More economic growth through incubation and supplier support

Rob Davies, Minister of Trade and Industry, is driving incubator expansion.

Rob Davies, Minister of Trade and Industry, is driving incubator expansion.

THE Department of Trade and Industry (DTI) is boosting support to small enterprises by helping to roll out more business incubators and is amending the Black Economic Empowerment (BEE) codes to increase support to black suppliers.
The Minister of Trade and Industry, Rob Davies, said in his Budget Vote speech earlier this year that it was important that the government’s ongoing industrialisation drive be backed by broadening economic participation if the country is to develop sustainably. The main thrust for broadening economic participation lies in supporting small businesses and black entrepreneurs.
Business incubation forms the central pillar of the department’s support for small businesses, with the number of incubators under the Small Enterprise Development Agency (Seda) having grown to 42, after the agency opened 10 incubators in the last financial year.
COST-SHARING GRANTS The department launched its Incubation Support Programme (ISP) in September last year to provide cost-sharing grants to organisation and businesses that intend expanding or starting up new incubators and incubation programmes to support small businesses. Since its launch, the department had approved 13 grants with a project value of R373 million in sectors such as renewable energy, IT, chemicals, mining, agro-processing, and clothing and textiles.
Davies said in the 2012/13 year Seda helped 376 new enterprises to set up and supported 2 247 small enterprises. The agency has incubators in various sectors such as biotechnology, mining, agro-processing, construction, jewellery, automotive, metals and renewable energy.
Davies said the department now wants to encourage universities and science councils to host incubators, in a bid to develop hi-tech and high-growth sectors. The minister pointed out that in addition to the ISP, other incentives have seen huge growth.
Since the launch last year of the Manufacturing Competitiveness Enhancement Programme (MCEP), R1.4 billion had been approved to 214 enterprises. MCEP grants were being disbursed within two months of applications being made.
Last year the department released a BEE bill to eliminate fronting and is also in the process of amending the BEE codes of good conduct to help develop more black entrepreneurs. Both the bill and draft codes have yet to be signed into law. Davies said the shift in focus of the codes to support more enterprise development and supplier development will ensure that big business plays a key role in developing black suppliers.
The department is also developing a national strategic framework on women’s economic empowerment, while work is also under way to improve support to co-operatives, through the Cooperatives Development Amendment Bill.
When the bill is signed into law it will establish a Cooperatives Development Agency, to provide more focussed development support to cooperatives, while a Cooperatives Tribunal will be set up to adjudicate over conflicts. Small businesses can also expect to benefit from the country’s infrastructure rollout and localisation drive – with a number of sectors having been designated for localisation. These include: rail rolling stock, power pylons, bus bodies, textiles and clothing, canned vegetables, furniture, certain pharmaceuticals and set-top boxes.
Davies said localisation is now fully entrenched in a number of key procurement programmes such as the renewable energy generation programme and the fleet procurement processes of State Owned Companies (SOCs). Work had begun on assessments of sectors and products for designation including the designation of valves, manual and pneumatic actuators; power and telecommunication cables; and components of solar water heaters.
Davies said in his Budget Vote speech that the manufacturing sector is not yet out of the woods, but that intervention in a number of business and industrial sectors had seen the threat reside. He said in 2009 when the new administration began, the threat of de-industrialisation loomed large.
However he pointed out that where the state had acted purposefully to implement programmes developed in consultation with stakeholders positive results have been achieved.
These included interventions backed by incentives to in sectors such as the automotive sector, business process outsourcing, the film sector, clothing and metals fabrication.

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  • Mpho molamu

    Manufacturing Competetiveness and Enhancement Programme has good turnaround times and it leads the entire schemes in the Dti trough its effectiveness and effeciency of the people administering this scheme. Wish other schemes in the Dti will follow suite and learn from MCEP.

    • joyfull

      Let us do away with empty promises if the country should be saved from the ticking time bomb.

  • Alex

    Could someone please answer the phone at the Dti’s Incubation Unit, its almost impossible to speak to relevant people!!

  • Presh

    hi , i would like to know who is the editor of the ‘Small Business Connect
    ‘ newspaper ASAP

  • Cliff

    I believe that its time to start funding the 1 man show, not just with cash but with management, so that they can grow to become a SME.. the definition of a SME is not the one man show that starts with an idea and ends with tears. Banks don’t lend money to the people who have nothing and if they do, it ends with them taking their house or car.

    Money with no management / guidance is a recipe for disaster. If there was a fund for the 1 man show with guidance from the previously advantaged like me for NO REWARD, will create true entrepreneurs.

    Government needs to start a fund for the 1 man show, no reward for anyone except the entrepreneur who will end up paying tax and help government feed a nation. Maybe funding should be to a max of R500’000. I assure you that before you know it, the nation will start working all they need is a break…

    Just my thoughts…