Publications
Partners
The Western Cape Government Department of Economic Development and Tourism (DEDAT) has collaborated with the Johannesburg Stock Exchange (JSE) to address the funding gap for Small and Medium Enterprises (SMEs) in the Western Cape.
On Monday, 27 November, more than 80 SMEs in the tourism & manufacturing, agriculture & agri processing, green economy, real estate, as well as service and technology sectors met with some of South Africa’s leading funders. In a speed pitching sessions, the SMEs offered an overview of their business growth prospects. The purpose of the ongoing initiative is for potential partnerships between the SMEs and the private sector, and to enable these smaller businesses to grow.
Mireille Wenger, the MEC for Finance and Economic Development and Tourism in the Western Cape said that public-private partnerships are important in supporting SMEs
“At the core of this bold plan is the understanding that the private sector creates jobs, while the role of the Western Cape Government is to enable this by making it as easy as possible to do business in the province. We are very proud of our collaboration with the JSE, it’s a prime example of this ethos in practice," says Wenger.
Vuyo Lee, the Director of Marketing and Corporate Affairs at the JSE said that this initiative intended to give a platform for SMEs to grow as they are the “lifeblood” of the economy.
“By addressing the funding challenges faced by SMEs, we are contributing to the overall resilience and prosperity of these businesses, which in turn will contribute to employment and the tax bases in South Africa,” she says.
John Peters, Chief Directorof DEDAT, shared this sentiment and expressed the need for entrepreneurs to take centre stage in growing our economies. Unemployment, inequality, and poverty in the country need to be addressed, he emphasised.
Speed pitching
The occasion marks the end of a five-month process in which Western Cape-based SMEs were invited to apply to join the project based on a set of criteria. The SMEs selected to pitch to investors go through rigorous capital readiness workshops which give them the skills and information needed to create strong investment cases that they may submit to potential investors. Participating funders provide grant funding, debt solutions, equity solutions (Angel and Venture Capital), and enterprise supply development as capital matching options.
The majority of the business owners went on a two-month training period to prepare for Monday’s meeting with the potential investors before pitching. They expressed their gratitude for being in the same room as the big decision-makers.
A big brother in the industry
“Entrepreneurs are always looking for help. And, if you can get credible help from companies and entities that can assist you, then that’s what you want. “As we know, entrepreneurs keep the GDP going and if we can’t support those guys then at some point the GDP is going to collapse," says David-John Bailey, marketing manager at Big Beard Web Solutions, a web support and designing company.
Adri Williams, managing director at Khayelitsha Cookies, a business that employs 87 previously unemployed and unskilled women and teaches them how to bake cookies, said she was excited to join this initiative as every SME needs a “big brother” in the industry.
"I know by experience that an SME needs a ‘big brother’ in the industry to help them grow as we don’t necessarily have the funding to buy the machinery that’s needed. And more than that, large corporates are privileged to have all the expertise in all the various fields [to help them]. As an SME owner, you have to be a jack of all trades and master of none," William says.
The challenges SMEs face
She said that as an SME owner, the challenges are different to bigger companies.
“You don’t have vehicles in small dorpies and you don’t have the infrastructure. So for me getting the opportunity to pitch your business to large corporations in the hopes of obtaining finance for future growth is very exciting but more exciting is the opportunity to showcase our products to large corporations in the hopes that they will buy from us.”
She believes that job creation is the key factor in growing our economy. “The only way to turn South Africa around is through job creation. The only way for us to do that – is to get the funding to facilitate that.”
Michael Madangatya, owner of Khula Khula Transport, a transport company that transports goods in the Western Cape and Gauteng, said the initiative didn’t only link him with potential funders but also creates a platform amongst SMEs to further engage around employment matters amongst themselves.
Monday’s event also gave him the confidence to prepare on how to pitch to potential investors. “You might have a way of presenting your company to Company X but they might have their criteria of what they want to hear, so this enabled me to pitch my business correctly. It also gave me exposure to many things. It might happen that you can’t help me, but you know someone who can assist me in any way. It has many things that create with meeting with certain people.”
A second meeting was already on the way for him with the potential investors. “I’m very positive. They felt that I’ve done very good work now, from where I started to where I am now. I was a truck driver for ten years and here I am now.”
Frans Rossouw, founder and CEO of OrbitX, an LED lights manufacturing company, said that this initiative is indirectly assisting the private sector to create jobs and alleviate poverty. He also praised the importance of the event which was time efficient. “I had the opportunity to meet several potential funders as opposed to spending days or weeks trying to set up meetings to get to the right people. Generally, I would avoid that because time is valuable.”
The impact of SMEs
An estimate by the International Finance Corporation reveals the significant impact of the local SME sector on South Africa's economy, contributing approximately 34% to the annual GDP and employing between 50 and 60% of the total workforce. Despite their vital role, over 70% of small businesses face challenges that lead to failure within the first five years. These challenges include a lack of access to tools and technology, skills deficits, difficulties in market access, and a pervasive lack of funding.
The funders that were engaging with these SMEs include African Bank, ABSA, Nedbank, the National Empowerment Fund (NEF), the Small Enterprise Finance Agency (SEFA), Small Enterprise Development Agency (SEDA), Esquared, Creative GrowthCap, Equate Group, Business Partners, Sourcefin, EdgeGrowth, AltVest, DEDAT and JSE Private Placements (JPP).
This post was sponsored by The JSE and produced by Adspace Studio.
