FOR economic development to reduce poverty and be sustainable it must be driven by an active, dynamic and growing private sector, says Bruce McNamer, president and CEO of global nonprofit business development organisation TechnoServe.
For that reason, TechnoServe’s work in South Africa is to "empower entrepreneurs to build businesses which break the cycle of poverty", says Mr McNamer. TechnoServe operates in 30 countries across Africa, Latin America and Asia.
South Africa has more than 3-million small businesses, representing 95% of all enterprises and contributing about 45% to the country’s gross domestic product, making the success of the sector a vital part of its economic growth. As a developing economy, the sustainability of economic development in South Africa is closely related to the sustainability of its agriculture sector.
Mandla Nkomo, TechnoServe’s acting country director for South Africa, says farming in South Africa is characterised by two extremes: black farmers who farm for subsistence purposes (91%) and those who farm for income generation (2%); and black farmers who farm with limited knowledge and facilities versus white farmers with an agricultural background and adequate facilities.
The result is a big income disparity, says Mr Nkomo. TechnoServe works with these black farmers to enhance their output, which in turn is intended to develop the agricultural value chain. Research conducted by Nkomo into the prevalence of start-up businesses shows South Africa ranks 23rd out of 43 countries, with a rate of only 7.8%. He says there are specific constraints that either discourage or hinder existing and would-be entrepreneurs, among them access to start-up and expansion finance and access to markets, technology and resources.
"For entrepreneurship to thrive there has to be an ecosystem in any country that encourages, capacitates and continuously supports the creation of entrepreneurial ventures. TechnoServe provides support and training for entrepreneurs to develop business plans, link with markets and seed capital, improve management skills, produce higher-quality products and services and operate more efficiently — all essential for businesses to thrive and expand," says Nkomo.
TechnoServe has achieved considerable success in developing agricultural entrepreneurs in South Africa. Among others, a project involving three emerging farmers in Limpopo in 2011 (started with a R1.25m loan from the Woolworths Foundation) now produces 400 tons of first grade tomatoes a year to Woolworths and a further 200 tons of second grade tomatoes to the informal market.
Partnering with Massmart in their Direct Farm launch last year, TechnoServe put locally produced small-scale farmers’ produce on the shelves of Massmart. The first harvest of 15 tons of first grade beans was delivered in September. After the launch, several hundred tons of produce has been delivered and sold, with substantial growth predicted for the next season.
As a consequence of these successes, TechnoServe was granted more than R40m earlier this year by the Development Bank of Southern Africa’s Jobs Fund.