Greening South Africa’s economy: improved business development support for social and environmental enterprises

According to World Bank, South Africa ranks as an upper-middle income economy, representing the second-largest economy in Africa. While disposing of an abundant supply of natural resources and a modern infrastructure, unemployment, poverty, and inequality remain a challenge. In 2011 45.5 per cent of the population lived below the national poverty line while 53.8% of the total income was held by the top income decile of the population (World Bank, 2011).

Small, micro and medium enterprises (SMMEs)* form the backbone of South Africa’s economy and are key to tackling the challenges of poverty, inequality, climate change and environmental degradation. They represent 91 per cent of all formal businesses, contribute 52 to 57 per cent of the gross domestic product and employ about 61 per cent of the country’s workforce (The Edinburgh Group, 2013, with data from the South African Institute of Public Accountants). Part of the SMME sector identified climate change adaptation and mitigation as a business case, but there is still a lack of awareness on the concept of social and environmental entrepreneurship – as supported by SEED.

This lack of awareness also applies to available business incubation and support services. While business advisory for SMMEs is broadly available in the country, services mainly focus on conventional business models and do not provide specific support on how to maximise social and environmental impacts of businesses. To fill this gap, SEED works to foster the ecosystem for social and environmental enterprises in the country through capacity building and networking activities for local service providers.

“Defining social and environmental entrepreneurship versus CSR”

Experiences from a Training of Trainers (ToT) workshop in Pretoria

Through a Training of Trainers (ToT) workshop from March 16-18, 2015 in Pretoria, funded by the Government of Flanders, SEED aimed at building capacity among local service providers in South Africa to improve their services towards social and environmental entrepreneurs.

A group of twelve experienced business advisors and trainers gathered in Pretoria to discuss the concept of social and environmental entrepreneurship and to get acquainted with the SEED business advisory toolkit. Among others, representatives from the National African Federated Chamber of Commerce and Industry, the University of the Witwatersrand and the Sustainable Tourism Partnership Programme took part in the training.

Whereas the majority of participants had already worked with social and environmental entrepreneurs from different sectors, they were highly interested in defining this type of business in comparison with other concepts such as Corporate Social Responsibility or Inclusive Business. The first session provided them with indicators and real case examples on the different types of businesses and business models. In this regard, participants also learned about the triple bottom line (TBL) approach the SEED methodology is built around. The approach encourages businesses not only to measure and report on their single bottom line performance, i.e. financial outcomes but also on social and environmental impacts.

Based on fictitious case studies from the energy, waste and agriculture sectors, participants applied the SEED business advisory methodology in a series of interactive group work sessions. They very much appreciated the structured approach SEED is taking, tackling the different issues of business advisory, including market analysis, value proposition or risk assessment. The interactive nature of the toolkit was also recognized repeatedly as it allows for an effective cooperation and dialogue between the business and the advisor.

Especially the session on “Pitching your business model” was very well perceived. Putting themselves in the shoes of the fictitious business cases, participants stepped into a role play to sell their business idea to a potential financier or customer. An input by the Responsible & Inclusive Business Hub (RIBH) South Africa, operated by Gesellschaft für Internationale Zusammenarbeit (GIZ) steered the discussion on how to build an advisory network with a focus on green and social business models on a national level.

Participants’ feedback showed that the majority is planning to integrate the SEED approach into their advisory and training programmes to boost social and environmental entrepreneurship in the country. Participants furthermore decided to stay in touch to exchange for business opportunities and experiences made with the SEED methodology and beyond.

 *Small, micro and medium enterprises (SMMEs): As defined by the South African National Small Business Amendment Act of 2003, the SMMEs definition includes the micro, very small, small and medium enterprises according to their sectors, number of employees, annual turnover and gross asset value.

SEED in South Africa

Since 2009 SEED has supported 25 social and environmental enterprises in South Africa, largely sponsored by the Government of Flanders and the European Union. At the moment, the selection process for the 2015 SEED South Africa Awards is running, and the Winners will be announced in mid-September at the SEED Africa Symposium in Nairobi, Kenya. This month, do not miss the SEED South Africa Symposium, which this year is organised in partnership with the International Conference on Innovation for Sustainability under Climate Change and Green Growth (26-28 May 2015, Johannesburg, South Africa).

This article is part of a series about SEED Training of Trainer (ToT) sessions on social and environmental entrepreneurship in selected African countries. Read here more about the last two ToT that took place in Malawi (Creating an enabling environment for social and environmental entrepreneurship in Malawi), Namibia (Boosting support for social and environmental entrepreneurship in Namibia) and Mozambique (How to improve support to social and environmental enterprises in Mozambique?).