Why are SMEs in the manufacturing sector important to the South African economy?
Although manufacturing operations rely on a core of highly skilled people to develop products for the market, they usually employ significant numbers of people, with basic skills, on the factory floor and production lines. It is at this level that small manufacturing companies make a major contribution to the economy – they contribute to job creation in a country where unemployment is a major challenge. What is most exciting about manufacturing is that it creates jobs in the very area where we need them most – low to semi-skilled positions.
If manufacturing activity at all levels is not encouraged, the possibility of creating employment will not be realised.
What are some of the major barriers for manufacturing companies operating in South Africa and looking to conduct business beyond our borders?
Many are struggling at the moment. Some of the difficulties are related to currency fluctuations and the value of the rand against other major currencies. The low value of the rand against the dollar does lend some competitive advantage, relative to other economies but definitely not to Asia.
On the other hand, we need to do more with regards to marketing and sales into the continent. We are simply not taking advantage of the natural markets for our products available on the continent. We also need to educate the rest of Africa about the depth of our manufacturing expertise in South Africa. We need to emphasise our broad range of product offerings.
How is this lack of marketing impacting on perceptions about South African products?
There is generally little understanding in the rest of Africa about our country’s manufacturing capabilities. In dealings with major companies and governments, people are unaware of what our manufacturing concerns can produce.
This is especially the case in the defence sector where people are surprised at the range of high quality products we offer. But, I also think that we are not spending enough time getting to know the continent and its needs. We do not send our best and brightest into the rest of Africa.
Are smaller manufacturing companies aware of the support they can get from government to assist with growing their businesses?
There are many small businesses who do not know where, or how, to find government support. The ‘Think Big’ TV series, however, showed that where entrepreneurs have taken the time to find out what is available, they benefit greatly from initiatives from sources like the Department of Trade and Industry.
How can contact between small business and government funders be improved?
Processes can be made easier. The compilation of material required for submission to the department can be daunting. The level of detail required is obviously in place to reduce risk, but I believe that reducing the volume of material required should not necessarily result in a sharp increase in government’s risk exposure.
It appears to outsiders that small manufacturing companies are battling for their place in today’s markets. This can be attributed to the cost of materials and high levels of international competition – especially from Asia. What is your view?
There is no way of avoiding the fact that Asia is a cheaper manufacturing destination than South Africa, and that their cheaper products compete for local market share. I don’t believe that this competitive advantage will last forever – particularly in Africa.
This is mainly because many people buy goods on the basis of the cheaper prices of Asian products, rather than focusing on quality. What we could be doing better is engaging with Africa and telling potential customers exactly what they will get when they buy from a South African company.
We should focus more on supporting the industrialisation and skills development processes in the countries we trade with. Win-win relationships can only develop when we leave real capacity in the countries we partner with.
For example, if you’re in Zambia and a South African-manufactured product breaks, support is close by. If you are buying from India or China, the picture is totally different. However, the real objective is to develop the capacity in-country to undertake basic maintenance with a view to support the move further up the value chain.
We need to be clever about what we can bring to the table in our neighbourhood and market these advantages. It is our neighbourhood after all.
While the ‘Think Big’ series has concluded on TV screens, episodes can still be viewed online by visiting www.standardbank.co.za/thinkbig. For an array of additional tips and tools on how to start, manage or grow a business, visit bizconnect.standardbank.co.za.
Related: Manufacturing in South Africa
A Look At Youth Mentorship During Global Entrepreneurship Week (GEW)
Entrepreneur: A person who sets up a business or businesses, taking on financial risks in the hope of profit.
Global Entrepreneurship Week kicks off from 12 November – 16 November. Around the world, entrepreneurs are carving out their paths and are taking matters into their own hands.
Back home, Futureproof wants to instil a culture of curiosity, tenacity and risk taking in every South Africa – young or old, intrapreneur or entrepreneur.
In fact, we go as far as to teach young children from the age of 8-years-old about the art of entrepreneurship as part of our countrywide school program. Most recently, the company has seen success in the Orange Farm area and is teaching 110 Grade 3’s to master the art of entrepreneurship.
To celebrate this week, the team at Futureproof interviewed several well-known entrepreneurs and asked them the big question: ‘What do you wish someone had told you before you became an entrepreneur?’ Here’s what they had to say:
Clive Murray, the founder and CEO of World Water Exchange: “Making money is easier than keeping it. Don’t change the rules you make for yourself when times get tough.”
Marc Ashton, former MD of Moneyweb and CEO of Dynamic Body Technology:
- Don’t start a business…
- If you are feeling foolish and still wan to then do it with partners.
- If you are doing it with partners then lay out the terms of divorce upfront.
CEO and Co-Founder, Lisa Illingworth says that Futureproof has made it their life’s mission to aid children with the real-life, hands-on skills that they need to succeed as entrepreneurs.
“Text books just don’t teach the things that entrepreneurs really need to know. So much growth and economic activity can be realised out of entrepreneurial ventures, but we are all too scared to take the leap… why? Because we don’t feel supported and we would probably prefer to stay in our comfort zones”.
In fact, while entrepreneurship could literally catapult our country, an article in the Daily Maverick in 2017 described entrepreneurship in South Africa as ‘Sitting backwards on a donkey riding further away’.
Issues that entrepreneurs will come to face, even in their younger years is that of funding issues, lack of mentorship and opportunities, low skill levels, compliance and of course, poor standards of education and lack of access to education.
The current structure of the education system was initially designed in an entirely different age to achieve economic outcomes that are no longer viable due, in large, to the rapid innovation and adoption of technology.
