As we conclude Heritage Month (September), we should remind ourselves of just how special South Africa is as a country that is rich in cultural diversity. With our progressive constitution and so much political and socio-economic advancement in the last 24 years, we have come a long way. We should pause, take stock and pat ourselves on the back for having made it this far.
We are not without our problems as a country however, and coming from a terrible past such as ours, it will take a long time before we reach our “Canaan”. Some of our historical problems have unfortunately latched onto our heritage as a new people, which has left many unable to work and provide for themselves and their families. What is abundantly clear is that solutions to our problems will come from ourselves.
One of the biggest problems to address is the economic marginalisation of many of our countrymen. Getting this right will have a ripple effect and contribute towards solving other socio-economic challenges we are faced with. Seemingly, we will not be able to make a dent in the reduction of crime, for instance, unless people are able to earn a living and feed their families.
When Eskom started getting involved in community development back in 1988, it began with a project that gave bursaries to talented black students who excelled in mathematics and science to study engineering. The focus grew to include early childhood development and school gardens, which all culminated in Eduplant, a competition run in partnership with Food & Trees for Africa, aimed to promote permaculture gardens and the role of food security in schools across the country.
Eskom continued its work in similar and other projects until 1998, when the Eskom Development Foundation was officially established, with a mandate of implementing the organisation’s corporate social investment (CSI) strategy in sectors including enterprise development, education, healthcare, social and community development. Through its various programmes and strategic partnerships, the Foundation has been working to enhance the quality of life for South Africans.
Under one of its focus areas, enterprise development, the Foundation has been supporting black-owned small and medium enterprises (SMEs) to become sustainable and create jobs. At the centre of the government’s latest stimulus package is the revival of township economies and small businesses. These businesses, which are based and operated in these townships, should be the drivers of this stimulus, if it is to make a difference and help grow these local economies.
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It is a known fact that many small businesses fail to survive or realise their full potential when the only thing possibly standing in their way is getting some guidance. Help in the business world exists in many different forms and in some cases, it doesn’t even cost anything. The reality is that acquiring the basic skills of running a business is something that cannot be replaced or bypassed, and can too often mean the difference between survival and failure.
At Eskom we believe that there is nothing small about small businesses. And this is within the context of their contribution to the economy. Many economists and business experts agree that SMEs are the backbone of any economy. Our programmes support enterprise development and are geared at helping small businesses become sustainable, achieve success and uplift their local economies.
The Eskom Contractor Academy equips small business owners with the necessary skills they need to build successful and sustainable businesses. The academy combines theoretical and practical work, where students attend a residential study school for a week every month over eight months. By using the academy to empower entrepreneurs, Eskom is contributing to boosting much-needed economic activity around the country. The academy boasts a 97% pass rate with a 60/40% male and female representation and 51% youth.
The Simama Ranta Entrepreneurship Education Competition is run in collaboration with Education with Enterprise Trust (EWET) and aims to stimulate entrepreneurship education in high schools across the country. It identifies and celebrates schools that are excelling in teaching their learners how to become entrepreneurs using practical enterprise clubs within their schools.
The Foundation believes that one of the best ways to fight underdevelopment in our communities is to teach and encourage the youth, at school level, to consider entrepreneurship as a viable career choice. To qualify for the competition, schools must run an enterprise club that teaches learners the basics of business through practical application while responding to their respective communities’ socio-economic needs. The competition rewards the winning schools with various cash prizes that they can use to grow their projects.
Business Investment Competition (BIC)
The annual Business Investment Competition (BIC) recognises and rewards SMEs that are significantly contributing to the fight against unemployment and poverty. These are businesses that are spearheading the country’s economic development by creating jobs in their local economies.
The competition is open to local, black-owned and registered enterprises that have been operating for more than 24 months in the manufacturing, engineering and construction, trade and services as well as agriculture and agri-processing sectors. The competition helps SMEs move to the next level with not only the financial rewards, but also the business skills, training and networking opportunities provided as part of the prizes. The competition winners receive cash prizes that they can reinvest into growing their businesses.
Small Business Expo (SBE)
The Foundation, in partnership with Thebe Reed Exhibitions, runs the Small Business Expo (SBE), a key calendar event in the small enterprise development space. The annual three-day SBE is a fitting conclusion to the Foundation’s other enterprise development initiatives as it is where finalists from the BIC and Simama Ranta competition get an opportunity to exhibit their enterprises and projects.
The expo gives entrepreneurs a unique platform to showcase their small businesses, build brand awareness, generate leads and interact with potential customers and investors. It also aims to stimulate entrepreneurship and contribute to the development of SMEs with a view to enhancing the country’s future economic growth and employment opportunities.
Top Sectors For SMEs In 2019
“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.
This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.
“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”
The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.
“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations have been relaxed and the sector is once again poised for growth,” he says.
Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”
He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.
“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.
“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.
In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.
Data and information technology
Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.
“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.”
It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.
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SME Insurance Checklist For New Year
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.
Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.
He advises SMEs to consider the following factors when reviewing their policies:
- Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.
This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.
- Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).
SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.
- Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.
More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.
- Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
- Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.
Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.
- Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
- New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.
“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.
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