Africa's Largest Startup Campus | Tue 16 April 2024
Powering The Next Generation of Entrepreneurs.

SMMEs Must Leverage Incubators & Accelerators During These Tough Economic Times

Kizito Okechukwu

Kizito Okechukwu | May 18, 2023

Across the world, some 225 million people working for startups and SMMEs lost their jobs during/post Covid. The impact of this also resulted in many of these businesses shutting their doors for good.

Fast forward post-Covid, we are now dealing with geo-political tensions, a high risk of global inflation and, for South Africans, we have an unreliable and unpredictable energy supply, which is further crippling business operations, with the agricultural and industry sectors being some of the hardest hit. Yes, many businesses have turned to installing alternative sources of power for their business, such as generators and solar solutions, etc. Yet this too can be a very expensive exercise, due to an increased cost of energy, such as diesel, resulting in many unable to sustain operations and have laid down workers in order to keep the business afloat. Although the government announced incentives to support households and businesses installing alternative sources of power, the reality is that this might not be enough for the smaller guys.

 

Just a month ago, I was honoured to be one of the ecosystem stakeholders invited to meet President Cyril Ramaphosa at the Union Buildings in Pretoria. During this unique engagement, the President acknowledged the difficulty faced by SMMEs during this period and assured us that government is doing all it could to ensure that loadshedding is a thing of the past. The owner of a small business – a bakery in Soweto to be exact – was in the audience and lamented on the challenges faced by his business where loadshedding has disrupted his operations, forcing him to lay-off 12 young employees. This is now a growing trend and it’s estimated that job losses from this year alone due to loadshedding could be over 500 000.

 

So how can Incubators & Accelerators help?

 

Just to get new, up-and-coming SMME readers in the know, accelerators emerged in the early 2000s with the launch of Y Combinator in the United States with many more mushrooming afterwards. Accelerators are generally for-profit and often hold equity in the startup firms that they support.

 

Our company 22 On Sloane was honoured to have received the Ecosystem Facilitator and Champion of the year award from the President of South Africa, Cyril Ramaphosa, and the Minister of Small Business Development, Stella Ndabeni-Abrahams. There a few more institutions such as ours in the country, which include the Small Enterprise Development Agency, the Innovation Hub in Pretoria, the Innovation City in Cape Town and many others.

 

These institutions aim to support startups and small businesses with capacity building programmes, where businesses are guided on learnings and lessons to start and grow their business, including how to withstand the tough economic situations we currently face. Some of these incubators also support startups with rental subsidies to lessen their burden on rental costs, which is usually significantly lower than what they would have paid in a commercial property. This will also include access to other infrastructure and even a 24hour power supply, as most of these have alternative energy sources. The incubators and accelerators also have access to various corporates, which can support smaller businesses to access more markets in their established supply chains, thereby boosting their revenue and weathering the economic storm. Most incubators and accelerators also have access to investor networks and even grants from local and international organisations that could allow SMMEs to keep afloat instead of laying off workers.

 

It goes without saying that it is a tough and ‘dark’ economic time right now, but it’s also a time to build resilient entrepreneurs that can withstand threatening times. So, more attention should be paid to businesses that manage their resources efficiently and think of innovative ways to survive.

 

But it’s easier said than done, even incubators and accelerators, such as ours, face these same challenges, but we all must work together to support each other as much as we can and work towards the greater good of economic sustainability.

 

Let’s look on the ‘bright’ side and remain positive.

 

 

Kizito is the Executive Head of 22 On Sloane and co-Chair of the Global Entrepreneurship Network (GEN) Africa.

logo

In Other News