SBDI PROJECT THUMA MINA SMME & SKILLS DEVELOPMENT PROGRAMME 2018-2020

“CREATING VIABLE AND ECONOMICALLY ACTIVE RURAL & TOWNSHIP COMMUNITIES”

THE ROLE OF INCUBATORS & ACCELERATORS IN RURAL & TOWNSHIP

DEVELOPMENTPresented by Xolani Qubeka

Chief Executive Officer

PRESENTATION CONTENTS

Disruptive Posture SBDIs THUMA MINA Inspiration The Role of Incubators in the Township & Rural Economies SBDIs Vision: Entrepreneur Network Infrastructure support & Local Ecosystem Development Key dependencies & Way Forward

SBDI’S DISRUPTIVE POSTURE

The SBDI is committed to contribute towards changing the economic architecture of South African economy as the major coordinating partner with key organs of the state and SOCs: Arrest the leakage of township & rural areas’ revenues to circulate

more amongst its communities Design and develop local ecosystems Promoting Township & Rural Economies Revitalisation Strategy

Radical economic transformation of key major sectors of the economy

Integrate indigenous financial products such as Stokvels, burial societies though community owned Cooperative banking system

Development of the Taxi industry major value chains Developing new home-grown brands Create alternative manufactured goods & retail brands Implementing & monitoring the 30% set-aside procurement in the

public sector

SBDI’THUMA MINA INSPIRATION

The SBDI Thuma-Mina SMME and Skills Development Programme 2018-2020 project is a special programme designed and driven by the Small Business Development Institute (SBDI) and inspired by the clarion call by His Excellency President Ramaphosa during his inaugural State of the National address. The project is located within the rural and township development and revitalisation flagship programme

The major objectives is to reinvigorate the rural and township economies through a combination of re-industrialisation of the these communities as centres for unprecedented, and accelerated economic development. The focus would entail skills development and training, targeted at competency building in specific market sectors so that core competencies required in these sectors are developed. Competency building entails incubation of entrepreneurs in high growth sectors, through two strategic pillars, i.e. Strategic Pillar 1:Wholesale & Retail Value Chain & Services; Strategic Pillar 2: Manufacturing. Incubation Programmes would form part of these pillars, as well as mentoring youth and women owned enterprises.

THE ROLE OF THE INCUBATORS IN TOWNSHIP & RURAL ECONOMIES

• To develop parallel industrial economic hubs and business infrastructure

• To reverse historical spatial disparities that were the centrepiece of apartheid divisive economic architecture that left township and rural economies as marginal survivalist communities

• To build a coherent economic base with inter-dependent local ecosystems

• To create economically viable communities driven by youth and women owned enterprises.

SDBI Vision

Structure of the SBDI Entrepreneur Network (SAEN)

Mandafhadza Social Enterprise Management Corporation

SBDI Entrepreneur Network

Service Centers Incubator Hubs Entrepreneur Malls

Core businesses structures with distinct offerings:Solutions

Clients

Go-to-market

Value Proposition

Team

Services CentersThe service centres will be the first to be established as the foundation and core of the SAEN

Solutions

Clients

Go-to-market

Value Proposition

Team

Service Centers

• Administration staff• Technical staff• Industry experts

• Statutory & compliance support • Accounting, tax and legal services• Business planning & development support• Skills development training & mentoring• Project management and implementation • Product and value chain development• Market access• Funding support

• Awareness campaigns to change narrative from potential employee to potential entrepreneur

• Community mobilisation and buy in from community partners

• Access to infrastructure and space • Knowledge management • Best practice sharing • Administrative service

management

• Early stage entrepreneurs• Community organisations

Business model overview: • The target client segment is early stage entrepreneurs, who are defined

as the percent of working age population both about to start an entrepreneurial activity, or that have started one from a maximum of 3 years and half.

