The incubation economy is upon us

An unexpected effect of the global pandemic has been the importance of building on and cultivating local business and personal relationships. From your next door neighbor to the small business that has your favorite take out dinner just around the corner, it’s important to start locally in order to support your community and boost the local economy.

Garsen Naidu, Managing Director of Cisco Sub-Saharan Africa

For small businesses and entrepreneurs the requirements are a bit more specific, but even the smallest steps taken to support them can affect big, long-term changes.

Incubation centers are nothing new, many have sprung up over the past decade because big brands understand that transformation in South Africa rests very heavily on the backs of our SMEs. And, with the lockdown and the effects of the Covid-19 pandemic threatening to close 60% of their doors, protecting and enabling SMEs during this time of economic turmoil is important, not least because their survival and recovery are likely to to be a guide to the economy. in general.

Research of McKinsey says SMEs are the lifeblood of South Africa’s economy – and also the most at risk. He goes on to tell us that SMEs in South Africa represent over 98% of businesses, employ between 50 and 60% of the country’s workforce in all sectors and are responsible for a quarter of the growth of employment in the private sector. And while South Africa’s SME contributions to GDP lag behind other regions – 39% vs. 57% in the EU – there is no doubt that this sector is a key driver of the economy. .

As such, it is essential that large companies find ways to encourage and support this sector – especially now – to find ways to provide SMEs with technology, training and empowerment programs, informing them on topics and trends that are relevant to the local economy and connecting them with experts who can offer tangible support in the development of business ideas and concepts.

In November 2018, Cisco opened the first Cisco EDGE Incubation Center in Pretoria, South Africa, which has become a prime example of a local business creating meaningful jobs through technology. Since then, Cisco has continued to expand the reach of EDGE, opening centers at Dube Trade Port, KwaZulu-Natal, and the University of Nairobi in Kenya. Other African countries for future expansion include Ethiopia, Ghana, Nigeria, as well as the Eastern Cape and Gauteng regions of South Africa.

Not run by Cisco, these incubators are managed by reseller partners, Makwa IT Technologies and A2D24 and both have helped create jobs and recruit locally. Boosting job growth is particularly important because South Africa faces high unemployment, low economic growth, declining competitiveness and declining productivity.

Here are concrete examples of notable achievements over the past three years:

  1. Most of Makwa IT’s employees come from disadvantaged backgrounds.
  2. Cisco Networking Academy students have also been interns at Makwa IT in the areas of sales and engineering.
  3. All of Makwa’s IT interns are now full-time employees of the company and serve as technical account managers and pre-sales engineers.
  4. A2D24 specializes in healthcare and financial technology platforms and recently expanded its healthcare footprint with 19 new products and services focused on Covid-19. Specifically, the products and services help prevent the spread of Covid-19, as well as screen people in high-risk areas such as hospitals and mines.
  5. A2D24 has also partnered with a private healthcare provider to deploy a telehealth system that allows patients and doctors to consult securely on digital platforms.
  6. On the financial technology front, A2D24 has developed a system with clients to help SMEs receive information on public funding and help available to small businesses that are meeting the challenges of operating businesses during the period. pandemic.

During the pandemic, Makwa IT and A2D24 boosted the local economy with their technological solutions, expertise and services. In turn, their clients have done the same by having a positive impact on individuals in the community. This type of support would not be possible without the support of larger organizations.

As McKinsey says: “SMEs are a key driver of the South African economy. They stimulate growth, create jobs – especially among young people – and spearhead innovation. SMEs are also customers of large companies throughout the supply chain and provide vital goods and services to businesses and households, thus helping to keep the wheels of the economy moving. Additionally, they can leverage their agility to design and incubate new technologies and business models to build a better future. Many South African SMEs have the potential to become the big companies of tomorrow, the African unicorns that this continent needs to continue on the path of growth and prosperity.

While we don’t know when the pandemic will peak, it is imperative that we don’t take our eyes off SMEs and the changing levels of support they will need – this is the sector that will take the longest to recover. , make decisions faster and, without a doubt, provide a safety net for many breadwinners across our country.

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