Government Support

There are several state-run initiatives that can assist in expanding the incubation support available in South Africa, either by providing finance or helping out with advice. These include the Incubation Support Programme (ISP), the seda Technology Programme (also known as STP) and the Small Enterprise Fund Agency (SEFA).

1.1. Incubation Support Programme

The ISP co-funds the establishment of new incubators in partnership with the private sector, as well as the expansion of existing incubators. Support lasts for three years and amounts to R10 million per financial year.

The incubator to be supported may be a corporate incubator, a private investor’s incubator or academic/ research institution incubator in partnership with industry. The incubator must be focused on establishing and/or growing enterprises that will graduate to sustainable enterprises.

The ISP is an initiative of the Department of Trade and Industry (the dti) and a sub-programme of the Enterprise Investment Programme (EIP). It aims to foster partnerships between small and big businesses and encourage big businesses to assist SMMEs with skills transfer, enterprise development, supplier development and marketing.

HOW DOES ONE USE THIS RESOURCE?

The ISP can be used in two ways: 1) to access finance; and 2) as an example for the design of similar incentives.

1. The ISP can be used to access funding, both for launching a new branch of an existing incubator and to launch an entirely new incubator. Bear in mind that the incubator needs to have a private sector partner that is willing to commit funds on a cost-sharing basis with the dti. More details on the application process are available on the dti’s website (www.thedti.gov.za). On the homepage, click ‘Financial Assistance’, then follow the ‘SMME development’ link and scroll down to the ISP.
2. The ISP can also be used as an example of the kinds of incentives a municipality or province can offer the private sector to establish incubators in a particular area.

1.2. seda Technology Programme (stp)

The stp is a programme of the dti that aims to stimulate economic growth and development through a focus on technology-based business incubation. There are currently 42 stp incubators in the country (see Annex 4 for a list of these).

The stp aims to provide technology-transfer services to small enterprises and specific technology support to women-owned enterprises.

The stp offers financial assistance in the form of a non-repayable grant of up to R600, 000 for programmes aimed at providing technology transfer to SMEs, particularly those that are women-owned.

HOW DOES ONE USE THIS RESOURCE?
The stp can be used in two ways: 1) to access funding; and 2) for advice.

1. The stp offers funding of R600 000 to support SMEs in line with its goal of technology transfer. If the planned incubator involves technology transfer or the development of SMEs within technology-related sectors (eg. Information Technology), visit the dti’s website (www.thedti.gov.za) for more information. On
the homepage, click ‘Financial Assistance’, then follow the ‘SMME development’ link and scroll down to the stp.
2. The stp incubators, as well as seda itself, are a good source of advice and expertise related to incubation. Feel free to consult the list included in Annex 4 and reach out to incubators that you think may be able to assist you.

1.3. Small Enterprise Finance Agency (SEFA)
SEFA provides direct loans to SMEs and co-operatives ranging from R50 000 to R5 million, as well as facilities (debt/equity) to intermediaries, joint ventures and partnerships to encourage on-lending to these SMEs and cooperatives. SEFA is an agency aimed at ensuring the establishment, survival and growth of SMMEs and at contributing towards poverty alleviation and job creation.

HOW DOES ONE USE THIS RESOURCE?
SEFA can be used in two ways: 1) to access direct funding for incubated SMEs; and 2) to support on-lending to incubated SMEs.

Many SMEs targeted by the proposed incubator are likely to require access to finance at some point in their journeys. SEFA can be used as a potential source of this funding, and the proposed incubator can assist SMEs in meeting requirements and making applications. Go to SEFA’s website (www.SEFA.org.za) for more information on how SMEs can access funding.

The proposed incubator may decide to offer loans to its incubated SMEs. If it does, SEFA can help with getting the capital required to make these loans. Go to SEFA’s website (www.SEFA.org.za) for more information on what types of support are available for potential on-lenders.

4.1.4. Other government support
Apart from the support listed above, there are various other government initiatives that can be used to assist in accessing funding, either for the proposed incubator or its incubatees. These include the following: