VENTURES AFRICA – Ricardo Dames is one of the successful black executives in the small business arena. With invaluable pragmatic experience in the entrepreneurship market, we chat to Ricardo about his time in the economic and business development market and specifically his effort and contribution towards igniting entrepreneurship among the youth in South Africa. His experience has built up a phenomenal track-record in the enterprise start-up youth market.
Ricardo, thank you for chatting to us!
VA: You playing the entrepreneurial game yourself now, but tell us more about where you career started in economic development?
RD: I come from a family of teachers and as fate would have it, I too opted to follow this path. I completed my Bachelor of Science and did a one year post graduate diploma in teaching and gave it my best shot. I was appointed as an educator at the very school I matriculated from but found that there had been significant changes in the educational landscape in the five years after I had left. I immediately knew that this was not my calling and after my temporary contract came to an end I did some serious introspection. I was fortunate to land a junior position as a facilitator at a business support centre in Port Elizabeth i.e. COMSEC in 1998 and little did I know that this was bound to change my career path forever. It was at COMSEC where I found that my true purpose was working with people and lifting them to higher heights both in terms of their self – esteem and their socio – economic standing in their community.
VA: Would you agree that a considerable amount of your track record lies well within the business incubation arena?
RD: Yes, that would be accurate. COMSEC was where I started my career in the business development service sector and as a generic small business incubator I forged a practical understanding of the incubation process and this sparked an interest for me to pursue further research in what makes incubators work and crafting a model to develop an enabling environment for SME incubation. I have been involved in a few research projects relating to either the establishment of or sustainability planning for incubators in South Africa and am currently involved in a national research project gauging the current practices in South African incubators and looking at designing a benchmarking process for incubator performance.
VA: You fairly well travelled. How do you think the youth in the SADC region fair against each other?
RD: This is an interesting question, while I have travelled extensively I must admit that I have only been exposed to youth affairs in Zimbabwe, Zambia and to a lesser extent Lesotho. I would rather comment on my observations in these countries as compared to South Africa. I had a stint in working for a national youth development agency and had first - hand experience in engaging with youth at all levels. I am concerned that youth in South Africa have unrealistic expectations. Youth unemployment in South Africa has increasingly come under the spotlight as an urgent social, economic challenge and there have been some arguments that it is a ‘ticking political time bomb’. This is however not unique to South Africa, with countries such as Zimbabwe, Zambia and Lesotho all experiencing a similar social implosion as mainly a consequence of youth unemployment.
What is key is how we respond to this challenge as a country in developing strategic youth development programmes to speak to the real needs of our youth. I observed much higher levels of entrepreneurial activity in Lesotho, Zambia and Zimbabwe while our local youth still have a pipe dream of landing that ideal job. A few years back our then President Thabo Mbeki had a catchy slogan which said, “Vukuzenzele”, loosely translated that means that its time for youth to get up and do it for themselves, this still rings true today.
VA: Let’s take a step back. What “Fire-Rings” should potential or aspiring youth entrepreneurs look out for?
RD: Being an entrepreneur myself I have “walked the talk”. Our youth need to understand that our current labour market just cannot absorb the number of graduates and matriculants emerging each year. They need to don their entrepreneurial hats and orientate themselves towards being job creators as opposed to job seekers from an early age. If I could list a few “fire-rings” they should look out for it would be:
- Following the crowd – they should seek to be innovative and read or research as much as possible to enlarge their world view.
- Making a quick buck – our youth swim in a sea of get rich schemes and the façade of overnight success. I suggest strongly that they decide upfront to put in some hard work and realise that it will take time for them to reach success in business
- Crossing over – I believe that we need to raise an army of strong young entrepreneurs who are unashamed to walk the barrow way when it comes to business ethics
- Not planning enough – young entrepreneurs need to understand the importance of planning. Business planning is key to making their business venture work. They should be as realistic as possible and remember that they are at the centre of the plan, as much as they are planning to work on their business they should never forget to work on themselves as well through self – development.
