“My name is Joankie Makwakwa from Kasi Convocation. We are based in Johannesburg. We organize Stokvel (informal money savings pools) data by region and make it universally accessible and strategically useful so that companies, individuals, and brands that represent them can access an extensive database of Stokvels, Stokvel consumers, and analytics of members in one platform. I did not have the opportunity to study further after matric, and I started the program without a lot of knowledge on the different concepts in the incubation modules. Going through the program has helped me to design proper concepts for a business strategy and how to launch it. My mentor and business coach is brilliant and I cannot wait for the three upcoming sessions.”
Joankie Makwakwa,
a 29-year-old self-taught entrepreneur
from Katlehong township in South Africa.
Challenges
All five Southern Africa Community Union countries — Botswana, Eswatini, Lesotho, Namibia, and South Africa—are struggling with low growth, stagnating export competitiveness and pressures on debt and fiscal sustainability as well as increasing climate related shocks. These countries are also currently experiencing the highest rates of unemployment, especially youth unemployment which was 34.5 percent at the beginning of 2022 in South Africa. In addition, these countries have among the highest rates of inequality in the world, which has been exacerbated by the impacts of the COVID-19 pandemic. Common challenges in all five countries include: strengthening the business regulatory and investment environment (to enhance private investments and diversify exports); improving the efficiency and performance of state-owned enterprises; implementing competition policies to facilitate the entry of new players into key sectors of the economy and promote private-public partnerships, especially in the network industries that are accelerating digital transformation to foster productivity-led growth; and stepping up efforts to strengthen human capital and address labor market rigidities. Strengthening the ecosystem for Micro-, Small, and Medium Enterprises (MSMEs) and entrepreneurs to improve access to finance and impactful business support services and skills is another challenge to creating innovative digital and green businesses that will lead to new and better jobs, especially for young people entering the labor force.
Approach
In South Africa, the World Bank (WB) provided analytical support and shared global knowledge on monitoring and impact evaluation that helped the government establish a new monitoring and evaluation (M&E) policy framework for programs supporting MSMEs. The project also provided analytical support to carry out three firm level Business Pulse Surveys during the COVID-19 lockdown period to assess the impact of the pandemic on MSMEs. Based on the survey findings, the government adjusted its firm-level support programs to improve reach and impact. A review of 15 national public sector youth entrepreneurship support programs catalyzed policy discussions on reducing fragmentation and duplication and enhancing efficiency and impact of public support for entrepreneurship. Analytics on policy and regulatory barriers facing tech startups in South Africa informed a policy paper on a possible startup act for South Africa that is being championed by the country’s leading entrepreneurship ecosystem actors who presented the reform agenda to the country’s President.
In Lesotho, the analytics and policy dialogue on export competitiveness and the impact of COVID-19 on the textile and apparel sector as well as the results of the COVID-19 Business Pulse Survey fed directly into the design of a new $50 million lending operation, the Competitiveness and Financial Inclusion Project. The analytics on incubation support services and the entrepreneurship ecosystem were instrumental in the design of the support programs on entrepreneurship and MSME development in the new project.
Public and private entrepreneurship ecosystem actors, across all five countries, strongly support the newly revamped Innovation Bridge Portal, which provides a one stop depository of resources and information readily accessible to entrepreneurs in the region. The Portal has created new opportunities for collaboration and knowledge sharing across the national ecosystem for all five countries through programs such as the Corporate Innovation Challenge, the Agritech Innovation Challenge, and the Innovation Bridge Portal 500 program, all of which aim at identifying and supporting early-stage ventures in a structured and data-driven approach to develop their business models to scale.
Results
In all five countries — Botswana, Eswatini, Lesotho, Namibia, and South Africa– the WB’s support has strengthened the entrepreneurship ecosystem through the Innovation Bridge Startup Community:
- The Portal usage increased by 160 percent between June 2021-June 2022.
- Close to 500 early-stage entrepreneurs are actively being supported through a world class digital incubation program (Thinkubate) developed in partnership with the private sector. The first cohort of 30 entrepreneurs have improved their business models and are successfully raising new funding.
In South Africa, the Department of Small Business Development adopted:
- A new M&E strategy that was implemented for two pilot programs and supported the establishment of a digital data platform.
- Diagnostics to support private-public policy dialogue on regulatory reforms faced by tech startups which led to a dialogue with the country’s President.
- Diagnostics on reducing fragmentation, overlap and duplication of national public support programs for youth entrepreneurship which is influencing policy dialogue amongst government agencies and development partners.
- MSME data systems and analytics that is influencing policy dialogue on reviewing firm level support programs in response to the impacts of the COVID-19 pandemic.
In Lesotho:
- The analytics supported the preparation of the new Lesotho Country Partnership Framework focusing on private sector competitiveness.
- Support to the Prime Minister’s Delivery Unit for private-public dialogue has strengthened efforts for business environment reform and influenced decisions taken by the Cabinet Sub-Committee on Investment Climate and Economic Reforms.
- The technical assistance facilitated dialogue between the youth groups in Lesotho and the relevant government agencies which led to a Youth Summit where the youth groups presented and discussed their reform agenda.
Bank Group Contribution
The WB has committed over $2 million to the Jobs Platform since January 2021. This has been complemented by trust fund resources including $0.25 million from the Umbrella Facility for Trade that directly supports the Jobs Platform. Further, additional trust fund financing has covered numerous activities supported by the Jobs Platform.
Partners
In South Africa, the key project partners are the Department of Small Business Development (DSBD) and the Department of Science and Innovation (DSI). The partnership arrangements are clearly spelled out in multi-year technical cooperation agreements that include analytics, data, knowledge sharing and technical assistance for capacity building. The WB’s support for DSBD on monitoring and evaluation complements support provided by the European Union which will invest in the ICT systems. The Innovation Bridge Portal is financed primarily by the South African government with technical support provided by the WB. The WB team crowded in resources from the French Embassy in South Africa and the UNDP for the agritech challenge. Business Unity South Africa (apex organized business entity representing South African business) supported the participation of the largest South African conglomerates in the Corporate Innovation Challenge while the Banking Association of South Africa financed the costs of an intern for a year to supplement the capacity of the Innovation Bridge Portal team. Thinkroom, a private South African ecosystem champion, sponsored 1,040 licenses for the digital incubation program (Thinkubate).
Looking Ahead
The WB will continue to provide support to deepen the engagement and scale of several on-going initiatives. Specifically, the WB will continue to support the ecosystem development activities of the Innovation Bridge Portal including formulation of a sustainability plan with private participation as well as programs to strengthen the ecosystems in Namibia, Botswana, eSwatini and Lesotho that will complement new lending programs in Lesotho and eSwatini. Support for establishing the M&E system in South Africa is envisaged to lead to increased efficiencies in public expenditure on support programs. Increased support for policy and regulatory reforms for MSME and entrepreneurship ecosystems as well as diagnostics on leveraging private digital platforms for job creation are ongoing.