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South African Business 2022

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Welcome to the 10th edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by the website www.southafricanbusiness.co.za. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provinces. This issue has a focus on Special Economic Zones which are being rolled out across the country with specific economic areas of focus. The importance of the revival of minerals exploration and the significance of onshore and offshore gas discoveries is the subject of another special feature.

OVERVIEW Development

OVERVIEW Development finance and SMME support The IDC has assets of R144-billion at its disposal. A Seda client adds the finishing touches. The Automotive Aftermarket Support Programme covers panel-beaters, motor mechanics, auto spares and auto fitment. Credit: Seda The Industrial Development Corporation (IDC) disbursed R6.3-billion in the year to 31 March 2021. The group has assets of R144-billion and is a major funder and funding partner in the South African business landscape. The group’s annual financial results claimed that a total of 13 354 jobs were expected to be “created, saved and sustained”. The IDC created a R2.5-billion Covid Distress Fund to assist partners and businesses which were hit by the pandemic. In addition, deferments were implemented, which allowed 75 of the corporation’s partners relief to the value of R778-million in a range of sectors from agro-processing to mining. In terms of the IDC’s transformation agenda, the following amounts were committed: • Black Industrialists, R3-billion • black-empowered companies, R3.2-billion • women ownership above 25%, R2-billion • youth ownership above 25%, R1-billion. The Covid-19 lockdown had a severe impact on small businesses. A survey conducted by risk finance company Business Partners Limited found that 95% of SMME respondents thought they would not survive without help. During lockdown, Business Partners regional general manager Jeremy Lang issued a statement regarding financing options for SECTOR INSIGHT The North West Provincial Government is investing in digital infrastructure. small businesses. “We implore SMEs who might be tempted to throw in the towel to reconsider their financing options,” he said in February 2021. Lang made the point that a wider range of financing options is available than many people might know about. He listed “grants, riskfree and risk-based finance where either grants, debt or equity investments are made available”. Lang also noted the relief programmes specifically designed to help SMMEs weather the Covid-19 storm. The company’s own packages SOUTH AFRICAN BUSINESS 2022 76

OVERVIEW included a Repayment Relief Programme and a Financial Assistance Programme capitalised at R100-million. The National Department of Small Business Development (DSBD) has several programmes to assist SMMEs and co-operatives. The Small Enterprise Development Agency (Seda), a subsidiary of the DSBD, has 42 incubation centres in South Africa under its Seda Technology Programme (STP). In Mpumalanga, Seda supports several incubators: Furntech, furniture manufacturing, White River; Mobile Agro-Skills Development & Training (MASDT), agricultural training, Nelspruit; Mpumalanga Stainless Initiative (MSI), stainless-steel processing, Middelburg (with Columbus Stainless); Timbali floriculture, Nelspruit; Ehlanzeni TVET College Rapid Incubator Renewable Technologies, Nelspruit. In the North West, the Provincial Government is investing in digital infrastructure. SMMEs will be able to use the newlyestablished Mafikeng Digital Innovation Hub as a co-working environment and to get support in using digital tools. The South African National Roads Agency Limited (SANRAL) actively supports small businesses wherever it works in South Africa. Subcontracts are routinely awarded for maintenance such as the patching of potholes, fencing and the cutting of grass verges. Part of the rationale behind a national programme to revive industrial parks is to benefit SMMEs. The National Department of Trade, Industry and Competition has invested R40-million in the Nkowankowa Industrial Park in Limpopo, an initiative which has helped to create 174 direct jobs. In the northern reaches of the province, more than 300 jobs have been created with the revitalisation of the Thohoyandou Industrial Park, which has achieved a 91% occupancy rate. A new fund for SMMEs was launched in 2020 with the aim of providing capital at a fair price. Former SA Post Office CEO Mark Barnes, who previously worked in investment banking and private equity, is heading the Kisby Investment Fund. Partners in the fund are Arena Holdings (media), 4AX Africa Exchange, 4AX Debt Services and Rainfin (online credit). Barnes told Business Day that the fund would be compensated for the risk in supporting companies that have to “hunt around in the overpriced debt market” by taking equity in the firm. Kisby is aiming for a R5-billion fund to support companies in the R10-million to R1-billion revenue bracket. ONLINE RESOURCES National Department of Small Business Development: www.dsbd.gov.za Small Business Institute: www.smallbusinessinstitute.co.za Small Enterprise Development Agency: www.seda.co.za South African SME Finance Association: www.sasfa.net Funding is available for technology start-ups in many forms but getting funding early in the process can be difficult because the concept is not proven. For asset management company Futuregrowth, ring-fencing some funding for allocation to early-stage development is a way of ensuring that potential is not overlooked. The company has put 10% of its development equity fund (or R280-million) into businesses such as payment devices (Yoco), infrastructure platform (Rubicon), fintech (LifeCheq) and an app for domestic workers (SweepSouth). Data company 5M2T (5Minutes2Town) has started offering sophisticated information about the township market. From how many spazas in Soweto have refrigeration units (4 700) to brand loyalty, 5M2T covers 60 000 spazas, salons, barbers and other informal trade outlets an “in-market audit”. This allows for better ordering and planning for suppliers and logistics operators. Most big companies in South Africa have two main programmes to support SMMES: enterprise development (ED) and local supplier development (or procurement). Venetia Mine in northern Limpopo, a De Beers Group mine, has more than 50 SMMEs enrolled in incubation programmes and 34 locally-owned companies are doing business with the mine. The National Department of Trade, Industry and Competition (the dtic) is trying to stimulate township and rural economies. Programmes include the Enterprise Investment Programme (EIP). ■ 77 SOUTH AFRICAN BUSINESS 2022

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