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Non-profit entities should develop small business hubs

| Economic factors

Last month, the Minister of Small Business Development, Lindiwe Zulu, conceded that the township industrial park concept meant to stimulate local economic development is in a dire state and should be revived in order to create thriving township economies. This followed a visit to two township industrial parks in Gauteng by DA shadow minister Toby Chance, where he discovered small business hubs in a shocking state of neglect.

The crumbling industrial parks in Orlando West and Pennyville have given government economic policymakers and implementers an opportunity to genuinely appraise how such facilities should be rolled out and managed in the future.

Gauteng Economic Affairs MEC Lebohang Maile intends building similar business hubs in 65 centres in the medium term and other provinces are also looking at similar plans as township economies and small business development take centre stage. Maile’s counterpart in the Western Cape, Alan Winde, has got similar plans to build small centres in some of Cape Town’s townships.

I think all these facilities and hubs that are aimed at growing township economies and ignite local enterprise creation should be developed and managed by non-profit organisations or social entities with government providing grants for the initial development. Government can ensure that its economic objectives are achieved through proper legal framework between developing and managing entities, even creation of a board to oversee day-to-day management of the hub.

The Mohlakeng Township Enterprise Hub model gives us some indication of Gauteng provincial government thinking. The Revitalisation of the Township Economy Strategy Draft released last year makes the following point about the Mohlakeng hub: “The facility will be registered as section 21 company governed by a detailed memorandum of agreement signed by all parties.” Entities like the Small Enterprise Finance Agency (Sefa) and the Gauteng Enterprise Propeller in Gauteng, Wesgro in the Western Cape and Ithala in kwazulu-Natal can have a seat on that board.

The Department of Small Business Development can also be represented on those boards. Sefa is not suitable to manage these parks or similar workplaces, neither is any other government entity.

Government should not become a facilities manager or property developer, as that is not its forte. All government offices are managed and owned by private commercial property entities. These small business centres, small industrial parks or local enterprise workspaces should in fact be managed by appropriate entities who understand small businesses and are specialists in creation of such workspaces.

The hubs or industrial parks cannot be developed by commercial landlords as the profit motive will place an emphasis on the “exchange-value” of such buildings as opposed the “use-value” – which should be the overriding concern. If the government achieves even a fraction of its objectives, we are likely to see a multiple of these hubs, and the Department of Small Businesses Development or even provincial counterparts will simply not be able to manage such facilities, instead an entity as we propose here will be most appropriate.

This is important, as it will free up the government to focus on providing additional support and improving policy framework that ensures the country’s ability to scale up this programme.

In the face of our high unemployment, I believe that local enterprise creation, connecting those entities to existing procurement opportunities and opening up export markets, can assist in ameliorating unemployment. This model must also be applied to new human settlements that Gauteng Premier David Makhura intends rolling out. It is important that whenever these human settlements are created and developed we ensure that local enterprises are provided with sufficient opportunities to open up their businesses in these nodes, as they will benefit from the new market opportunities created by them.

Housing developers should be encouraged to develop these new human settlements with small local enterprises in mind. Part of the problem in Cosmo City of illegal built business premises in front of people’s homes may also be as a result of lack of suitable small local enterprise centres there, despite numerous shopping centres dotted around this new exciting residential node. Studies point to the importance of small businesses in creating employment opportunities, and we cannot miss the boat. One of the most important aspects here is that small businesses located in these centres should be required to pay rent and the managing entity should not look at making a profit but rather to use the rental revenue and other means to run a sustainable workspace for the benefit of local enterprises.

The problems we see in Sefa managing industrial parks is because Sefa is purely focussed on delivery on its core mandate and facility management is really outside its competency. I think minister Zulu must transfer these facilities to the Gauteng government through MEC Maile’s department, who in turn should select a suitable non-profit organisation to manage these centres. Lastly, with these business centres or industrial parks it is important that tenants should also be offered other services that are critical to their growth.

Many small businesses fail because of lack of business advice, mentorship or marketplace linkages. To fortify these new and emerging enterprises against failure and ensure their success, these services should be offered. This is where Sefa and other such entities will come in. Given the poor performance of our country in attracting foreign direct investments (fdis) highlighted by AT Kearney’s 2015 FDI confidence index where South Africa dropped out of the list of 25 countries, small enterprise creation and support of their growth should form the mainstay of this government’s effort to grow our economy.

Thembelani Tukwayo is founder and director of Local Enterprise Workspaces.

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