• Modest fee model

Incubator HubsIncubator networks are the next step to scaling the SAEN

Solutions

Clients

Go-to-market

Value Proposition

Team

• Service centre personnel• Subject matter experts• Coaches and mentors

• Incubation support• Coaching • Infrastructure support

Monitoring and evaluation• Innovation hub• Industry specific coaching • Technical infrastructure • Serial workshops • Research and development offering• Access to creative working spaces

• Targeting individual techno-preneurs (students, professionals, companies and government agencies )

• Hubs act as brokers to build up a physical environment or a virtual platform to increase potential connections among stakeholders

• Flexible and comfortable environment, that enables the exchange of knowledge as well as develop people-to-people connection with entreperenuers from different backgrounds.

• Early stage entrepreneurs• Techno-preneurs (students,

professionals, companies)• Serial entrepreneurs

Business model overview: • As SAEN matures and scales, the organisation will now be able to offer

incubation support and infrastructure support

• SBDI can potentially charge fees or take an equity stake in businesses

Incubator Hubs

Entrepreneurship MallsProvides SAEN with scale and footprint

Solutions

Clients

Go-to-market

Value Proposition

Team

• Service centre personnel• Incubator hub personnel• Facilities management

• Cost effective infrastructure e.g. use of shipping containers to build structures

• Leverage use of ecosystem partners (telcos, banks and retailers to make offering more compelling and affordable

• Unparalleled access to networks and infrastructure

• Entrepreneurs• Ecosystem partners• Community partners

Business model overview: • Self sustaining and cost effective delivery model that leverages on

community partnerships and the entrepreneurship ecosystem

• Model’s success hinges on scalability across SA townships with the assistance of community and ecosystem partners

• Revenue streams include:

• Service fee (facilities using, skills training, IP creation etc.)

• Sales income or commission

• Access fee

• Monitoring and evaluation • Innovation hubs• Creative guidance • Space & facility renting for groups• Workshop programs

Entrepreneur Malls

Entrepreneurship MallsProvides SAEN with scale and footprint

Solutions

Clients

Go-to-market

Value Proposition

Team

• Service centre personnel• Incubator hub personnel• Facilities management

• Cost effective infrastructure e.g. use of shipping containers to build structures

• Leverage use of ecosystem partners (telcos, banks and retailers to make offering more compelling and affordable

• Unparalleled access to networks and infrastructure

• Entrepreneurs• Ecosystem partners• Community partners

Business model overview: • Self sustaining and cost effective delivery model that leverages on

community partnerships and the entrepreneurship ecosystem

• Model’s success hinges on scalability across SA townships with the assistance of community and ecosystem partners

• Revenue streams include:

• Service fee (facilities using, skills training, IP creation etc.)

• Sales income or commission

• Access fee

• Monitoring and evaluation • Innovation hubs• Creative guidance • Space & facility renting for groups• Workshop programs

Entrepreneur Malls

TARGETED SECTORS: STRATEGIC PILLAR 1

Wholesale & retail:

Buying & wholesaling

Grocery retail coops & family owned

Bakeries

Logistics & transport

Services:

Bulk laundry cleaning

Dry cleaning factory & depots

Business services:Printing

Faclities MNGMT TOURSIMSIGNAGE

Personal Services ( Hairdresser, beautician)

Automotive repairs & motor

maintenance

Recycling & waste management

TO FACILITATE THE CREATION, DEVELOPMENT & SCALING UP OF AT LEAST 300 000 SMALL TO MEDIUM ENTERPRISES BY 2021

TARGETTED SECTORS: STRATEGIC PILLAR 2

Manufacturing:Automotive &

rail component manufacturing

Clothing & textile

manufacturing

Detergent products

Toilet paper & related

productsFurniture

Construction & building

implements

Agro processing Dairy farming

TO FACILITATE THE CREATION, DEVELOPMENT & SCALING UP OF AT LEAST 3000 SMALL TO MEDIUM ENTERPRISES BY 2030

SBDIs SERVICE CENTRES

SBDI ENTREPRENERUSHIP MALLS

SBDIs Incubator Hubs

Ideal Interior of the Malls

90%

KEY DEPENDENCIES & WAY FORWARD

• A well structured policy environment on development of local ecosystems that supports industrialisation of township & rural economies:• BI-laws that are enablers in support of local ecosystems

