One example of a major policy inhibitor is the lack of regulation in the enterprise and supplier development (ESD) industry. Since the amended codes of good practice on broad-based BEE 2013 came into effect and placed a greater emphasis on awarding points for supporting small black-owned businesses, opportunists have launched ESD programmes of varying quality, ranging from top-notch to fly-by-night. It is not uncommon for entrepreneurs, particularly those in the start-up phase, to jump from one ESD programme to another without achieving any tangible growth or measurable success in their ventures. We personally know many entrepreneurs who have participated in seven or eight incubator programmes in a row, but whose businesses are still struggling to survive.
The endless number of support programmes such entrepreneurs get roped into, and barely gain from, can easily be mitigated if incubators, accelerators and ESD programmes functioned under stricter regulation with tight quality controls. Policies should exist for regulating the number of support programmes an individual entrepreneur or business can participate in, as well as for measuring the outcomes of such programmes against the status of the entrepreneur’s business. This would ultimately force these programmes to become more competitive, as their “client base” would have to be more selective of the programmes in which they choose to participate.
More often than not, large companies receive BEE points for supporting SMMEs regardless of whether the enterprise succeeds or fails. Creating policies that allow programmes to only claim 50% of BEE and ESD points for supporting the entrepreneur, and the remaining 50% only if the entrepreneur can prove growth in their business as a direct result of the support, is one way in which the industry of support programmes can be better regulated.
Regulations such as this would ensure a stronger commitment from the programmes to the success of the entrepreneurs they support, and this, in turn, would also ensure entrepreneurs do not keep jumping from one programme to another in search of more impactful growth opportunities.
Unlike SA, SMME-friendly countries such as Singapore, which is ranked number two on the 2018 World Bank ease of doing business index, offer an entrepreneurship visa that grants start-up entrepreneurs residency for two years to launch a new venture and create local employment. To be eligible for this visa, the foreign start-up entrepreneur must have raised funding from a government investment vehicle, venture capitalist or business angel that is recognised by the government. In addition, the foreign start-up entrepreneur needs to have been accepted to a Singaporean incubator or accelerator recognised by the government.
