Current Edition >> Archives Section >> Leading Stories >> November 2001

Billions of rands being floated in SA emerging business sector

NEWS just breaking from various directions indicate that billions of rand emanating from a number of sources are already being floated or is to be floated shortly in the South African emerging business sector, as is mainly being manifested in the SMME sector (small, medium and micro enterprises). This makes it clear that the SMME sector in the country is in itself a multi billion rand industry.
The sources which are set to pump huge sums of money into the SA emerging business sector are:

• Input by Thrip: Aimed at boosting SMME's in SA, the manufacturing sector is receiving the major slice of support from the Technology and Human Resources for Industry Programme (Thrip), with manufacturing-related projects accounting some R88,6 million of the R137,5 million allocated for the 2000/01 financial year. The remainder of Thrip's budget is being invested in projects in mining and quarrying, transport, storage and communications, and electricity, gas and water supply sectors, among others. Thrip is a partnership programme funded by the Dept. of Trade and Industry (DTI) and managed by the National Research Foundation (NRF). In 2000 more than 106 patents were registered and some 450 products were developed in terms of Thirp, while the number of small, medium and micro enterprises participating in the programme's projects has increased six-fold since its inception in 1996.

• R95 million UN procurement offer to SA: South African businesses are in a process of receiving R95 million in 2001 from the United Nations Children's Fund (Unicef) for the procurement of supplies - a figure that has risen more than five-fold in two years. At press conference in Midrand, the director of Unicef, Mr. Jesper Morch, said: “There is huge potential for rapid growth in our buying in South African suppliers - in 1999 Unicef bought just $1,9 million worth of South African goods, this year that figure will exceed $10 million.” Regarding the creation of a procurement office in South Africa, Mr. Morch said Unicef had taken “a clear political decision to establish itself in South Africa. The latter is at a huge corporate advantage because it is close to our programmes in Africa, which makes it easy and efficient to transport goods. Additionally many South African commodities are extremely competitive price-wise.” The two UN agencies that do the most business in South Africa are the United Nations High Commission for Refugees (UNHCR) and Unicef. Globally, Unicef spends $1 billion on commodities each year, with a large portion of the goods being distributed within Africa. South African commodities of most interest were educational supplies, including classroom equipment, furniture and teaching aids, computers and related items, printing material, hospital equipment, vehicles, motorcycles and bicycles, water pipes, tanks and fittings, mosquito nets and insecticides, and generic drugs including anti-retrovirals.

• R70 billion procurement spin off from arms deal: Despite the raging controversy over SA's huge arms deal, of which the last word has seemingly not been spoken, the signed contracts are largely a fait accompli and are to be implemented. In this regard Trade and Industry Minister Alec Erwin said last month that the SA economy stands to reap more than R70-billion over the next 11 years from industrial participation projects linked to the arms-purchase programme. He said the benefits to the local economy will come in the form of defence-related offsets, totalling R14,5-billion; the counter-purchase by the defence-equipment suppliers of South African goods, worth R31-billion, and foreign investment in South Africa by companies associated with the equipment suppliers, amounting to more than R20-billion. This all relates to the Industrial Participation Programme (IPP), adopted in 1997, and which applies to all public-sector procurement - including parastatals - where the imported content exceeds $10-million.

• In general, a trend among big corporates in South Africa to restructure themselves to an increasing extent in order to boost the SMME sector - for their own indirect benefit later on - is evident. This applies to the banks, insurance companies and mining houses, which are all creating specialist SMME divisions within themselves, budgeting millions of rands for the work of these divisions.

• The availability of foreign development aid from West European countries, the US, Canada and Australia for meritious projects is a massive funding source merely being mentioned here.
It is thus clear that the emerging business sector in SA is not only a multi billion industry, but is also offering tremendous opportunities to innovative entrepreneurs. Unavoidably some of these opportunities are open to misuse, but in general they certainly constitute exciting times as never before.