SMMEs and informal trade are direct-to-family means of income, and their absence puts millions of households in danger
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The narrative around the importance of small, medium and micro-sized enterprises (SMMEs) as a key enabler of fundamental economic growth has drastically shifted in the space of a few short weeks. The national response to the scaling spread of the Covid-19 pandemic has halted the revenue-generating capability of thousands of businesses and placed the informal sector at the gravest risk. The ripple effect of this is the incapacitation of value chains and reduced production capability, and what this means for the journey of inclusivity for SMMEs and private sector organisations.
Covid-19 responses by governments across the southern Africa region have shown how deeply interconnected the countries of the region truly are. Precautionary responses of national lockdowns and relief mechanisms of financial aid, while meaningful to businesses operating in the formal sector, exclude micro businesses and informal and cross border informal traders, many of which are not structured to take advantage of the relief mechanisms. Put closer to home, SMMEs and informal trade are direct-to-family means of income, and their absence puts millions of households in danger.
The threat to the SMME, informal and cross-border sectors must be collectively supported by the public and private sector in collaboration with civil society organisations.
Prior to Covid-19 reaching southern African borders, a tripartite partnership between the Southern Africa Trust, Graça Machel Trust and the Mail & Guardian was established in the form of a series of impact dialogues. These were directed towards creating a platform to support the sustainability of SMMEs and informal businesses through the development of pragmatic interventions. This is formally known as the Trilogy of Social Impact Conversations on Empowerment through Innovation for People and Society.
The pilot dialogue focused on the creation of fostering inclusive value chains through building collaborations with private sector organisations. Throughout the conversation, it was evident that the hindrances to the development of small businesses include the lack of access to markets and deep integration into larger industry value chains. While there is much education and awareness to be raised on impact investment, partnerships such as these can unlock critical advantages to support and sustain businesses that have an enormous relevance in society.
Respectively, the Southern Africa Trust, through its programmes that empower women cross border traders in southern Africa, Graça Machel Trust through its Women Creating Wealth Incubator programme, and the Mail & Guardian through its work of targeted media positioning for small businesses in storytelling, have committed to focus a Covid-19 relief response for SMMEs, informal and cross border traders by pooling power and resources. This is a focused intervention to address the immediate and long-term needs of this vulnerable sector.
Partner Existing Interventions
The Southern Africa Trust through its partnership with the Southern Africa Cross Border Trade Association (SACBTA), supportswomen cross border tradersthrough its policy engagement and institution facilitation capability. This has empowered women in Zambia, Zimbabwe and Malawi — who trade at a significant disadvantage to their male counterparts — with the knowledge and tools to increase their productivity through simplified trade regimes that are in place to support their businesses. Additionally, through their deep understanding of cultural context and access to translators, the Southern Africa Trust has provided women traders with language-specific information brochures as a supporting tool to their trade.
Women Creating Wealth Initiative
The Graça Machel Trust (GMT) is championing the empowerment of women in business in Africa through its enterprise development. The women creating wealth initiative involves a six-day intensive entrepreneurial competency training course complemented by a 10-month aftercare support programme. Through the women’s enterprise development initiative, GMT has capacitated 300 women entrepreneurs in Malawi, Tanzania and Zambia, enhancing their entrepreneurial skills and confidence to increase their capacity to access opportunities, finance and markets, and to scale and graduate their businesses from income generation to wealth creation businesses. In 2020, GMT launched the initiative in South Africa, enrolling 120 entrepreneurs.
Faranani Rural Women Training Initiative
The Faranani Rural Women Training Initiative is an intervention of PricewaterhouseCoopers that functions in the form of a foundation. The intervention aims at training rural businesswomen; it is about supporting people who aspire to have a business or have just started one. These businesses include farming, manufacturing, construction and other businesses that are normally initiated by women in rural areas. The current targeted areas in South Africa include KwaZulu-Natal, Eastern Cape, Limpopo, Mpumalanga and Northwest, with a recent launch in the Western Cape. The programme, which capacitates the women and helps them put together business plans to procure funding, has trained more than 4 000 rural women.
