Page 29 - IDC

6 CITY PRESS, 2 OCTOBER, 2016

business Howard Schultz: I think, if you’re an entrepreneur,

you’ve got to dream big and then dream bigger

Getting a foot in the door

The IDC is helping young

people jump through start- What the

up funding hoops, writes IDC thought

Dewald van Rensburg
of young

urturing young entrepreneurs into the formal economy is a national
imperative if there is going to be inclusive and meaningful readers’
economic growth. A
Young South Africans have the ideas, but more often than PROJECT IN
not, they do not have the capital or experience to get a foot
Nin the door. PARTNERSHIP business
“Almost weekly, we receive truly innovative applications,” said Daniel van WITH THE
Vuuren, a senior youth enterprise specialist at the new development impact
support (DIS) department at the Industrial Development Corporation (IDC).
“Very often these are castles in the air, but there are concepts and IDC
applications that show promise, ranging from guys using 3-D printing for ideas
construction, people coming up with new composites to build bricks, new
chemical compounds to clean Converse All Star takkies, right through to
technological advances in relation to tablets and phones.
“We want to see an influx of young entrepreneurs who will be the industrialists
of tomorrow. We will be looking for the next Sasol to come from young, black
industrialists. That is our intention,” said Van Vuuren.
“Sometimes you will find a transaction would simply be rejected owing to
insufficient proof of market, viability issues, whatever it may be. We will then see
how we can bolster it,” said Van Vuuren.
That’s where the DIS comes in.
“We concentrate on how to get marginalised people and groups into the centre of
the economy,” said Stuart Bartlett, who heads up the department.
More specifically, its mission was to get people excluded from the IDC into the
IDC, said Mzwabantu Ntlangeni, also a senior specialist at the DIS, focusing on
youth enterprises.
In 2013, the IDC adopted funding for “youth-empowered” (25% to 50% ownership)
and outright youth-owned businesses as a formal target. The increase in deals with
young businesspeople since then has been spectacular – growing from R143 million
in the 2014/15 financial year to R970 million in 2015/16.
For young people in particular, the
IDC has committed to providing
funding of R4.5 billion over five IDC funding for youth
years, including through its R1 billion
Gro-E Youth Scheme. R MILLIONS
“We provide concessionary pricing 1 000
if the business demonstrates it can 2013/2014
create jobs at less than R500 000 800 2014/2015
per job. Potentially, the pricing can 2015/2016
be as low as prime minus two, but it
can go to prime minus three for 600
youth-owned businesses – the
cheapest development finance in
South Africa. We are quite proud of 400
that,” said Van Vuuren.
The IDC uses the African Union’s 200
definition of youth: people up to,
and including, the age of 36, instead
of the usual 35. 0
“The young people we deal with Youth-empowered Youth-owned Total
tend to be between 25 and 35,” said 25-50% 50% or more
Van Vuuren. Source: IDC ISABELLA MAAKE, Graphics24
“Your real outliers will be the
19-, 20-year-olds coming through the
door with a fantastic industrial
opportunity. Those are few and far
between, let’s be honest.”
Practically, the kind of deals that
are done with young people range
from capital for a small-scale brick-
making operation right through to
funding participation in multibillion-
rand renewable energy projects.
“We are proactive, we go out and
engage with the broader ecosystem
and clients and try to get them to
send the pipeline our way,” said
Bartlett.
The IDC recently approved its
Youth Pipeline Development
Programme.
This programme is currently in a
pilot phase, but is already sitting on
a project pipeline of R2 billion
related to 130 different projects.
The intention is to guide young
businesspeople through the stages of
a transaction with the IDC, starting
with making their projects more
“investment-ready”.
“Not all of them are going to be From left: Mzwabantu Ntlangeni, Stuart Bartlett and HOLY GUACAMOLE City Press reader Mothekgi Mphahlele hopes her idea bears fruit
appropriate to the IDC. Sometimes it Daniel van Vuuren of the IDC’s development impact
is not within our mandate,” said support unit PHOTO: EUGENE GODDARD
Bartlett. ast week, City Press asked readers to send in standards or health requirements to abide by? This saved up, which the IDC likes to see.
The IDC provides funding and support in a range of sectors. their business ideas. Here is what the DIS team needs to be included in a business plan. Once that is “We like any entrepreneur who is willing to put
However, those that fall outside its mandate are referred to appropriate entities in Lhad to say about two of those ideas. in place, we can engage and advise her,” he said. some skin in the game,” said Van Vuuren.
