South African business body, the Black Business Council (BBC) and India's small business agency, the National Small Industries Corporation (NSIC) this week signed an agreement that will help set up five business incubators aimed at training youth to become entrepreneurs in just three months. Can it work?
Engineering News reported that the incubators will be based on the rapid incubation model developed by the NSIC (which applied to patent it in 2011) in which unemployed people are trained in the basics of entrepreneurship and a technical skill, using factory equipment, in just three months.
The BBC's incubators will be set up in the provinces of KwaZulu-Natal, the North West, Mpumalanga, Gauteng and the Eastern Cape over the next year. The agreement includes assistance on skills in the auto component sector, machine tools, leather, chemicals and pharmaceuticals, fruit and food processing and textiles.
The NSIC has for some years had an office in Johannesburg and has already helped set up two incubation centres in KwaZulu-Natal (in Pietermaritzburg and Hammarsdale) which focus on projects to make exercise notebooks, wire nails and barbed wire. The NSIC also helped install a plastic injection moulding equipment at the Soshanguve Manufacturing Technology Demonstration Centre in Pretoria.
Rolling them out
Since it began rolling out them out a few years ago, the NSIC has set up over 90 rapid incubation centres (also known as training-cum-incubation centres) in India itself, which are run under a franchise model (detailed here) - where the NSIC acts as the franchisor.
It also helped set up similar incubators in a number of other African countries, with an incubation hub launched this month in Rwanda. In addition the NSIC co-operates with South Africa's Small Enterprise Development Agency (Seda).
How it works
The model includes classroom training on entrepreneurship, practical training on actual manufacturing projects, guidance on project management and advice on preparing a fund proposal for banks and support services to start a business.
In the first week of the programme the right candidates are chosen for incubation, after a call is placed for applicants in local media. The minimum qualification is that a candidate should have at least 10 years of schooling and possess basic entrepreneurial traits. Preference is given to those that have a background in an industry or business.
What sets the NSIC's rapid incubation model apart from others is that it focuses on skilling participants in pre-chosen business types. Most other incubators tend to assist participants to turn an idea or a young business into a growing business, with the incubation period often running for three years.
The organisation has about 200 enterprise types (all requiring little investment to set up) that a potential entrepreneur can chose from - including such areas as brick manufacturing, embroidery, making of construction materials and bakeries.
Jury still out on model
It's difficult as yet to assess how successful the model has been, mainly because it's a fairly new concept and because figures on the number of enterprises and jobs that have been created by rapid incubation centres are not readily available.
Though the model may be the kind of incubator that hopes to turn the next bright idea into a rock-star-like high-growth business, important will be to assess how sustainable such enterprises will turn out to be.
At some time or other those assisted by the incubator will have to fend for themselves in the market without subsidised support. If too many fail on exiting or create enterprises that limp along, with just the owner themselves without growing and creating jobs, then it may be an indictment of the model itself.
Timm writes on small business. Click here to sign up to his monthly newsletter. Follow him on Twitter at @Smallbinsight and on Facebook.
Stephen Timm is a