Lessons from a Successful Public-Private Partnership

By Rob Nagel, Credit Portfolio Manager at Ashburton Investments

As South Africa continues its search for growth engines that are both scalable and inclusive, catalyticcapital stands out as one of the few high-potential tools still underutilised. Yet quietly, away from the headlines, one public-private partnership has demonstrated how catalytic capital can unlock real investment and meaningful jobs — without compromising returns or relying on perpetual subsidies.

The Scaling a Guarantee for Job Creation project (“the Project”), a collaboration between Ashburton Fund Managers and the National Treasury’s Jobs Fund, is not just a case study in blended finance. It’s a demonstration of how R90 million in catalytic capital from National Treasury — structured as a contingent guarantee — enabled Ashburton to mobilise R900 million in private investment, support over 26,000 jobs, and channel capital into parts of the economy traditional investors typically avoid.

As the project lead, I’ve lived through the highs and complexities of implementing this initiative. With the benefit of hindsight, I offer a few reflections for those shaping the future of developmental finance, whether in government, asset management, or institutional investment.

But first, context: South Africa’s official unemployment rate remains at 32.9%, with youth unemployment above 60%. More than 7.9 million people are actively looking for work. If ever there was a time for practical, scalable models of job creation, it is now. And catalytic capital — applied smartly — offers one such path.

Catalytic capital refers to targeted financial tools that shift the risk-return balance to crowd in private investment. In this public-private partnership, the R90 million contingent guarantee helped make the fund viable for pension funds, long-term investors, and other institutional investors who may otherwise have viewed the asset class as too risky. It wasn’t a subsidy. It was a mechanism, a lever to redirect private money toward businesses that matter.

When we talk about “over 26,000 jobs,” it’s important to clarify what that means. These include:

• Approximately 7,100 direct jobs created within the investee companies themselves, verified and reported using the IRIS+ global standard, and independently validated through employment contracts, payroll data, or similar evidence.
• Roughly 5,400 indirect jobs generated through supply chains and vendors supporting those businesses.
• Around 14,400 induced jobs arising from economic activity stimulated by the spending of wages in local communities.

Execution was critical. The guarantee opened the door, but Ashburton’s credit team had to deliver. We developed a pipeline of over 200 potential investees, ultimately selecting 18 across sectors like affordable housing, SME lending, and Agri-processing. The fund faced down COVID-19 disruptions, regulatory uncertainty, and macroeconomic stress — and still met both its return and impact objectives.

Partnerships like these work when they’re based on trust. National Treasury, through the Jobs Fund, played more than a funding role. They were an active strategic partner, committed to integrity and open engagement. We held ourselves to high reporting standards, producing 22 quarterly reports and using IRIS+ metrics to track impact in a way investors could trust.

Still, challenges remained. The single biggest constraint was the pipeline. Even with capital on hand, many potential investees were not yet investment-ready or could not meet the dual criteria of financial return and job creation. This isn’t a failure of the model. It’s a call to support the surrounding ecosystem — accelerators, credit advisory services, and business development infrastructure that can bring more enterprises into the investable space.

Looking back, several lessons stand out for those seeking to replicate or scale catalytic capital models:

• Catalytic capital works when it’s targeted and disciplined, not open-ended or vague.
• Investors respond to clear structures that manage downside risk without distorting upside incentives.
• Impact measurement must be integrated from the start, not treated as an afterthought.
• Execution quality is non-negotiable, good fund managers make or break these models.
• A shallow pipeline limits scale, so ecosystem building must accompany capital mobilisation.
• Trust between public and private actors matters and needs to be cultivated actively.
• Policy support is vital, but champions inside institutions who solve problems, not just write strategy are the real accelerators.

The Ashburton Jobs Fund partnership proved that catalytic capital could bridge the gap between public good and private investment logic. With nearly R1 billion raised, and more than 26,000 jobs supported, it is a working example of what developmental finance should look like

This isn’t just a success story. It is now a proven model — one that should probably be repeated, refined, and scaled to help address South Africa’s greatest economic challenge: support the country’s broader goal of inclusive, employment-led growth.