Effectiveness of the Co-operative Grant Incentive Scheme (CIS) on beneficiary firms’ job creation capacity in South Africa

Abstract

This paper investigates the effect of Co-operative Incentive Scheme (CIS) on beneficiary firms’ job creation capacity and presents empirical evidence generated from operation of the CIS aimed at supporting co-operative enterprises in South Africa. The paired-sample t-tests were applied in determining the effectiveness of the CIS grant incentive programme by comparing employees before and after implementation of the programme. Two employment (job creation) models were formulated based on OLS regression models. Our results suggest that the CIS grant funding programme in South Africa has not effectively contributed to beneficiary firms’ employment capacity between the financial periods of 2011/2012 and 2015/2016 under study. We found that the amount approved made a significant contribution to the number of employment opportunities created in beneficiary firms. Within the same period, the beneficiary firms’ employment creation was lower with respect to the employment figure recorded by the beneficiaries’ firm at application. This may be due to overestimation of the employment figure that was recorded at application by the CIS beneficiary firm. This observation is consistent with other studies, which observed that beneficiary firms of grant incentives overstated their declared employment targets at application to influence their chances of benefiting from such grant schemes.