Growing black business

Xolani Qubeka, CEO of the Small Business Development Institute

The SMME sector has been experiencing rapid growth in South Africa. With a current unemployment rate of 25%, nothing could be a better motivator and cause for renewed urgency and focus on an entrepreneurship culture in the country.

But small businesses usually do not get on their feet by themselves. Partnerships and guidance remains a vital piece of the puzzle. Currently small-business incubation is becoming more popular and after the establishment of the Ministry for Small Business Development, all hands are on deck to ensure the goals are reached in this regard.

A man who knows what he’s talking about when it comes to SMME development, is the dynamic Xolani Qubeka, CEO of the Small Business Development Institute (SBDI).  We caught up with the former CEO of the Black Business Council after his presentation at the recent SMME Opportunity Roadshow in Port Elizabeth.

Can you tell us what brought about the establishment of the SBDI?

There was a need in South Africa to co-ordinate various programmes that assisted budding entrepreneurs to access opportunities, to access support as it were. Our new democracy came with lots of expectation of opportunities, but what was missing was a platform where one could bring enterprises and entrepreneurs together – for big companies that seek to procure services from suppliers, as well as the government’s policy that enables the supporting of enterprises through black empowerment, through various government related instruments aimed at driving economic transformation. We wanted to provide a platform from which we would become the matchmaker and provide solutions to make sure that within the enterprise, the development eco-system would be able to provide a similar service, so that SMMEs in particular don’t have to be running around that institution. We wanted to create a one-stop shop where they are able to access all sort of supports they may require.

Was this concept your brainchild?

Yes, I founded the Small Business Development Institute way back in 2008, but because of funding, among others, it took longer for me to firmly establish it. So I found an opportune moment when government created the Ministry of Small Business Development. It is ideal as it relates to the National Development Plan that seeks to put a vision of where South Africa ought to be by 2030 - more SMME driven – and that the economy would be 90% privately driven, opposed to what it is now.

What other challenges did you have to overcome to get where you are today, and to bring the platform to a stage where embracement is happening?

The challenge really was the mind set issue – the fact that there was not really a strong belief that SMME development is very important. SMMEs were mostly synonymous to black business. The challenge was to get corporates to understand the importance of SMMEs and the development of small business. Just think about it – nearly all listed companies today started as small businesses. So for me it is important therefore to lend that experience to small entrepreneurs to help them along on their journey. I call it the valleys and pitfalls along the way. You have to be able to confront and you also have to be ready to fail. I’ve failed myself many times. At one stage when I was running my business and staying in Soweto, I came home one day and when I opened the door, the sheriff was there to collect. The house was empty. Those are the valleys and the pitfalls I’m talking about.

How has your experiences prepared you for the leadership role that you are now providing?

I always tell people that I’ve graduated from the University of Hard Knocks - it is the type of journey that takes away the complacency. When you speak to the next person who is aspiring to get into business, and point out that it is really not the land of milk and honey, you know you are able to share with young people that there are no big wins. If you want to get into business it is not an easy journey. Yes, my experience has prepared me for what I’m doing today. I’ve seen it all. I’ve been in small business and I’ve been in big business and I’ve learnt the ropes. I don’t have any formal education, but I’ve learnt as I moved along. What is important is that you have to be able and you need to have people you look up to in your life. I’ve been fortunate that I was able to identify mentors and people who were willing to lend a hand - and I’ve learnt from them. The most important thing is to have a learning mind.

What do you consider your biggest achievement in business?

I’d have to say that my biggest achievement was the establishment of the Black Business Council, which I started from scratch after I hosted the first Black Business Summit in 2011. When the black business associations moved out of BUSA (Business Unity South Africa) and reconvened under the Black Business Council, I had to start afresh - from setting up to finding an office, from creating the logo, to developing the brand, right down to marketing. We started from scratch and created an entire new space. It has been a very memorable moment really because today the things that we fought for are happening - the Ministry of SMMEs has been established and the BEE Act has been strengthened and amended. Things are starting to fall in place and people are beginning to have a different narrative.

