Hlonela Lupuwana, CEO of the Small Enterprise Development Agency (Seda), has loaded the Department of Trade and Industry (DTI) move to launch an SME incubation facility.
Hlonela said the system of incubating small enterprises has already proven to be a successful model in South Africa. She said she was convinced that the initiative by the DTI to replicate the model extensively will contribute immensely to the development, growth and sustainability of the small, medium and micro enterprises (SMMEs) in the country. The minister of trade and industry Rob Davies announced the initiative this week at the International Small Business Congress held in Sandton. The initiative DTI’s Incubation Support Programme aims to establish 250 incubators set up throughout the country by 2015. Davies said applications for the dti Incubation Support Programme would open next month.
“Research conducted on the lifespan of SMMEs has proven that more than 80% of them fail and close shop in the first two years of their existence because this is the most difficult and vulnerable period in the life of SMMEs. Entrepreneurs who had ventured into small business have to contend with various challenges during this time and they tend to throw in the towel in their large numbers and discontinue their operations,” said Lupuwana.
She added that the negative trend was reversed when it came to SMMEs that have been through the incubation programme with the success rate exceeding 80% of enterprises who survive the difficult period and sustain themselves successfully.
She added that 295 small enterprises were established by the Seda incubation programme during the 2011/2012 financial year. These were capacitated with various skills and expertise including business management, financial management, marketing, production and quality management, and all other technical aspects pertinent to running a business in a particular sector.
Currently Seda has 38 incubation centres spread in all the provinces except the Northern Cape, where one is still being established. These are in various sectors ranging from floriculture, construction, mining and automotive to agriculture, furniture manufacturing and Information and Communication Technology (ICT).
Lupuwana also called for the private sector to partner with the government in developing and growing the SMME sector in South Africa, saying although the cost of establishing and maintaining an incubator was very high, the returns on investment were immensely immeasurable.
“1 517 jobs have been created by the SMMEs established by the incubation centres during 2011/2012,” said Lupuwana.