Small Micro Medium Enterprise (SMME) development has been a key driver in emerging economies such as in the South African context. As such, entrepreneurs in the SMME sector have been a focal point for their capacity development, in order for them to be fully responsive in contributing to the economy of the country and job creation (National Development Plan, 2012:15).
To ensure the adequate economic functionality and performance of SMME’s, the Department of Trade and Industry (DTI) (2012:2) launched the Incubation Support Programme (ISP) which is a programme designed to develop incubators and to create successful enterprises with the potential to revitalize communities and strengthen local and national economies. Moreover the ISP’s objectives signal the recognition that private and public partnerships are strategic in attempts toward effect economic development as articulated in B-BBEE, more specifically the enterprise development imperatives of BEE (Ntlamelle; 2015).
The foremost role of incubation is to respond to criticalities which hinder inclusive and sustainable economic growth by way of supporting SMME’s with the potentiality to positively impact growth in industry. More specifically in his citation of Dee (2000), Ntlamelle (2015) expands the role of incubation to highlights its significance in policy making, as it has been found to be an effective tool in reviving innovativeness in regions, The Innovation Hub Incubation Programmes are one such example of provincial governments policy agenda.
In their paper, Mirza and Rahmani (2017) successfully unpack the role of incubation centers, and affirm that studies have shown that factors such as incubation centers physical infrastructure, provision of business assistance, management guidance and counselling, enabling environment and sound practices of incubation centers have led to survival and growth of many small businesses.
The primary objective of business growth and acceleration is commercialization, as only with a first sale, can the intended impact of incubators be gauged and the business measured for economic activity and effectiveness. There is only so much that incubators can offer to SMME’s, the rest, says Buti Makama, eKasiLabs Programme Manager, is up to the market and the entrepreneur.
The funding environment is one such obstacle that has been identified as precarious as it is essential to the commercial capacity of SMME’s. At most times there is limited or no access to funding. Funding, to a start-up, is arguably the life line for business sustainability. Many start-ups rely on funding for the product cycle (development, testing and further development), whereas others rely on funding for sustaining production costs. Funding is so crucial that even with the willingness of a first buyer, small business credibility is questioned as they are often unable to meet the demand of large orders.
Next to limited funding are contextual or environmental constraints that make commercialization an uphill battle. Stringent government procurement policies, namely the PFMA requirement of three quotations, diminish and misunderstand the very nature of innovation. Next to this is the lack of industrial inclination to support and absorb innovation, because the reality is that South Africa may not be fully equipped or prepared to match the emergence of innovative technologies and services produced by our very own entrepreneurs.
Commercial Specialist at Maxum Smart, Wandisiwe Nondlazi, says poor connectivity is one such example of environmental limitations “an entrepreneur could create the most incredible app, in response to a very real challenge, but how far can this app really go if its success relies on data that consumers can ill-afford, or in a country that has limited and unreliable access to Wi-Fi”. Issues such as poor connectivity or no access to connectivity excludes potential customers thereby undermining commercial, and subsequently, economic capacity.
Outside of the policy and environmental challenges, entrepreneurs do much to fail themselves in their commercial pursuits, thinking too small in a global village. Innovation Specialist for the Climate Innovation Center, Maloba Tsehla cites contextual solutions as a way in which entrepreneurs limit their customer segment “many times entrepreneurs provide solutions for their immediate environment, forgetting that the goal of any product should be to exist in the global market, with the ability to solve global challenges. Products should be both robust and flexible, and these considerations should be reflected in the business development strategy, in its systems and communication aspects. There is, after all, no financial reward in playing small.”
This remark offers insight into perceptions that entrepreneurs may have about themselves and their products, Makama adds that “a lot of township based entrepreneurs do not consider themselves to be global challengers, and tend to limit themselves to their immediate environments, but the reality is that a problem in South Africa is a problem anywhere.” All Weather Engineering Roads (Pty), an SMME incubated at Maxum Smart developed an innovative asphalt for road constructions which is resistant to potholes. Founder, Emmanuel Mothabi, created the binder for building long lasting roads in South Africa, but he has successfully expanded his customer segment to include offshore companies, and has been successfully received by the global community.
However, beyond perceptual limitations of entrepreneurs toward their products, the presence of corporate misconceptions toward SMME’s, specifically township SMME’s, presents a very real barrier to SMME commercial potential. Programme Manager of eKasiLabs Ms Khensani Nkuna says that corporate South Africa has the tendency to underestimate the ability of SMME’s to deliver and questions the quality of SMME products and services. There seems to be resistance from Corporate South Africa to procure from SMME’s, more so township based enterprises. There is a sentiment that Corporates often apply to township entrepreneurs that aren’t readily applied to SMME’s in close (suburban) proximity.
However the question of workmanship and quality assurance on the part of SMME’s that exist in under resourced communities cannot be neglected. Programme Manager of eKasilabs, James Segooa, says that in his experience entrepreneurs do not have the wherewithal to employ qualified personnel, and are therefore often forced to do all of the work themselves, everything from marketing, manufacturing and sales. This has the potential to undermine the quality of the product and the end users experience.
However, despite the very real challenges to commercialization, more so those that operate in informal environments, many entrepreneurs have risen to the occasion and successfully commercialized. They have done this by way of expanding their social capital through networking, a component that Tsehla says is a vital contributor when commercializing. They have also achieved this by identifying and understanding their customer segment and its needs, and so, says Rebone Komane of Maxum Smart, are better equipped to articulate unique value proposition to their customers
Here are some of our own companies that have been able to commercialize in spite of environmental and financial constraints:
Kusini Water is a black, youth-owned water engineering company. With over 10 years -experience within our team, Kusini designs home, office and municipal water filters that make use of the latest technology in nano-tech. The water filter is manufactured from macademia nuts.
The company employs a franchising model for installing and running their water-filtration units, enabling employment opportunities throughout South Africa, while also beneficiating what is otherwise a waste stream (macademia nut shells) of the agricultural sector.
The company's technology plays an important role in the provision of access to clean water, even to the furthest parts of South Africa, as a result of the portability and robustness of its containerized solution.
In September 2019, Red Bull and Kusini Water announced the launch of a partnership that would see the development of a desalination plant at the V&A Waterfront (Cape Town) later in the year. Once complete, the plant will be capable of producing 4,000 liters/ hr of fresh water (or enough water to supply over 4,800 households a day)
In October 2018, Kusini made it to the top ten in the AB InBev Africa Sustainability Challenge. And in the same month the company was granted a pilot project pipeline with Gauteng Department of Infrastructure and Development (GDID) for provision of clean water in public schools