• A well articulated and structured entrepreneur, business support & development model encapsulating a single approach & template permeating all 3-tiers of government, including SOEs

• Targeted industrial sector approach• Deliberate demand side approach that ring-fences opportunities for

Youth & Women-owned enterprises-offtake agreements & supplier development programmes

• Skills development, training & mentorship programmes including sector oriented incubation model

• Enhanced strategic approach to home grown products & services

Scaling the SA Entrepreneurship NetworkCreating a robust business model that can be replicated on a multinational scale

Business Model Scale Geographic Scale

GautengSoweto Katlehong

Soshanguve Alexandra

Western Cape Khayelitsha Mitchell’s Plain

Kwa Zulu Natal Umlazi Kwa-Mashu

Free State Manguang Botshabelo

Eastern Cape Ibhayi Mdantsane

SA Entrepreneur Network

Incubator Hub Entrepreneur Mall

Ecosystem Partners*

RetailersTelcos

Local Municipalities

Corporate Partners

Community Partnerships

Service Centers

Banks

1

2 3

1. The business model requires a sequential scaling of offerings

• Initiate with the introduction of service centres

• Roll out incubator hub as the next step

• Development of an entrepreneur malls

2. Once proof of concept is attained in one location, the model can be replicated nationally

ANNEXURES: AUTOMOTIVE SECTOR

AutomotiveSub SectorsFocus Area

ComponentManufacturing

VehicleDistribution

Centre

beneficiation

Dealerships

Logistics

Incubation Of motor

Mechanics

SDBI AUTOMOTIVE KEY FOCUS AREA FOR TRANSFORMATION

Component Manufacturing –Transformation of the Sector

• Aim is to develop initially at lease 20 black owned Tier 3 components manufacturing partnering with Tier1

• FDI JV’s – Lower risk of investment (Partnering with blackIndustrialists)

• Stronger focus on upgrading of Black lower tier suppliers that do not have the benefit of multinational /OEM linkages.

• Skills development will be prioritised and integrated with competitiveness upgrading and localisation activities to drive sustainable change.

• Localisation opportunities pursued in first phase should be realised or replaced with other viable opportunities.

Logistics Services Providers

Creation of sustainable Black Businesses within the Automotive Value Chain by Developing a cooperative of30 black owned logistics companies to:

• Transportation of vehicles from ports to Vehicle Distribution Centres

• To Transport vehicles to dealerships• Custom Clearance and freight forwarding

This will be achieved through a partnership with a blackOwned company currently manufacturing car carryingtrucks

Logistics – Vehicle Distribution Centre

Development of a black owned vehicleDistribution Centre with the potential to:

• Vehicle storage • Dent and scratch Repairs at VDC• Take out insurance for stored vehicles• VDC will be own approved and will be

secured to ensure protection of vehiclesDuring hail storm

• Collections of vehicles from plant toVDC

Facility

• We have managed to secure an existing facility in Johannesburg that was previously utilized to cater for Refinish and mechanical repairs.

• Options are rental or outright purchase• The facility was abandoned by its previous owner with a great deal

of machinery and infrastructure still in place.• An in depth audit was conducted on the facility

and it has been estimated to get the facility upfull capacity would require a cash injection and a three month refurbishment period.

• (See attached annexure)

Incubation of Motor Mechanics, Panel Beaters and Spray PainterIncubate and provide support to at least 18 Mechanics ,panel Beater and Spray Painter with offtake agreements with provinces depending on size of province.

This will be achieved through:• Provision of mentoring services by master artisans to • Provide technical support• Provision of state of the art infrastructure• Provision of state of the art equipment• Provision of shared services, quotation system, finance,• Quality management systems, Security etc• RMI accreditation and Merseta workplace accreditation

to host Students for technical and class room training• Business Development and Market Access

Dealerships & Super Dealership

Create 4 Black owned Super dealership in:• Mpumalanga • Gauteng• KZN • Western CapeCreate at least 4 dealership per province This will be achieved through a partnership with OEM’s and funding will be sources from SBDI current partners such as:• IDC • SEFA• OEM’s Enterprise and Supplier Development• The Dti