SETA grants are financial awards provided by the Sector Education and Training Authorities (SETAs) in South Africa to support skills development initiatives. There are two main types of SETA grants: mandatory and discretionary.
Skills Development Levies: A Mandatory Contribution
The Skills Development Levy (SDL) stands as a compulsory monthly payment mandated for South African employers with an annual income exceeding R500,000. Constituting 1% of their payroll, this levy is remitted to the South African Revenue Service (SARS) alongside monthly PAYE and UIF contributions.
Allocation of Skills Development Levies
The collected Skills Development Levies are distributed between the National Skills Fund (NSF) and the Sector Education and Training Authorities (SETAs). These entities, in turn, manage the disbursement of grants to funds, programs, and employers throughout South Africa, aiming to enhance the training and upskilling of the nation’s workforce.
A fraction of the funds assigned to the SETAs serves the internal administration of these entities (10%) and supports the Quality Council for Trades and Occupations (QCTO) with 0.5%.
What Are The Different Types Of SETA Funding
Mandatory Grants
The Mandatory Grant plays a pivotal role in fostering collaboration between employers and SETAs. It encourages employers to submit essential data regarding their workforce and skills requirements, derived from their annual Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs).
SETAs are obligated to reimburse 20% of the Skills Development Levy annually to employers who successfully submit the required documentation.
- Eligibility: Received automatically by employers who have paid their Skills Development Levy (SDL) and submitted their Workplace Skills Plan (WSP) and Annual Training Report (ATR) on time.
- Amount: Equal to 20% of the 1% SDL paid by the employer.
- Purpose: Encourage employers to comply with skills development requirements and invest in their workforce.
- No application required: Automatically paid into the employer’s bank account after the SETA has verified their compliance.
Discretionary Grants
The remaining 80% of the Skills Development Levy is earmarked for employers at the discretion of the SETAs. To access this funding, employers must undergo a structured application process through the respective SETA’s online platform. This process may include submitting a Letter of Intent (LOI) and responding to SETA submission windows, each uniquely outlined by the relevant SETA.
The primary objective of Discretionary Grants is to stimulate stakeholders and employers to actively contribute to skills development initiatives. This involves addressing critical and scarce skills shortages, fostering job creation, and generating employment opportunities.
- Eligibility: Competitive process open to employers, training providers, and other organizations.
- Amount: Varies depending on the project and the available funding.
- Purpose: Support a wider range of skills development initiatives, such as:
- Addressing critical and scarce skills shortages.
- Promoting innovation and new technologies.
- Broadening access to skills development opportunities.
- Creating jobs and employment opportunities.
- Application required: Each SETA has its own application process and deadlines.
Here’s a table summarising the key differences between mandatory and discretionary SETA grants:
| Feature | Mandatory Grant | Discretionary Grant |
|---|---|---|
| Eligibility | Automatic for compliant employers | Competitive process |
| Amount | 20% of SDL | Varies depending on project and funding |
| Purpose | Encourage compliance and investment in workforce | Support wider range of skills development initiatives |
| Application | Not required | Required |
Conclusion
Understanding the dynamics of both discretionary and mandatory SETA grants is crucial for employers and organizations seeking to participate in South Africa’s skills development initiatives. The mandatory grant, constituting 20% of the Skills Development Levy, serves as a tangible incentive for employers to comply with skills development requirements. This automatic grant encourages the submission of essential data through Workplace Skills Plans (WSPs) and Annual Training Reports (ATRs), fostering collaboration between employers and SETAs.
On the other hand, discretionary grants, comprising the remaining 80% of the Skills Development Levy, provide a platform for employers, training providers, and organizations to actively contribute to skills development. This funding, accessible through a competitive application process, aims to address critical and scarce skills shortages, promote innovation, broaden access to opportunities, and create employment.
The distinction between these two grant types lies not only in their eligibility criteria and allocation methods but also in their overarching purposes. While mandatory grants focus on encouraging compliance and investment in the workforce, discretionary grants aim to support a broader spectrum of skills development initiatives, contributing to the overall enhancement of the nation’s workforce. Employers and stakeholders should navigate these grant mechanisms judiciously, recognizing the diverse opportunities they present for advancing skills development in South Africa.
