“ECDC Contribution towards SMME
Development, Finance and Growth of
the Eastern Cape Economy”
Presented to:
2010 SOUTH AFRICA SMME CONFERENCE
PROGRAMME
Birchwood Hotel, Boksburg, Gauteng
21 OCTOBER 2010
local touch,
global vision
By: Noludwe Ncokazi
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PRESENTATION OUTLINE
Eastern Cape Economy
The SMME Context
ECDC Value Proposition & Delivery Model
Performance Highlights
Observations & Findings
ECDC focus going forward
Conclusion
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global vision
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THE EASTERN CAPE ECONOMY
GDP Composition by Economic Sector, SA vs Eastern Cape 2008
Gen government services
Community, social & other personal services
Finance, real estate & business services
Transport & communication
Eastern Cape
Wholesale & retail trade; hotels & restaurants
South Africa
Construction
Electricity and water
Manufacturing
Mining and quarrying
Agriculture, forestry and fishing
Source: StatsSA
local touch,
global vision
0.0
5.0
10.0
15.0
20.0
25.0
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The SMME Context
SMMEs are part of the global village
Various stereotypes still dominate and dilute the SMME Development
Agenda
Big is better
Throwing money into all problems will help solve them
Entitlement
Government must promote “local content” at the expense of
“value for money”
SMMEs are solely responsible for their failure or success (policy
environment, infrastructure, skills, systems & processes, etc.)
Export business is for the “elite” and opportunities exist in the
developed economies
“Magic” success formula or one size fits all
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global vision
SMME support presents an opportunity to contribute towards rural
development
China’s dominance in the manufacturing sector
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The SMME Context…
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global vision
Lack of entrepreneurship spirit.
More job-seekers than entrepreneurs
Business – waiting area
Dependency (on government)
Entitlement
Lack of hard skills (business & technical skills)
Poor or limited business infrastructure.
Premises
Technology
Systems
Lack or poor access to markets
State of readiness for exports (quantity, quality, time & price)
Scepticism and or ignorance – trading in Africa/SADC,
BRIC)
Lack or poor understanding of what the market requires.
Access to finance (speed, flexibility, Government system
inefficiencies, cost of capital, etc.)
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local touch,
global vision
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Delivery Model Depicting linkages between Finance & nonfinancial support
Development
Services
Non-financial Business
Support Services
Employs both
Pro-active and
Demand-driven
approaches
Pipeline
Development
Services
Core Business OR
Revenue Generating
Main Revenue
Generation
Development
Investments
(Loans & Equity)
Support Services
Mentorship &
Increased support
to companies in
distress
Aftercare
Development
Properties
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global vision
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Service Delivery Context
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global vision
ECDC has presence in all Districts within the province
Primary focus is on supporting ECDC clients to improve loan
performance
It has formal agreements signed for delivery of services with:
Department of Trade and Industry (the dti)
IDC
Centre for Scientific and Industrial Research
Small Enterprise Development Agency (SEDA)
East Cape Aids Council
CIPRO
Department of Housing
Department of Public Works
Organized Business
Partnerships are established on a project basis with the following:DBSA
NEF
Eastern Cape Tourism
TEP
Local Government
HEI & FETs
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HIGHLIGHTS
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global vision
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HIGHLIGHTS
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HIGHLIGHTS
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global vision
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HIGHLIGHTS
The Corporation increased the number of small businesses it
financed over the previous year by 11.8 %, i.e. from 800 to 907
enterprises.
Women-owned businesses received 37 % of the funding, while 85 %
of disbursements went to small enterprises with a turnover less than
R500 000.
ECDC disbursed the majority of its loans (59 %) to rural enterprises
to promote economic opportunities. This allowed ECDC to play a
meaningful role in government’s renewed focus on rural
development.
Improved cash collections on the entire loan portfolio from R169,9
million in 2008/09 to R219,9 million in 2009/10.
ECDC invested heavily in research in targeted sectors to assist in
identifying and packaging new business and investment
opportunities especially in emerging sectors, such as renewable
energy, agro-processing, aquaculture and services sector.
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global vision
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HIGHLIGHTS
Revitalization of the Eastern Cape Information
Communication Technology Initiative [ECITI] which is an ICT
and Film Incubator
Partnership with SEDA Technology and the dti in the
establishment of the Mthatha Furniture Incubator.
Improved access to international markets for SMMEs in the
Arts & craft sub-sector
Improved Turnaround times for business registrations due to
a close working relationship with CIPRO
Increased Entrepreneurship Outreach Programme targeting
poverty nodes (rural and farm areas)
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global vision
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OBSERVATIONS & FINDINGS
Strong links with government service delivery
Infrastructure Development
School Nutrition Programme
Transport
Development Finance can contribute towards
reviving ailing industries (turnaround strategies)
Clients differ significantly from each other
depending on industry, location, size, level/stage of
growth, etc. and therefore tailor-made solutions are
required.
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global vision
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GOING FORWARD
Focusing on the provision of after-care to existing clients to curb high
impairment of loans
Focused provision of finance in vital sectors of the economy
Agro-processing (e.g. Mohair, Livestock, High-value crops, wood
processing, pharmaceuticals, etc.)
Green Industry
Tourism
Creative Industries (craft, film – content generation, etc.)
Market intelligence generation
Stronger financial muscle required to encourage diversification and
acceleration of economic growth
Leveraging resources, strategic alliances and partnerships
Focus on High Impact Priority Projects
L-T investments
Develop human capital (DFI competencies, sectoral focus, etc.)
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Constantly review business processes to improve internal efficiency
and throughput
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CONCLUSION
SMME Development should be aligned with the
priority growth sectors
Not only do SMMEs create jobs but the cost per
job is significantly lower
SMME Development must include investing in
Research and Development to ensure the
following:
Innovation
New product development
Access to new markets
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global vision
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Thank You for listening
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global vision
.
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