The trade department is set to launch its Competitiveness Fund, which draws on specialists to help small businesses grow, reports Madeleine Wackernagel
THE Department of Trade and Industry (DTI) is to seek tender applications for an operator to run its Competitiveness Fund by the end of this month. The fund, established to help small businesses compete in the global market, has been given the green light by the State Tender Board almost 18 months after the initial feasibility studies were completed. It should be up and running by the final quarter of this year.
Not to be confused with the DTI’s other small-business initiatives such as the Khula financing arm and the Ntsika Enterprise Agency, the Competitiveness Fund will run on a matching grant basis, whereby an applicant has to put up 50% of the financing to demonstrate their commitment. The fund will then provide advice on marketing, production and general business strategy with the aid of a registrar of specialists, who will be drawn from technikons, universities and private consulting firms.
Critics argue that the programme will do little to boost local competitiveness given that it will concentrate on the export market, but Dr Alistair Ruiters of the DTI’s centre for small business development was quick to dispel this claim.
“Yes, emphasis will be placed on helping firms to break into the export sector, but others will receive help in defending their local market share against imports by developing a niche, in line with the Asian tigers’ experience, thereby strengthening their position.”
And while the International Bank for Reconstruction and Development, a division of the World Bank, has put up a $50-million loan, the South African government has been very much in charge of devising the project, together with the constituencies of the National Economic Development and Labour Council, says the bank’s Junaid Ahmad.
The complexity of the programme probably mitigates against a local company alone doing the job of operating the fund. “It’s hard to say who will bid and who will win, but international experience would be a big plus,” says Ruiters.
`This is a very sophisticated programme. The World Bank indicated when we were originally devising this project that there are very few firms worldwide with the kind of expertise and experience necessary to run the fund.
“But crucial to our decision is that if an international company is chosen as operator, it must ensure that those skills are transferred to a local partner. So we are looking at joint ventures and other collaborative enterprises.”
The project is two-pronged, concentrating on small and medium-sized businesses on the one hand, and micro enterprises with fewer than 20 employees on the other. This latter part will be covered by the Bumble Bee Programme (BPP).
“The BBP will be run on the same lines, with accredited consultants giving four free hours of services. We were concerned that the bigger businesses would get the lion’s share of help, so this provides a perfect stepping stone for the really small companies. But to run the BPP the operator must have local know-how,” says Ruiters.
He would not be drawn on the sums involved but stressed that they are significant enough to warrant a thorough tendering process. “It is time-consuming but necessary. We have to keep our integrity, otherwise we lose support.
“This is a very important supply-side measure that has taken a great deal of work; we don’t want anything to go wrong.”