SA to replicate Indian SMME incubation hub model

Source Engineering News

by Natalie Greve | Jan 20, 2015

South African industry organisation, the Black Business Council (BBC), and the Indian government’s National Small Industries Corporation (NSIC) on Monday signed a memorandum of understanding (MoU) that will see the establishment of five local incubation hubs aimed at upskilling and training young entrepreneurs in the small, medium-sized and microenterprise (SMME) sector.

The hubs would be based on a concept first implemented by the NSIC in post-independence
India in 1956, in which rapid training was provided to budding entrepreneurs in several manufacturing and service sectors, transforming unemployed youth into entrepreneurs.

BBC executive policy and research head Pule Mokoena told Engineering News Online at the signing ceremony that this “hand-holding” model of enterprise development would assist primarily manufacturing-focused SMMEs to access finance, provide marketing support, enable exposure to the BBC’s business network and provide technical skills training.

He added that the incubation hubs would be established in KwaZulu-Natal, Gauteng, Mpumalanga, the North West and the Eastern Cape over the next year and would be aligned with the Department of Trade and Industry’s overaching black industrialisaton and economic transformation programmes.

“Incubators provide an opportunity for first-generation entrepreneurs to acquire basic technical trade skills and gain exposure to all areas of business operation, such as business development.

“These hubs will [also teach] entrepreneurs to identify the most appropriate technology, acquire hands-on experience on working projects and enable them to understand the commercial aspects of business,” the chamber outlined.

BBC president Ndaba Ntsele added at the Johannesburg event that the MoU would also result in collaboration between Indian and South African SMMEs and aid in the identification of possible synergies and trade links between the two countries.

“We will partner with our counterparts in India…we want to increase the contribution of SMMEs to the economy, as we currently have a deficit of entrepreneurs, and this concept will show us how to do that.

“Importantly, the [local incubation hubs] will provide [SMMEs] with access to venture capital, because if you don’t have marbles, you can’t play the game,” he asserted.

NSIC chairperson Ravindra Nath revealed that the business promotion corporation had been active in South Africa for several years and had already established technical incubation hubs at three technical and vocational education and training colleges in KwaZulu-Natal and the Eastern Cape.

The recent MoU was set to solidify the existing relationship between the NSIC and the South African government and accelerate the roll-out of the concept to other provinces.

“[Our] model has also been well accepted elsewhere in Africa and we have already established incubation centres in Senegal, Ethiopia, Burundi and Rwanda, while Botswana has just put in an order for a $2-million hub.

“These centres will provide a solution to unemployment – a problem shared by both India [and Africa],” he commented.

A jubilant Small Business Development Deputy Minister Elizabeth Thabethe described the signing of the MoU between the parties as a “milestone” agreement.

“I am elated and happy that the BBC has signed this agreement to share best practise with India and strengthen trade and industry between the two countries, as South Africans have always been ready to do [more] business with India.

“We [as the Small Business Development Ministry] will continue to support such partnerships, which look to abolish poverty, as government’s key role is to create conditions in which businesses can thrive. Hopefully, this agreement will result in a better [local] SMME and cooperative sector, because, if India can do it, why not us?,” she remarked.

According to Indian Micro, Small, Medium Enterprises (MSME) Minister Kalraj Mishra, MSME’s contributed nearly 8% of the country’s gross domestic product, 45% of its manufacturing output and 40% of its exports, providing the largest share of employment after agriculture.

“The Indian government is keen to promote partnerships between the South African and Indian SMME sector and we consider [the signing of this MoU] as the start of a new bilateral economic relationship between our two countries,” he concluded.