Can you tell us what are the biggest lessons you’ve learnt in your journey in this SMME space?

The most important thing for me is to persevere.  I’ve also learnt to be patient, to have a learning mind and to listen and learn from others. I’ve made peace with the fact that it is not an easy journey to succeed in business.

You often speak about fostering symbolic relationships between small and large business. Can you tell us how important this is in our specific quest to boost small business development?

It’s really about opening up the supply chain, because business is about supply chain. Within the very chain of companies, they have various suppliers for each part on the value chain. The question for us is how do we unlock that whole value chain to make sure that you can have new entrants in the industry. It’s about saying to large companies that we need to enable new suppliers to get their foot in the door. It’s about saying to them that they have a role to play and that they can use their balance sheet as big companies to train and to up-skill these small companies so that we can switch from using overseas products to local products. That alone will grow, assist and drive internal and inclusive growth. It will increase the middle class substantially, and once we increase the middle class, people will buy more houses, cars, fridges, TV’s, and so on. The motivation is that we need to make sure that corporates understand the importance of building new supply.

Cutting to the chase, are the challenges that black-owned small businesses face different to that of white owned small businesses?

In general the problems and challenges of SMMEs are generic. But coming back to South Africa, because we come from a very racially based economy and circumstances, there aren’t sufficient big black-owned companies that are able to provide access to the supply chain. We’re dealing with large white-owned companies which is what I call the “old boys club”.  In other words they’ve had relationships with their own suppliers and they prefer their own suppliers, so for them to open up those markets for new entrants, especially black SMMEs, is a huge challenge and it takes a lot of convincing to change the mind set. That is why we always push for government to provide the training ground. If government can provide their own supply chain in a very significant way to small black companies so that they can gain traction, they can begin to grow so that they can be ready to be the suppliers, not only to government, but also to the private sector, because they would have developed economies of scale and they would also have gained experience and expertise. For me more than anything, it is about access to continuous businesses. It is not much of a money issue, but more about access to significant markets on a continuous basis. If you for instance are able to get a five year contract and you can go to a bank, it’s easier to secure finance.

Let us look at revitalising and mainstreaming specifically township enterprises. How this will help to change the structure of the country’s economy and what role will your organisation be playing in the process?

Firstly, we have very dynamic townships with excellent opportunities in the country. Because development has not really happened in black townships in particular as much as it has elsewhere, there are a lot more opportunities, if one has a vision.  In Gauteng for example, we’re working closely with the Provincial Economic Development Department, where they have adopted this strategy of revitalising the economy. There are several projects in the panel beating trade. So it’s all about collaboration and partnerships. The Gauteng Government as an example, have in excess of 7 000 vehicles.  We are saying in the townships, lets ring-fence your work and provide opportunities to black-owned panel beaters in the townships. We will work to make sure that we bring them together. We will professionalise them, we will make sure that they provide an excellent quality service, and we will ensure that industry standards are maintained. So it’s really about providing opportunities. We are also now assisting local retailers. Most black families have been running retail companies. We want to revitalise those businesses and make sure that we put them in a semi-franchise chain, for them to be able to access the supply of products and goods at much more competitive prices. We group them under one brand, and then we provide the distribution network. Our next phase now is to create manufacturing entities that supply on this retail network.

The establishment of the Ministry of Small Business Development came as a ray of hope for many struggling SMMEs. Where do you think this department will make the biggest impact?

Our major driver should really be that the Ministry of Small Business Development integrate South Africa’s SMME development target. Yet the most impact that the Ministry will make is to come up with what we term a national SMME policy master plan. We must have a policy master plan because once we have a master plan it will drive us to a specific target that will focus on moving SMME development from the periphery to the epicentre of the economy.

Lindsay King

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