Meet three entrepreneurs that have engaged with corporates
Dikonelo – An SMME with the drive and capacity to grow
In 2016, I won a provincial Female Entrepreneur of the Year award, and in 2017 attended a two-week course at Georgia University in the US, under the Cochran Fellowship Program. We have started a poultry hub in the Free State, with a feed meal that can produce three tonnes per hour and large chicken coops. We have 3 000 chickens laying, and access to licenced abattoirs — all achievements of which we are very proud. But we our not without challenges. We are unable to maintain consistency in the market, mostly due to the gaps in our value chain. We don’t have breeder farms, which we need to become sustainable. The red tape, like obtaining an Environmental Impact Assessment, is complicated for small businesses.
“We need more cohesion between the government and the private sector, especially with grant money allocation. We need more training, compliance, and access to finance.”
Rethabile – Connecting cultural food preferences to nutrition security and wealth creation
In 2011, I was the winner of Eskom Business Investment, and again in 2016. In 2016, I was the second runner-up in SMME Africa, and in 2019, won the Female Farmer of the Year award. My business was incubated by the CSIR, which enabled Golden Goods to build our own prototype plant in the Free State. We produce motoho — a soft fermented sorghum porridge drink, traditional and highly nutritious. We have our own value chain, farming our own sorghum on 50 hectares, although we don’t own the land. We mill the sorghum ourselves, processing and packaging it too. If we run 24 hours per day, we can produce 18 000 litres per day. We currently supply Spars, but we are not listed: as an SMME, food safety compliance is hard to obtain. We did our research at the University of Pretoria, and are currently doing the microbiology at the University of Zululand. We have a quality control lab at our facility, and our product has been tested by various institutions.
We have an agreement with the local hospital to provide motoho to the patients who cannot afford to buy food but must still take medicine. Our product is full of probiotics, vitamins and minerals. We are proving to the department of health that we have a good product. I know I am a hard worker and that this business can go a long way. My goals are going to be achieved in terms of driving the sustainability of the business, contributing to the economy, alleviating poverty and helping people live a healthy lifestyle by returning to indigenous, organic foods that form part of our culture.
“We want to contribute towards food security … and see that no child goes hungry. We see ourselves not only conquering Free State or South Africa, but Africa at large.”
Bridget – Connecting the creative economy with issues of social injustice and equity
I am a qualified textile designer and product developer, with experience in empowering rural crafters in Mpumalanga and KwaZulu-Natal. Working for a leading fabric house in Johannesburg as a consultant gave me the tools to start my own business. Selling is in my DNA, so I started the first black-owned fabric house. I’m finding getting funding a major challenge, as I don’t tick the usual boxes of being a retailer or distributor. But I am now working with a company that introduced me to BEE innovation, where youth can work in my showroom and I get paid a stipend.
I am developing a range of products with a partner, whereby we identify artists in Joburg and the rest of South Africa and turn their creations into fabric designs.
“Although the fabric industry, hotels, lodges, government departments are looking for BEE compliant companies like mine, I am struggling to be noticed. The contracts are out there, I know; I just need help and funding to be more visible.”
Storytelling
In conclusion, it is necessary to move from conversation to action. As further opportunities are identified to strengthen the partnerships, it is important to use the resources available, including the storytelling elements through the media. The task for the Southern Africa Trust is to bring their work with established corporates, to meet the efforts of the Graça Machel Trust working with emerging business. Could the establishment of a regional platform for SMMEs be advantageous? The presence of SMMEs at events held by Business Leadership South Africa is imperative for putting the people who can implement change in touch with those who need it. Networking relationships between these organisations and SMMEs must be fostered and facilitated by organisations like the Southern Africa Trust.
Informing the market about what meaningful social investment looks like for South Africa and the rest of the continent is a big step towards understanding the impact of investment.
For more details, visit https://www.southernafricatrust.org/ or https://gracamacheltrust.org/