Design Indaba shows way for small business development
Annual showcase brings in money and fosters entrepreneurship
THERE has not been a lot of positive news about the South African economy lately. Business confidence reached a 16-year low in June and continues to drop. And this has been matched by a similar decrease in consumer confidence. The International Monetary Fund forecast a modest 2 percent growth for 2015-16, highlighting the country’s power supply crisis as its biggest growth obstacle.
Growing an economy in these conditions is challenging. But some are getting it right.
We could learn a few lessons from the organisers of the annual Design Indaba, the country’s biggest design showcase, held in February and March in Cape Town.
This year, the Design Indaba contributed R118.9 million to the province’s coffers.
It joined thinkers, buyers and sellers for an exhibition and conference and an additional R134m was generated in orders for local exhibitors.
Over the past six years, the Design Indaba’s total contribution to the country’s GDP increased to R380.5m and over 960 full-time direct and indirect jobs were created.
All this according to a report, Economic Contribution of the 2015 Design Indaba, complied by Stratecon and endorsed by the UCT Graduate School of Business (GSB).
The research shows how the Design Indaba has grown over the past 20 years, from 40 exhibits in 2004 to 612 exhibits, 13 events and over 40 000 visitors in 2015.
And the tourism industry also benefits since many delegates spend additional days in Cape Town and the country, spending money on accommodation and entertainment.
There is evidence that they return with their families in coming years.
But while it is tempting to be blinded by these numbers, the real value of the Design Indaba may not be in the cash it generates.
While hard to quantify, there is real value in how the event supports artists and craftspeople, providing a platform for entrepreneurs and small businesspeople in need of a venue to showcase their wares as well as a market and consumers to whom they can sell their goods.
It gives them the opportunity to gain a foothold in competitive industries and provides an initial boost, making it easier for them to become sustainable businesses in the long run.
Crafters and artists usually form part of the small-, medium- and micro-sized enterprises (SMMEs) sector – a particularly vulnerable segment in the South African economy – which can create employment for people who are unskilled or have little education.
Young people between 15 and 24 are often a big part of this group.
Much of South Africa’s hopes for job creation are pinned on this sector, with the National Development Plan estimating that 90 percent of jobs will be created by small- and medium-sized businesses by the year 2030.
Yet levels of entrepreneurship in South Africa are below average.
According to research by the Global Entrepreneurship Monitor (GEM) in 2014, South Africa’s total early-stage entrepreneurial activity is the lowest in Africa and does not compare favourably with similar economies such as Brazil.
But a new report from GEM on global youth entrepreneurship released in July shows that youth in Sub-Saharan Africa are among the most entrepreneurial in the world.
Youth from this part of the world are more likely to express an intention to start a business (52 percent) and even more likely to actually get one started (28 percent), compared with youth from European countries, for example.
Just 19 percent of youth in that region express entrepreneurial intentions and only 8 percent are actually engaged in entrepreneurial activity (measured as a percentage of the adult population).
However, the report also shows that many of these African businesses fail to gain a firm foothold in the economy – with many not making it beyond their first three years of existence.
In a recent speech at the SMME Colloquium in Sandton last year, Minister of Small Business Development Lindiwe Zulu quoted statistics saying that small businesses in South Africa have only a 37 percent chance of surviving for four years and a 9 percent chance of surviving 10 years, with up to 80 percent of small businesses failing in their first year.
She acknowledged that while much had been done for SMMEs in terms of policy creation, much more needed to be done to help get smaller organisations on their feet. She called for more collaboration between the private sector, the public sector and government.
“Innovation, entrepreneurship and small business development are areas where we need to focus with every ounce of our collective energy,” she said.
It is here that events like the Design Indaba and spin off activities like the Guild and Art Fair and craft-orientated retail outlets like the Watershed and the V&A Waterfront can make a viable contribution.
Barry Standish, a former senior lecturer of economics at the GSB now with Stratecon and one of the authors of the Design Indaba economic impact study, said there are many examples of big businesses that started out small.
“Small business enterprises need to be nurtured and supported, they need to get out and show their wares. Events like the Design Indaba and shopping venues like the V&A Waterfront give them a platform,” he said.
One designer who credits the Design Indaba for her success is jeweller Tiffany Marx, whose first exhibition at the 2006 expo launched her career locally and internationally.
Another success story is that of Tyred Sustainable Lifestyle Furniture, a company that recycles tyres into custom-designed chairs, ottomans and tables that became the rage at the 2010 show, generating international sales and media attention.
If we want our economy to make beautiful music, we need to give entrepreneurs and craftspeople, artists and vendors a place to sing and to make their voices heard.
Professor Walter Baets is the director of the UCT Graduate School of Business.
YOUTH IN SUB-SAHARAN AFRICA ARE AMONG THE MOST ENTREPRENEURIAL IN THE WORLD BUT THEIR BUSINESSES OFTEN FAIL TO GAIN A FIRM FOOTHOLD IN THE ECONOMY