VA: Let’s make it more interesting. How has this changed with the current economic climate?
RD: On the skills development side, industry needs to dictate to ensure that skills development programmes are aligned to provide relevantly skilled youth. The era of the briefcase and laptop has passed and we now need to look seriously at developing more technically skilled youth. On the entrepreneurship development side, the same applies. We have an oversubscription of novel SMMEs and need more innovation driven SMMEs. This may imply more deliberate interventions to stimulate new and fresh entrepreneurial ideas and resulting in more industry aligned business ventures.
VA: Does business incubation at all assist with the “Fire-Rings”?
RD: Absolutely not, I believe that we have hardly scratched the surface in respect of business incubation in Southern Africa, and while it is often seen as the panacea for SMME development, in reality business incubation is only as good as the overarching strategy that drives it. This is where thought leadership work needs to be invested. We need to focus on designing sound SMME development strategies that seek to develop SMMEs for the “real world”
VA: Does the “pool” of start-ups match the availability of sector specific incubators?
RD: With the evolution of business incubators, specialisation has become more prominent. In South Africa the Seda Technology Programme have been proactive and responsive in ensuring that more sector specific incubators have been developed to create “spin-off ventures” able to feed industry needs. It has also been interesting to observe a triple helix element in business incubation in South African incubators where a more formalised relationship between government, industry and academia has led to the establishment of many sector – specific incubation programmes.
VA: So we bring incubators into the equation. How does this balance the risk in terms of access to finance or the need? Feel free to one of your experiences.
RD: Incubators provide a safe environment for start – up enterprises and in a recent national survey of business incubators it was interesting to see that few, if any of the mainstream business incubators provide in-house finance to their incubatees. This function is mostly provided as an external service by niche funders within the SMME environment. In my view, an SMME in an incubation environment is surrounded by a wide range of non – financial support which assists them to the point where they become finance ready. The non- financial and financial support should be implemented in an orchestrated fashion where SMMEs are also supported with the finance application and post loan business advice and mentoring during the incubation process. As a funder I would be more at ease knowing that my SMME client is being supported in this fashion thus reducing their risk of reneging on finance agreements. This however hasn’t manifested formallly in the incubation sector.
VA: On a scale of 1 – 10, how accessible is development finance for a really good, innovative idea/concept channelled through an business incubator?
RD: As per the previous statement, this integration of financial and non – financial services is still evolving thus it may be premature to comment. I’d risk a score of 7 but need to add that where the business case has been well researched and professionally documented it
enhances the potential for funding thereof. Invariably the poor approval rate for business finance submissions can be attributed to an asymmetry in respect of how the business case is presented versus the funding criteria of the financial institutions. That opens a whole new discussion topic on the quality of business support services offered that I would rather not enter. It is thus critical for business incubators to know the various funding solutions that exists and to understand their processes and criteria. Alternatively they should
use a credible and competent team of external business advisers who can help incubator clients navigate the various funding institutions and assist them in finding the right financing solution.
VA: Finally, you’re currently punishing yourself with a Doctoral study (DBA) focused on business incubation. Anything you think may be interesting in your ‘basket’ of finding so far?
RD: Incubator managers are busy people! I thus value the time some of them have spent in assisting me with feedback. A number of interesting findings have emerged and have confirmed that the incubation industry is maturing and that we are catching up with our
counterparts in leading developing countries like Brazil and India. The funding model for incubators seem to be moving away from sheer government funding to a more hybrid model thus improving financial sustainability prospects. The scope and depth of business development support is moving from traditional BDS to more value adding services including networking and the interventions are now also extending beyond the formal incubation tenure. Lastly it’s also interesting to note that business incubation is taking on a more virtual guise, this ensures that the business support reaches a larger geographic footprint and yields more impact.
Ricardo, thank you for your time and best wishes with your research study!