Entrepreneurship in SA
DESTINY’s July issue contains our annual Entrepreneurship Report, full of advice for starting and scaling a business. We look at the local state of entrepreneurship here and provide a comprehensive list of funders for small business owners.
Sometimes, quite glibly, South Africans’ supposed “entitlement” is blamed for how our country’s rates of new entrepreneurs have lagged sluggishly behind other developing economies’.
But in the recent Global Entrepreneur Monitor’s 2012 study of South Africa, it is reported that the number of youth entrepreneurs is indeed the lowest of eight other sub-Saharan countries measured – this, despite our 48% youth unemployment rate.
It suggests our youth are definitely more interested in sheltered employment.
The study also found that low as our numbers of youth entrepreneurs were, many of those who did decide to set up small businesses were spurred on by sheer desperation. This creates a complicating dynamic within the SME sector as businesses founded on a need to survive employ fewer people than businesses founded by what are called “opportunity-driven entrepreneurs”.
These hire an average of six people during the firm’s first three-and-a-half years compared to necessity entrepreneurs who employ just two people. In an International Labour Organisation study in the Free State last year, 49% of youth said the most important reason for them to pursue entrepreneurship was unemployment.
The report makes much of our sub-standard maths and science education, saying it is depriving many youngsters of skills essential to life as an entrepreneur, such as number crunching and problem-solving.
However, one of the biggest entrepreneurial stumbling blocks in SA remains government policy. The process of registering new businesses has improved slightly but delays are still common and although funding exists for new small business startups, this finance is not easily available from the public and private sectors
In Peru, where rates of entrepreneurship are three times as much as SA’s, the government amended regulations to favour new businesses, making the new business registration process less bureaucratic and absolutely free.
The SA government has launched nine new business incubators in recent months, bringing the total number of Small Enterprise Development Agency incubators to 44 but many are aimed disproportionately at poorly-skilled people. What’s needed is for universities, angel investors and the government to create a pact around a shared model of how new ideas can be researched, funded and launched.
Here are some funding and development organisations for entrepreneurs:
FUNDING AND DEVELOPMENT ORGANISATIONS
Vuka Mentorship Programme
Aimed to cater for pre-start up businesses, this programme identifies potential entrepreneurs and trains them to be business savvy. Participants leave with knowledge of how to start and maintain a successful business. At the end of the programme developed businesses will present their ideas to Nedbank for funding capital.
For more info visit, http://www.vukamentorship.co.za/home.php
The Hub Fellowship Programme
This programme targets businesses still at an ‘idea’ stage. Participants are taken through a year long process to develop networks and business skills. Programme aims to develop social and environmental entrepreneurs.
For more info visit, Johannesburg.the-hub.net
SAB KickStart supplies grants for initial capital for businesses. They focus on youthful entrepreneurs between the ages of 18 and 35. Participants go through a development process for their business with annual awards for the most successful ventures.
For more info visit, www.sabkickstart.net
Micro Enterprise Development Organization (MEDO)
MEDO combines skills development, mentorship, networking and office networking to help existing entrepreneurs to flourish. Additionally, the programme tailors companies to cater to a specific target market to raise profits.
For more info visit, www.medo.co.za
Property company GrowthPoint created the Property Point programme that assists small to medium enterprises in property. Businesses aim to be procurement ready by the end of the programme. There is a nominal joining fee of R5 000.
For more info visit, www.propertypoint.org.za
This foundation aims to grow businesses that can eventually feature in Eskom’s work. Participants’ businesses are expected to join the Eskom working environment by the end of the course. For more info,www.eskom.co.za
Angel Hub caters for businesses with steep growth rates. Funding is offered between R1 million to R10 million. Applicants need to have a strong team and have a measurable business plan.
For more info visit, www.angelhub.co.za
This funding scheme is specifically for mining and connected industries. The funding is separated by four different schemes, Supply Chain Fund, Anglo American Khula Mining Fund, Community Fund and the Green Fund.
For more info visit, www.angloamerican.co.za
Capital Projects Feasibility Programme (CPFP)
Under the Department of Trade and Industry this programme aims to fund candidates willing to study abroad. The hope is that participants will return with solid knowledge of the exporting industry. Grants are given between R100 000 to R5 million.
For more info contact James Koko at email@example.com
National Youth Development Agency (NYDA)
The agency focuses on young entrepreneurs with two schemes, Micro-Finance and SME Funding. The latter supplies funding for established businesses while Micro-Finance is for start-up businesses. Funding ranges from R1 000 to R5 million between both schemes.
For more info visit, www.nyda.gov.za/
National Empowerment Fund (NEF)
This fund caters for functioning high growth businesses with separate funds catering for the amount a business needs. Procurement, acquisition and expansion finance are the focus areas for the funding.
For more info visit, www.nefcorp.co.za
Often entrepreneurship development organisations are geared towards a specific disenfranchised group. Women centered organisations often address female specific challenges an entrepreneur may have and foster networking opportunities.
“Policies promoting societal attitude changes about women, and that train, support and encourage women entrepreneurs will promote inclusiveness and fuel economic growth.” Global Entrepreneurship Monitor 2012 Global Report.
IDC’s Women’s Entrepreneurship Fund
Enablis Entrepreneurial Network
South African Women Entrepreneurs’ Network (SAWEN)
To read the full version of this story go to page 22 of the July issue of DESTINY