what the DIS team call the youth entrepreneurship “ecosystem”. “First and foremost, we will look at what they’ve “There are competencies the IDC does not have; for “He indicates that he needs support with his
“We try to help young entrepreneurs precisely to avoid a situation where they are got,” said Van Vuuren. “Do they have a business plan? instance, health-related food knowledge. We would business plan – that he has done some market
turned away,” said Bartlett. Are they ready to submit an application? Often with then, with Mothekgi, go to someone like the SA Bureau research and needs some assistance there.
Referring applicants to the right place, as well as ensuring that appropriate young people, you will find they’re not ready. of Standards, to find out what this product “We’d love to engage him and discuss the
applicants approach the IDC, is becoming an important part of the development “We want to make sure young people get into the needs. It will also be important to know level at which he has developed his
financier’s model for young people. TALK IDC, but we cannot in any way reduce the where the avocados will be sourced plan,” said Van Vuuren.
This includes other state-owned entities such as the Small Enterprise Finance requirements or criteria,” said Bartlett. “We would from – the sourcing is essential – in “Similar to Mothekgi, we would
Agency and National Youth Development Agency, but also a whole constellation TO US rather help them get to that level. terms of quality and quantity,” want to be very sure what the
of public and private agencies that do work in support of youth Are you a young “What we look for in a business plan are added Van Vuuren. products are that Lenny wants to
entrepreneurship. person starting out in management, marketing, technical and financial “If you want to supply to take to market.
“You must be linked to other places and spaces,” said Van Vuuren. business? Tell us your skills – which are all critical requirements.” retailers, you have to give “Has Lenny had any
An application to the IDC would go through various stages, ranging from story. Email us at comfort to them on quality and discussions with retailers? As
preassessments to full-scale due diligence investigations, each with its own mybusiness@idc.co.za Mothekgi is 22-year-old graduate from Pretoria quantity. Then there is packaging investors, knowing he can make
challenges. using ‘Young business’ who wants to create an avocado-based spread. and labelling, then logistics.” the product is not enough.”
“These processes are often daunting, so we try to ease the navigation through in the subject She has experimented with preservative methods In general, entrepreneurs should
what often feels like a maze to the entrepreneur – so they understand what is line and wants to address the cost of avocados, as well as Lenny is a 27-year-old from come to the party with a good sense
expected of them,” said Van Vuuren. their seasonality. Limpopo, currently studying arts of the market in terms of what they
If a transaction is approved, another set of major obstacles arise. She is asking for help with testing facilities, management and marketing at the want to do.
“You will often find that this is where entrepreneurs battle most. They get the nutritionists, her business plan, incubation support, as University of the Witwatersrand. Lenny Walter Mkhari “If there is a product, there must
transaction approved as if that wasn’t hard enough, but the cost of meeting some of well as equipment and mentoring. He wants to start up a beverage be a consumer of that product; if
the conditions is sometimes so prohibitive that it inhibits them. “The questions we’d have to ask is: Exactly what business, focusing on bottled water and 100% fruit there is a service, there must be somebody who wants
“We assist particularly young entrepreneurs with the clearance of those does she want to do in terms of processing the juices. to use that service,” said Ntlangeni.
conditions.” avocados?” said Ntlangeni. He has done research and has a sense of the “We always encourage young people, before they
Ultimately, all the players in the ecosystem positioned to guide young “The second thing is whether she has done research purification and labour-intensive bottling technology venture into business, to at least do research on
entrepreneurs to business success have the same goal: to build the economic on who she will sell the avocados to and how that he wants to use, as well as some distribution whether there is a need for their product or service in
capacity of the country to create jobs and future economic prosperity. selling is going to happen. Are there any retailers’ partnerships he could pursue. He also has money their own communities.”