By Thapelo Tlailana, Social Impact Analyst, Tshikululu Social Investments
As South Africa navigates the final phase of the National Development Plan 2030, the ‘S’ (Social) in ESG is emerging as the country’s most material human capital risk. Our ability to unlock inclusive growth and deliver verifiable social return on investment is inextricably linked to resolving a persistent structural paradox; persistently high youth unemployment, with young people aged 15–34 seeing their employment rate drop by 2.8 percentage points in the last decade, exists alongside a critical shortage of work-ready skilled labour.
South Africa’s skills landscape: A vision confronting reality?
Government policies correctly identify technical and vocational skills as essential for productivity, yet the education system continues to deliver qualifications misaligned with market demand. The economy is transitioning rapidly into green industrialisation and digital services, but the skills pipeline lags far behind. For instance, analysis by the Council for Scientific and Industrial Research (CSIR) in the report Identification of Skills Needed for the Hydrogen Economy shows that the nascent Green Hydrogen economy requires 138 specific occupations, yet 77 of these are not currently reflected in national frameworks, and 24 necessary degree/diploma programmes that are not offered by South African higher education institutions.
What are we doing wrong?
The persistence of this skills mismatch is rooted in four systemic flaws:
- Output over outcome: Success is measured in certificates issued and clean audits, rather than verifiable economic impact, such as jobs created or livelihoods sustained.
- Administrative friction: Complex, cumbersome, and excessive paperwork required to participate in learnerships, apprenticeships, and internships actively deters employers, particularly resource-constrained micro, small, and medium enterprises (MSMEs).
- Fragmentation and leakage: The lack of an integrated learner management information system (LMIS) across the 21 Sector Education and Training Authorities (SETAs) leads to inconsistent tracking and the inefficient allocation of resources, including instances of “double-dipping”.
- Curriculum lag: Training content is slow to adapt to macro-economic shifts, leaving graduates unprepared for the demands of high-growth potential digital and green sectors.
The Transformation Fund: A catalyst for SROI
A proposed aggregated Transformation Fund, aiming to raise R100-billion to support majority black-owned enterprises, offers a powerful opportunity to redesign the funding model.
As a leader in Social Fund Management with over 27 years of experience in South Africa, Tshikululu understands the critical factors for fund success.
It is through our own rich experience in managing and advising socio economic transformation funds worth billions that we assert a need to shift from generalised expenditure to a strategic, performance-linked investment focused on measurable social return on investment.
We have long recommended that our clients invest in youth training and placement programmes focused on occupational and vocational skills, and the results have been promising.
For example, a nonprofit training centre in Stellenbosch maintains nearly a 90% placement rate for its health, beauty, and personal care students, supported by strong ties with local B&Bs, retirement estates, and nursing homes. Similarly, a national youth leadership nonprofit ran a six-month vocational programme for one of our mining clients, tailoring training to local demand. While many pursued employable skills like occupational health & safety, the best results came from groups trained as electricians’ assistants, both of which established successful electronics repair shops in their villages, achieving sustainable self-employment.
Another suggestion is to strategically incorporate pay-for-performance or placement-linked funding, where capital disbursement is conditional on achieving verifiable social outcomes, such as sustained job placement or enterprise survival. This approach has already been successfully validated through the Green Outcomes Fund which was established in 2020, a fund championed through the FirstRand Foundation (which was under Tshikululu’s management at the time) to incentivise local South African fund managers to increase investment in green small and growing businesses (SGBs) by paying for outcomes, such as green job creation, climate mitigation, and improved water and waste management.
Building on these examples, the Transformation Fund has the potential to take such impact to scale, bridging the gap between youth potential, skills development, and enterprise growth. Yet to realise this vision, collaboration between the public and private sectors must evolve from parallel investments into a system of shared accountability.
A blueprint for shared accountability
If implemented effectively, The Transformation Fund could become a catalyst for reimagining how South Africa closes its skills gap and accelerates MSME growth. Its success, however, depends on redefining collaboration between private and public stakeholders around shared accountability; a shift from parallel efforts to a co-owned collaborative system that designs, funds and delivers a demand-driven skills pipeline. This could be achieved through some of the below initiatives:
- Co-design of curricula;
- Embedding work-integrated learning; and
- Measuring outcomes, not compliance
By leveraging the Transformation Fund to drive co-ownership, placement, and measurable impact, South Africa can turn skills development from a compliance exercise into a shared national mission for inclusive growth. But achieving this vision demands collaboration. Tshikululu Social Investments, already championing innovative models in youth training, enterprise development, and outcome-based impact measurement, stands ready to partner with business, government, and philanthropy to make this transformation real. Together, we can build a skills ecosystem that not only prepares young people for the economy of today but empowers them to be a part of shaping the thriving economy of tomorrow.
End notes:
- Statistics South Africa. (2025, February 27). The social profile of South African youth: A decade in review. Statistics South Africa. https://www.statssa.gov.za/?p=18083
- Council for Scientific and Industrial Research (2024). Identification of Skills Needed for the Hydrogen Economy: Research Report. Labour Market Intelligence research programme, Department of Higher Education and Training
- Urban-Econ Development Economists & Urban-Econ: NIKELA. (2024). An analysis of key processes and systems being used by Sector Education and Training Authorities and the National Skills Fund to manage and fund learnerships, apprenticeships and internships. Department of Higher Education and Training (DHET)
- Department of Trade, Industry and Competition. (2025, March). Draft Transformation Fund Concept Document. The Department of Trade, Industry and Competition (the dtic). https://www.thedtic.gov.za/wp-content/uploads/Draft-Transformation-Fund-Concept-Document.pdf
- Malapane, A. (2025, October 22). Funding the future of skills in South Africa. APPETD Blogs and Articles. Retrieved from https://appetd.org.za/funding-the-future-of-skills-in-south-africa/
- Tshikululu Social Investments. (2025, May 16). Understanding social investors to unlock green finance. Tshikululu Social Investments. https://www.tshikululu.org.za/insight/understanding-social-investors-to-unlock-green-finance/
