 18 and 35, who has a registered business and is a beneficiary of the NYDA, automatically qualifies for this opportunity. The programme links startups with businesses in their market to increase business opportunities and improve access to the market for youth-owned businesses.

More support resources for youth-owned enterprises:

– The Best Time to Start a Business is Now – 10 PLUS Business Ideas for Youth
– 13 Youth Initiatives and Support Networks to Join This Youth Month

Similar to youth-owned businesses, cooperatives are looked to as a solution to youth unemployment. In addition to creating jobs cooperatives benefit young people in the following ways:

“They bridge the economic divide, promote an inclusive local economy, and remain viable means of alleviating poverty by creating employment opportunities.

“Resulting in local resilience, spending, democratic accountability, and much needed active participation of community members towards sustainable livelihoods.”

Because of the important role cooperatives play, the NYDA also offers support to youth-owned cooperatives with compliance regulations, in-depth training and market access, as well as funding.

In addition to registration of co-operatives, the NYDA assists aspiring and established co-operatives with the following business support programmes and services:

• Co-operatives pre-incorporation training
• Gap analysis and needs assessment
• Technical and entrepreneurship development training
• Co-operative governance training
• Business development support services such as bookkeeping, marketing, tendering support, website development and more
• Facilitate regulatory compliance
• Facilitate access to markets and other business referrals
• Access to business loans, the NYDA offers a low business loan interest rate which currently stands at 6%
• Mentorship and post-investment support

Requirements for youth-owned cooperatives:

• The main applicant or at least one of the members should be involved in the day-to-day running of the business operations and management.
• The applicant should have the skill to run the business or at least show the potential skill that can be nurtured.
• The applicant must be of sound mind.
• The venture pursued by the cooperative should be viable.
• The cooperative should be operating within the South African borders.
• There should be at least 5 members.
• If the highest shareholder, who is involved in the day-to-day operation and management of the business, is employed when the grant is approved, they should resign. After that, they should provide proof of resignation to an NYDA grant officer.
• The sought-out grant funding must be more than R 1 000 but not exceed R 250 000.

See also: Guide to Cooperatives in South Africa 

If you meet the eligibility requirements the application process for the NYDA funding grant includes:

• The applicant must obtain an application form from www.nyda.gov.za or from any NYDA full-service office.
• They must then visit the nearest NYDA branch and submit the completed application form, along with certified copies of the IDs of members and business registration documents (if registered).
• An assessment is conducted to assess the application and determine if the business matches the services being applied for.
• Proof that you have attended a business management course.
• A 10-minutes business pitch can be conducted telephonically or in person.
• A due diligence report will be conducted by an NYDA official.
• The business is in good standing as the NYDA will conduct credit checks for all grant applications for funding.
• You can contact the NYDA call centre on (+27)800-52-52-52, visit your local branch or download an application form on their website here.