“Gearing the country up for the forth industrial revolution is proving to be a challenge in both the public and private sectors. Are we really ready and how we use this particular week of the year to relook the problems and derive opportunities from them?” says Lisa.
Lisa provides context on the issues that entrepreneurs face. “Imagine this: you have a brilliant idea but no investment. You have no clue where to begin but you take it to the banks and a few potential investors. Without a solid plan and ‘street smarts’, the deals fall through, or you jump through hoops, give away more than half of your company and land up working tirelessly with no returns. This a reality for many who really don’t know how to launch an idea, understand its feasibility and raising the capital they need through mechanisms that won’t cannabalise the business at a later point.”
Lisa says that the country remains hopeful for President Ramaphosa to implement his vision for entrepreneurship as stated in the SONA 2018. “The President stated that ‘establishment through the CEOs Initiative of a small business fund – which currently stands at R1.5-billion – is an outstanding example of the role that the private sector can play. Government is finalising a small business and innovation fund targeted at start-ups’,” she continues.
“We need to change how and what schools are teaching for this to be realised on a large scale and providing the foundations so that these kinds of funding initiatives will have the best possible chance of growth and success”.
Make Your Travel Even More Rewarding
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When travelling within southern Africa or internationally on British Airways, Executive Club members from Silver Tier status and up will experience a valuable and enjoyable ‘moment in time’ between checking in and boarding with lounge access into all British Airways eligible lounges. Some of these features include on-site spas, wine tasting from a monthly selection of the finest South African and international wines, a Living Library, private meeting spaces and business facilities to mention but a few.
The more Tier points you earn the sooner you will reach your next Tier status in the Club, which will result in additional benefits, such as bonus Avios, priority check-in, extra luggage allowance, access to over 170 lounges worldwide and enhanced opportunities to afford the luxury of travelling in the British Airways Club (Business Class) cabin.
When travelling in Club, priority boarding is on offer giving passengers a minute or two to reflect as they settle into the comfort of the business class seats, meaning significantly more space, which can be utilised to work on your next business pitch, read a book on your digital device or stretch out and relax before touching down.
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As part of the Executive Club you will collect Avios every time you fly and you can even top up your Avios with ease and make use of a collective balance by pooling Avios together within a household account, to reach your dream destination sooner. By calculating earnable Avios and Tier points with the simple calculator available on ba.com, an estimation can be done before booking your next flight.
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How Schindlers Attorneys Became Involved In The Landmark Cannabis Case
Everything you accomplish accumulates and eventually comes back to assist you further along in your career. This is how a final year LLB assignment became the basis for a Constitutional Court case.
Schindlers Attorneys are the law firm that were involved in the landmark Constitutional Court judgement on cannabis use within a private space. Paul-Michael Keichel, Partner at Schindlers Attorneys shares how they came to be the foremost legal experts on cannabis and how they became involved in the Constitutional Court case:
How the journey began
“In 2005, my first year at Rhodes University, whilst studying for Intro to Law, it occurred to me that there were strong constitutional points that could be raised to objectively justify the decriminalisation of cannabis in South Africa,” explains Paul-Michael Keichel.
“In my final year LLB, 2009, I took Constitutional Litigation as an elective (largely motivated by the creation of a timetable clash, which meant that I’d not have to sit another semester of lectures for a module that I had failed the previous year). This provided me with the opportunity to write an assignment titled “A Critical Analysis of Prince and an Objective Justification for the Decriminalisation of Marijuana in South Africa”, in which I composed my argument (based on the right to equality in our Constitution).”
The start of the partnership
“Fast forward to 2013 and the Dagga Couple find themselves at Schindlers (where I am a first-year associate) to register their NPC, “Fields of Green for All”. The attorney handling the registration (who I’d also bored with my argument) suggests to the Dagga Couple that they speak to me. It turns out that they already knew of me, because my assignment had (unbeknownst to me) done the rounds on the underground cannabis networks. We get chatting and I rope-in my brother, Maurice Crespi, the managing partner of Schindlers,” explains Keichel.
“We are the only firm out of many approached by the Couple who are willing to take on their trial action against 7 state departments and Doctors for Life to push for a declaration of constitutional invalidity of the laws prohibiting cannabis use/possession/dealing in South Africa. We decide to run the challenge for them pro bono.”
The Cape ruling that started it all
“Prince and Acton et al have their matter heard in the Cape, which resulted in the 2017 Judgment. We run a portion of our trial (including expert evidence from international scientists and doctors – the best in field), but it is rendered part-heard. We then heard that Prince and Acton et al’s matter will be heard by the Constitutional Court in November 2017 and we decide, with the Dagga Couple, to intervene in that matter, upon which it is confirmed that my 2009 assignment forms the on-record basis of a major chunk of Prince and Acton et al’s arguments in support of legalisation.”
“Our involvement in the Constitutional Court was such that we provided clear legal argument and authority to support and expand upon what Prince and Acton et al were trying to say to the Court. Ultimately, much of what we submitted has found its way into the judgment of the Constitutional Court.”
How a final assignment became the foundation for a Constitutional Court case
“So, an idea (bolstered by wanting to create a timetable clash) resulted in an assignment, which provided certain credibility and impetus to cannabis activists. Two of these activists ended up being our clients, which, despite being handled pro bono, has brought Schindlers immeasurable positive publicity, and which, ultimately, contributed to the decriminalisation (and potential future legalisation and commercialisation) of cannabis in our country.”
“Schindlers now has a dedicated “Medicinal and Recreational Cannabis Law” department, through which we will continue to make submissions to parliament, apply for licenses on behalf of our clients, support those who have been arrested and charged.”
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