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South African Business 2019 edition

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The 2019 edition of South African Business is the seventh edition of this annual guide to business and investment in South Africa. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies. Feature articles on topical issues such as Special Economic Zones and African trade provide unique insights, together with comprehensive overviews of critical economic sectors. Other special features focus on the exciting new possibilities in renewable energy, airports as engines of regional growth and the maritime sector as an entirely new prospect for South African entrepreneurs and businesses. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed at

OVERVIEW Development

OVERVIEW Development finance and SMME support Prompt payment is vital for small businesses. SECTOR INSIGHT SAB aims to create 10 000 jobs by 2022. Portia Mngomezulu, the founder and managing director of Portia M, told the host of a radio business show in 2018 that one of the most important factors in allowing her to scale up her skin products business was the willingness of Pick n Pay to pay her within seven days. The entrepreneur was named in 2018 as Pick n Pay’s Small Supplier of the Year and her sales topped R10-million. From an initial investment of R200, she now employs 27 full-time staff and her range of products is available in four African countries outside South Africa. One of biggest problems faced by small, medium and microenterprises (SMMEs) is cash flow. Most government departments have rules about procurement which are biased in favour of purchasing from SMMEs or co-operatives. However, for many South African entrepreneurs, the inability or unwillingness of government to pay within 30 days presents a major risk to sustainability. The Enterprise and Supplier Development (ESD) Programme of Pick n Pay addresses and goes a step further with the seven-day rule. Public procurement from township enterprises from provincial and municipal governments in Gauteng, the province where more than half of the country’s SMMEs are located, increased in 2017 to R17-billion, up from just R600-million in 2014. This expenditure has allowed many township businesses to enter the formal economy and for them to become more sustainable. The City of Johannesburg runs seven SMME hubs where office space, Wifi and advice and training are available for small business operators. All South African retailers have ESD programmes which typically create or support small businesses along their supply chain. A small community in rural Mpumalanga is remote and difficult to get to, but 13 farmers at Elukwatini Farm sell tomatoes to Woolworths. According to a Business Day report, Woolworths works through Technoserve (an NPO) and Qutom (a large supplier) for produce to be collected. De Beers Venetia Mine in northern Limpopo has chosen the transport of its workers as an area for business creation. Two small bus businesses servicing its labour-sending areas have been created with a wide range of ownership and with potential to expand. SOUTH AFRICAN BUSINESS 2019 144

OVERVIEW South African Breweries, a subsidiary of AB InBev, wants to use its four entrepreurship programmes to create 10 000 jobs by 2022. In 2018, Coca-Cola Beverages South Africa launched the Mintirho Foundation, a R400-million fund to pay for training of farmers and support business in the agricultural value chain. Toyota South Africa Motors is funding the newly created Toyota Empowerment Trust (TET) to the tune of R42-million. Beginning in 2018, the trust will at first train specialised automation technicians with the long-term intention of helping qualified technicians to start their own maintenance firms. The National Department of Small Business Development (DSBD) has several programmes to assist small, medium and micro enterprises (SMMEs) and co-operatives. These include: • The Black Business Supplier Development Programme, a costsharing grant to promote competitiveness • The Co-operative Incentive Scheme, a 100% grant. The Small Enterprise Development Agency (Seda) is a subsidiary of the DSBD. Seda has 42 incubation centres in South Africa under its Seda Technology Programme (STP). In a 2018 publication, Seda reported that the number of SMMEs in South Africa increased by only 3%, from 2.18-million to 2.25-million, between 2008 and 2015. The National Department of Trade and Industry (dti) is trying to stimulate township and rural economies. Various programmes within the dti and its agencies contribute to the creation of SMMEs or to the rescue of ailing SMMEs in tough times. The Enterprise Investment Programme (EIP) has achieved considerable success. Having received a grant in 2014, Thorax LP Equipment, a 100% black-women-owned company based in Gauteng, has subsequently turned over more than R8-million and employed many young people. A grant to Kalagadi Manganese in the Northern Cape helped to create 8 857 jobs. The National Gazelles is a national SMME accelerator jointly funded by Seda and the DSBD. The aim is to identify and support businesses with growth potential across priority sectors. Businesses can receive ONLINE RESOURCES Gazelles: National Small Business Chamber: Small Business Institute: Small Enterprise Development Agency: Small Enterprise Finance Agency: SMME Opportunity Roadshow: up to R1-million for training, productivity advice, business skills development and the purchase of equipment. The Industrial Development Corporation (IDC) supports SMMEs either by disbursing loans or by taking minority shares in enterprises and giving advice. An agricultural project in the Northern Cape is an example of the kind of work it does. Through the IDC’s Transformation and Entrepreneurial Scheme, a black economic empowerment project is underway at Kakamas. The emerging farmers of Vaal Community Citrus are planting citrus. The president of Business Leadership South Africa, Jabu Mabuza, expressed concerns about at a small business summit in July 2018 about the number of different agencies working on diverse programmes to promote SMMEs. He also called for big businesses to pay SMMEs promptly. At about the same time as Mabuza’s speech, some of the early findings of a baseline study of the SMME sector were released. The study is being conducted by the Small Business Institute (SBI) and SBP, a business environment specialist. The study suggests that definitions of enterprise size vary too much, that there is not sufficient coordination in support of the sector and that entrepreneurs face an enormous amount of red tape. 145 SOUTH AFRICAN BUSINESS 2019

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