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Today I visited Riversands Incubation Hub near Diepsloot in north west Johannesburg at the invitation of Anne Vicente who handles its PR and marketing. She is doing a good job - today's Business Day has a feature by Lesley Stones on the hub - you can read it here. Stones is upbeat about its vision and conveys the staff's sense of excitement about its potential impact on small business development.I won't repeat what she says in her article but add a few observations of my own and comments from Anne and the hub's CEO, Jenny Retief who spent a valuable hour with me after my tour.
Century Property Development identified a need for job creation in the communities adjoining its large expanse of land which is now home both to the Hub and Riversands Commercial Park. Century developed the Hub in partnership with the Jobs Fund and the total investment is approaching R500 million.
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| Opportunity - one of the DA's policy pillars. The others are Freedom and Fairness. Riversands doing a pretty good job with all three! |
characteristics and a capacity to execute his or her plan, and provide an economic opportunity for the surrounding area. Finally, the business must demonstrate a favourable ratio of cost and risk to benefit.
So clearly, Riversands is not for everyone as successful applicants have to be commercially grounded. This is one of the problems of other incubators, which take on too many unproven start-ups whose failure rate is very high.
5 businesses have already taken up premises, just a month after the Hub opening, another 7 are in the process of moving in and 62 are busy with the application process. Almost all the applications came from Diepsloot.
I visited three of the businesses and they were all very happy to have moved from the cramped, unsecure and expensive places they came from. To quote Anne, "Sello Makhamate of Zila Steel has now been able to target a nearby formal housing development because of the credibility he now has since his business moved to the Hub. The business support that he receives strengthens his business acumen. He, his family and his sub-contractors are all benefitting from the move."
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| Sello and his business partner before moving to Riversands |
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| Stewart, a welder working for Sello at the new premises at Riversands |
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| Tebogo Maake outside his factory/office |
Big Brain is a
certified accountant, not a Chartered Accountant, meaning he can do the books
for clients but cannot audit them. This doesn't seem to bother him. He aims to
turnover around R600 000 a year after a couple of years at Riversands. There
were two trainees in his office when I visited, who help out when the workload
demands it. Big Brain is expanding and now has clients as far away as Carletonville.
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| Big Brain in his old office in Diepsloot |
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| Big Brain in his new office |
I asked Jenny about
the commercial viability of the Hub once the Jobs Fund money runs out. Apart
from the tenants' rent, which is more for recovering running costs than
repaying the capital invested, the Hub intends to offer facilities for training,
conferences and events using its 450-seater and two
smaller auditoriums, training rooms and large outdoor event spaces. It
will attract funding from firms wishing to spend enterprise development, skills
development and supplier development points on their BBBEE scorecards. And it
will also seek funding from foundations and other grant-making institutions
with a mandate to support small business development. As a non-profit company
it does not need to provide a return to its investors.
There is also the
question of the cost of each job created, which Jenny said they could only
really know a few years down the line. They do have some metrics of cost/return
but were keeping these close to their chests.
Apart from the small
businesses, the Hub is attracting tenants such as Nedbank's small enterprise
division, the Gauteng Enterprise Propeller and the South African Institute of
Chartered Accountants to provide advice and services. Sitting within the
Century Commercial Park, the Hub will offer its tenants access to potential
customers on their door steps, while the activities and conferences will bring
decision-makers and networking opportunities which most of the small business
owners could never dream of in the township. This is all about professionalising
them, taking them from the informal into the formal sector.
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| Traders doing business next to Diepsloot |
One thing that
impressed me is the time and care taken during the selection and induction
process. Each business owner must have a thorough understanding of what
they are getting into before they sign the 60 page lease, the performance
agreement and code of conduct. There is no long-term binding lease agreement which
punishes the business owner if things don't work out - they can leave after
giving just 7 days notice. I think this is a very enlightened approach.
