Enterprise development and business incubators

Enterprise development and business incubators

Hatching the golden egg

The SMME sector is a significant economic driver, and more than 70% of South Africa’s workforce is employed in the sector. In its plans to revive the economy, the Government will be taking measures to unleash the potential of small businesses, micro-businesses and informal businesses.

The informal sector provides for a large part of the workforce, keeping many households above the poverty line

In his State of the Nation Address, President Cyril Ramaphosa said: “These are the businesses that create the most jobs and provide the most opportunities for poor people to earn a living.”

The force behind small business development

This sector also has a large proportion of businesses operating in the informal sector. Around 2.5 million South Africans work in the informal sector, and it creates almost the amount of direct employment as the mining sector. Due to its importance for economic growth, the Department of Small Business Development has a special focus on the informal sector.

The Department is responsible for the coordination, integration, and mobilisation of efforts and resources towards the creation of an enabling environment for the growth and sustainability of SMMEs and Co-operatives.

It supports more than 70 000 competitive small businesses annually and focuses on introducing interventions aimed at changing the lives of the marginalised, especially women and youth, and those living in impoverished rural areas and townships.

To this end, the Department has a number of programmes targeting the informal sector, including the Township and Rural Entrepreneurship Programme (TREP), with R545 million disbursed to township and rural enterprises during the last financial year.

Incubators for small business development

1. Business incubators can play a vital role in equipping entrepreneurs with the skills needed to create successful and sustainable businesses. They offer support that is especially focused on small business owners, who may not have the resources or skills that larger corporations have access to. Incubators address the challenges specific to SMMEs – the impact of the pandemic, a lack of access to funding and markets, and limited tech adoption.

2. Here are five newly launched incubators offering SMMEs support.

3. The Gibela Business Incubator supports qualifying entrepreneurs and small businesses operating in Nigel, Springs and the greater Ekurhuleni area. The programme is a partnership between the Gibela Rail Transport Consortium, the City of Ekurhuleni and the Small Enterprise Development Agency.

4. The Fetola Circular Economy Accelerator is focused on supporting the growth of over 100 small and emerging businesses within the circular economy and sustainability sectors. This includes startups that tackle global challenges like climate change, biodiversity loss, waste, and pollution.

5. The Department of Tourism, in collaboration with the Technology Innovation Agency (TIA), has launched the Tourism Technology Grassroots Innovation Incubator Programme.

6. The MultiChoice Creator Incubator focuses on digital video content creators native to the TikTok platform, teaching them digital storytelling and business skills and connecting them with other creators.

7. The Craft + Design Institute (CDI), in collaboration with the V&A Waterfront, is offering Cape Town-based creative entrepreneurs the opportunity to gain full retail experience at their incubator store, Design Lab.

Building value chains Small Business Development Minister Stella Ndabeni-Abrahams says her Department is working to amend legislation to provide norms, standards, and a common business licensing framework for spaza shop owners. It is also assisting informal spaza shops with company registration and compliance with tax and labour legislation.

Minister Ndabeni-Abrahams says this work will be done through the Spaza Shop Support Programme, which is aimed at value chain development within the retail space of spaza shops.

This includes the concurrent linking up of beneficiaries with wholesalers, bulk buying arrangements done through South African Spaza Support Associations, access to SMME products at wholesalers by South African-owned spaza shops through localisation efforts of the Department and its entities, as well as the formalisation and strengthening of these South African-owned spaza shops by working with municipalities and the banking sector, says Minister Ndabeni-Abrahams

“In addition, the department is assisting with the transitioning of informal spaza shops to formality by providing assistance with regulatory requirements and instruments such as company registration and compliance with tax and labour legislation,” she says.

“This transition allows South African spaza shops to gain access to opportunities for growth and sustainability within the mainstream economy as described under the first point above,” she said.

Another programme offered by the Department is the Township and Rural Entrepreneurship Programme. The TREP is a dedicated programme to transform and integrate opportunities in townships and rural areas into productive business ventures. The focus is to create platforms that provide the business support infrastructure and regulatory environment that enables entrepreneurs to thrive.

The TREP includes bakeries, autobody repairers and mechanics, butcheries, personal care service providers, spaza shops and tshisanyama and cooked food businesses.

The informal sector provides for a large part of the workforce, keeping many households above the poverty line. These businesses have the potential to reach even higher economic gains with the help of the Department: by formalising these businesses, they have further access to support and resources and are able to contribute to South Africa’s tax base.