Establishment of an Enterprise Support Hub in Hout...

Establishment of an Enterprise

Support Hub in Hout Bay

Hout Bay Enterprise Hub Feasibility Study: July 2016

14 July 2016

Hout Bay Enterprise Hub Feasibility Study

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This Final Report Draft was prepared by:

Enterpriseroom Pty Ltd

151 Oxford Road (cnr. Ashford Road),

Parkwood,

2193

Tel: +27 11 268 0286


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Contents

Abbreviations ................................................................................................................................................. 3

1. Introduction............................................................................................................................................. 4 1.1. The Hout Bay Partnership .................................................................................................................... 4

1.2. City of Cape Town Integrated Development Plan 2012 - 2017 .................................................. 5

1.3. City of Cape Town Draft Tourism Development Framework 2013 to 2017 ............................... 6

1.4. Constitutional Mandate ...................................................................................................................... 6

1.5. The Constitution of the Western Cape 1998 ................................................................................... 7

2. Executive Summary ............................................................................................................................... 7

3. Overview of the Geographical Study Area ........................................................................................ 9

4. Study Approach and Methodology ................................................................................................... 10 4.1. Primary Data Collection ................................................................................................................... 11

4.2. Secondary Data Collection ............................................................................................................. 11

4.3. Data Collection Challenges and Limitations ................................................................................ 11

4.4. Hub Feasibility Decision Criteria ...................................................................................................... 12

5. Context and Background ................................................................................................................... 12 5.1. Hout Bay Demographic Overview ................................................................................................. 12

5.2. Hout Bay Economic Overview......................................................................................................... 13

5.1. The Hout Bay Economic Outlook .................................................................................................... 17

6. Challenges and Opportunities Analysis ............................................................................................ 17 6.1. Findings from Secondary Data Analysis: SME Challenges ......................................................... 17

6.2. Primary Data Collection Findings: Stakeholder Consultations .................................................. 20

6.3. Scoping Opportunities and Challenges ........................................................................................ 23

6.4. The Case for an Enterprise Support Hub in Hout Bay .................................................................. 25

7. Analysis of Potential Hub Models ....................................................................................................... 27 7.1. SME Support Hub Concept within the South African Policy Context ...................................... 28

7.2. Unpacking the Different Enterprise Support Hub Models ........................................................... 30

8. Recommended Hout Bay Enterprise Hub Model ............................................................................. 38 8.1. Tourism enterprise development..................................................................................................... 38

8.2. Walk-in centre ..................................................................................................................................... 38

8.3. Job centre ........................................................................................................................................... 39

8.4. Typical deliverables ........................................................................................................................... 39

8.5. Legal status.......................................................................................................................................... 39

8.6. Operating model ............................................................................................................................... 40

8.7. Key activities and functions of the hub ......................................................................................... 41

8.8. Governance structure ....................................................................................................................... 42

8.9. Hub Model Evaluation Criteria ........................................................................................................ 43

9. Implementation plan ........................................................................................................................... 45

10. Establishment cost and Operational budget ................................................................................ 46

11. Assessment and Selection of Potential Premises ......................................................................... 47 11.1. Hout Bay Real Estate Overview ....................................................................................................... 47

11.2. Criteria for Site Selection ................................................................................................................... 47

11.3. Assessment of Potential Hub Sites Against Requirement Criteria ............................................. 47

11.4. Selection Process ............................................................................................................................... 48

11.5. Prospective Funding Sources and Conditions .............................................................................. 49

References .................................................................................................................................................... 51


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Abbreviations

B-BBEE Broad-based Black Economic Empowerment

CoCT City of Cape Town

DEDAT Department of Economic Development and Tourism

DHET Department of Higher Education and Training

DSBD Department of Small Business Development

GDP Gross Domestic Product

ILO International Labour Organisation

IY ImizamoYethu

LED Local Economic Development

NEF National Employment Fund

NGO Non-Governmental Organisation

SBDC Small Business Development Corporation

SEDA Small Enterprise Development Agency

SEFA Small Enterprise Funding Agency

SME Small and Medium Enterprise

PSP Provincial Strategic Plan

UK United Kingdom

TDF Tourism Development Framework

UNIDO United Nations Industrial Development Organisation

WCTD Western Cape Tourism Development Framework


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1. Introduction

The leadership of the Western Cape government recognizes the value of continued diversification

and growth of the provincial economy, by developing local economic nodes within areas like

popular tourist destination, Hout Bay.

Efforts to stimulate the economy are formalised in strategies and plans after thorough

engagement and planning with key stakeholders and these plans are published for public

information in the following documents, namely;

a) The Western Cape Provincial Strategic Plan (PSP)

b) Western Cape Department for Economic Development and Tourism Strategic Overview

Cape Town, the commercial gateway and political centre of the Province, is also the tourism

capital of South Africa. Hout Bay, with its harbour as the ninth most visited tourist attraction in Cape

Town, forms part of the greater Cape Town tourist offering.

In 2011, the national population census reported the Western Cape population at 5.82 million

people. Hout Bay with its less than one hundred thousand residents, hosts a significant percentage

of local and international tourists visiting greater Cape Town. As a top tourist attraction, the

Western Cape’s offering to its visitors include exquisite beaches, mountains, heritage attractions,

nature reserves, top hotels, award winning wines and spirits and world-class infrastructure.