Jenny and her team
know they are breaking new ground at Riversands and hope their model can
succeed and inspire similar ventures elsewhere. They did not need reminding
that scalability and replicability are key to South Africa being able to ramp
up small business development fast enough to create the millions of jobs we
need.
Umm. So many questions. If this is publicly funded through the jobs fund, why the secrecy on the metrics of cost/return? If there's no transparency, how can there be accountability? How would we even know if it's a success? Or will the goalposts simply just shift?
ReplyDeleteThe most important question for me is how do we know this is not just one giant vanity project?
Anonymous – We strongly agree with you on the importance of cost/return metrics and look forward to sharing key metrics as time goes on. Of course we have rigorous Jobs Fund targets and report to them and undergo inspections regularly. In addition, over 50% of our funding is private from Century Property Development, and Century also seeks clear social impact returns. However as the management team, we have if anything even more aggressive goals. Cost/Job is but one metric. Then there is the survivalist micro entrepreneur, who previously had a small erratic income. When her business and income grows and becomes sustainably consistent, although not a new job, the positive impact is indisputable and the metrics must reflect that. As Morgan Simon put it, “x verifiable impact today, but how do we ensure that impact is x plus 1, if not times 10, tomorrow”. And we need to track and measure that too.
DeleteThe project has a number of powerful ingredients. The position of the Riversands Incubation Hub within Riversands Commercial Park creates opportunities for small and micro enterprises to rub shoulders with large businesses in a common geographic location, offering them goods and services which would otherwise have been logistically difficult to provide.
Also important to note is that the initial investment will continue creating a return. The infrastructure asset remains there and will continue being used to sustain the project far beyond the initial funding.
I invite you to visit. There is no need for anonymity, we welcome all constructive input. Realising the full potential of this project will need the best of creativity and intellect that we can attract to lend shoulder to the wheel.
I think these are good questions and I hope Riversands will be able to answer them here.
ReplyDeleteHaving National Treasury’s Jobs Fund as a valued partner, Riversands Incubation Hub continuously monitors its progress in terms of impact on the community and its metrics overall. These metrics are reported to the Jobs Fund and are used internally by the Hub to drive continuous improvement of its programmes. It is good to see returns already materialising from the investment, with grass roots level businesses directly benefitting from the project.
ReplyDeleteHi Anon, Why don't you pay the hub a visit and seek answers to those many questions? We'll need to change our names though if we want to get through security! Toby states that it is partly funded by public funds; there is private money backing it too. I'd love to know how you accurately and meaningfully measure the cost versus all the benefits of giving a number of entrepreneurs a real shot at making a success of their businesses. The benefits would have to measure different aspects like crime reduction, improved education and training (directly and indirectly), social and health improvements, increased tax revenue, etc etc... The toughest of course would be to measure the value of such an overt expression of positive commitment and the promise of a better life to Diepsloot with a population of 350,000 people. If just one business with its start in this Hub, goes on to employ thousands of people in years to come, what cost per job would make that worthwhile?
ReplyDeleteThis project represents a vision of SA made solid out of bricks, mortar and steel. It has attracted service providers who have bought into the vision. People have been willing to die for visions and symbols of things they believe in, so don't underestimate the positive value of this one. These guys have moved away from their calculators, secured the money, built an impressive structure and they are giving those entrepreneurs their best opportunity at real success - along with the invaluable confidence and pride that comes from having done most of the hard work themselves. I applaud them and would love to know how to support this initiative to ensure it is a success - by any measure.
For me the big take away from this (the hub) is the 'opportunity' aspect. It provides entrepreneurs with the opportunity to develop their business in a more formal environment with like minded businesses facing similar challenges.
ReplyDeleteWith the Jobs Fund being involved and providing funding; I know from other experience where they have provided investment that they do set definite goals / criteria regarding job creation assessed by official employment contracts. I expect that similar goals have been set in this instance.
The leadership in this initiative is also highly credible with a track record of previous success.
This is positive stuff - embrace it!