Paving the way for SMME incubators
Achievement by an NGO through technology transfer or training activities
Small, medium and micro enterprises (SMMEs) are seen as key drivers of economic growth, innovation and job creation. SmartXchange, an SMME incubator, is producing significant results and garnering national and global attention.
Based in Durban, KwaZulu-Natal, SmartXchange focuses on the media information communication technology and electronics (MICTe) sector. It is a not-for-profit company, registered as Durban Technology Hub and trading as SmartXchange.
“We were originally an ICT incubator. However, when media and electronics converged into the ICT space, we responded to these shifts,” says Jonathan Naidoo, chief executive of SmartXchange.
In 2009, the World Bank released its global study of ICT incubators and SmartXchange was one of five incubators identified as a replication model for incubation in sub-Saharan Africa.
Established in 2004, the organisation promotes and supports the region’s vision to be the technology hub of Africa. Its mandate is to identify and assist in developing quality MICTe SMMEs and to build a pool of skilled MICTe workers.
SmartXchange also focuses on developing localised solutions, as well as promoting empowerment, so that the new generation of MICTe businesses reflect the region’s demographic makeup.
“We are an innovation node and a business incubation centre. Our premises include some of our strategic partners, test lab facilities, SMME financing facilities, graduated small businesses and SMMEs that are currently within the programme. It’s about creating an environment that stimulates innovation, attracts new ICT projects into the region and supports local SMMEs,” explains Naidoo.
SmartXchange organises training to develop incubator SMMEs. “We cover every aspect of business training,” says Naidoo. “There are various tools and accredited training programmes, with training outsourced to certified providers.” There are only eight SmartXchange employees, as well as interns.
SmartXchange runs a three-year programme, with a new intake of four companies every quarter. There is a vigorous interview process with thorough screening. Naidoo says that this is part of the business model, which has a 99% success rate of graduated SMMEs.
“While the mandate is to focus on youth, women and BEE candidates, the incubator doesn’t turn genuine business cases away. However, when it comes to recruitment drives, the focus is on the three priority areas,” explains Naidoo.
The organisation also has a preincubation process for individuals with the right qualities but who need to develop their business case.
SmartXchange has a Technology Innovation Agency seed fund of R500 000 per year. It’s for innovative SMME MICTe projects that address day-to-day community challenges. The funding focuses on prototype development and there are currently eight innovation projects being funded.
The incubator is now launching a challenges portal. Industry will log its challenges and MICTe companies will respond with a proposed solution. If the businesses like an idea, they progress forward with the SMME.
SmartXchange was the brainchild of a multiparty consortium led by the eThekwini Municipality. The founding partners included Siemens Business Services, Durban University of Technology and the department of trade and industry.
SmartXchange continues to partner with corporates from the MICTe industry, tertiary institutions and the government sector.
SmartXchange engages with finalyear ICT students annually. Naidoo says that, in reality, 60% of the graduated students will be unemployed, so they are encouraged to turn their ideas into businesses.
In 2015, the 55 SMMEs in the SmartXchange programme created 322 jobs and had a collective turnover of R163 774 326. Since 2004, the incubated SMMEs have created 3 054 jobs while in the programme. The incubator graduates, on average, six successful SMMEs yearly.
The vision is to expand SmartXchange’s reach throughout KwaZulu-Natal. Naidoo then hopes to take the model nationally to develop the MICTe industry.