The leadership of the Province realised in 2004 (City of Cape Town: Tourism Development

Framework – Tourism Spatial Framework, 2004) that despite the growth in tourism, the approach to

marketing the tourism sector in line with development planning remained ad hoc, resulting in the

failure to fully exploit resources and duplicating efforts and that this lack of co-ordination, curtailed

growth. The mentioned strategies followed as a response to this lack of co-ordination and the

Western Cape Toursim’s sector has since shown significant development and growth.

The 2015/16 Reviewed and amended Five-Year integrated Development Plan of the City of Cape

Town 2012 to 2017 provides the policy foundation that provides the mandate and direction for

tourism development in Cape Town. To this extent, tourism is a key economic development growth

node.

Cape Town Tourism Vision

To position Cape Town as a world-class competitor and South Africa’s premier tourism and events

destination and to maximise the economic spin-offs.

1.1. The Hout Bay Partnership

The HBP, a not-for-profit organization, was established in 2014 with the purpose of promoting

integrated social and economic development. It became a stand-alone organisation on 1 July

2016. One of its core objectives is to support and transform the existing social and economic

activities of the communities of Hout Bay, in particular, Imizamo Yethu, Hangberg and the Valley.


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Vision

The vision of the HBP is to create a model for integrated and inclusive social and economic

development in the context of cultural diversity and economic inequality existing in Hout Bay,

which is a microcosm of the challenges facing broader Cape Town and South Africa as a whole.

Since its inception, the HBP has undertaken or commissioned studies to build a business case to

rejuvenate the Hout Bay economy and as a result address its social ills. More practical efforts

include the awarding of R100 000 in micro-grants to organisations that implement programmes

that improve lives and social cohesion within Hout Bay.

1.2. City of Cape Town Integrated Development Plan 2012-2017

Hout Bay falls within the municipal boundaries of the City of Cape Town. In this section, we discuss

the documented tourism plans of the City of Cape Town, within the broader economic

development context. The IDP confirms that tourism is a key driver of the Cape Town economy.

The City of Cape Town indicate in its plan the following potential domestic tourism growth areas:

Business tourism

Cultural and heritage tourism

Education-based tourism

The City of Cape Town had been building its tourism reputation over more than a decade and

has, as a result, achieved recognition and impressive accolades:

1. Top City in Africa and the Middle East - Condé Naste Readers’ Travel Awards 2010

2. Africa’s Leading Destination, 2010 World Travel Awards

3. Second Best Beach City, Lonely Planet’s Ten Best Beach Cities 2011

4. Second-best city in the world and best city in Africa - by readers of US-based travel

resource Condé Nast Traveller, 2012

5. Cape Town is the Best City in the World - Telegraph Travel Awards, 2013

6. The news that Cape Town has been ranked as the top holiday destination for the year by

British newspaper The Guardian and the US's The New York Times, 2014

7. Conde Nast Traveler names Cape Town as one of the top five eco-friendliest cities in the

world in 2015

8. The Telegraph Travel Awards chose Cape Town as the Best City in the World for the fourth

year running, 2016

The implementation of sector plans through the IDP has been steadily growing the local economy

and this has lead to an increase in the number of foreign tourist arrivals to 8,339,354 million in 2011

from 8,074,000 million in 20101.

Reflection 1: The growing number of tourists visiting Cape Town also impacts the demand for

accommodation and tourist services in Hout Bay. Local lodges and guest houses attest to an

under-supply of accommodation and other tourist related activities (guided tours, marine

excursions etc.). Thus, the improvement and greater variety of accommodation and tourism

1City of Cape Town Draft Tourism Development Framework 2013 to 2017


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services and activities in the area of Hout Bay points to the need for a sector focus in local

economic stimulation.

1.3. City of Cape Town Draft Tourism Development Framework 2013 to 2017

The City of Cape Town developed its Tourism Development Framework (TDF) in which it states that

over the years, Cape Town’s destination mix has diversified to include various events, fairs, festivals,

exhibitions, cultural activities, music performances and concerts, drama and dance,eco-tourism

events and so forth.

Wine tourism within Cape Town (i.e. the Constantia area and along the peninsula) and within

close proximity (particularly Stellenbosch, Paarl and Franschhoek) has also emerged as a strong

niche market2. Tourism in the Western Cape is concentrated in the Cape Town metropolis, the

winelands and further up the east coast, along the Garden Route. Hout Bay, due to its close

proximity to Cape Town and its unique attractions can benefit from the increased tourist flow to

the region, but it can also contribute to the diversity of offerings that visitors to the City of Cape

Town can enjoy. There is already evidence of the willingness and interest of tourists to visit Hout Bay

with the numbers lining up for “fish and chips” in the Hout Bay harbour and the thousands of visitors

that frequent the popular Hout Bay market every weekend.

According to the TDF, the occupancy and accommodation demand, the strategy indicates that

the biggest demand is in the self-catering, 2 and 3-star, and backpacker markets. Moreover, from

the strategy, it can be deduced that in developing more accommodation facilities within Hout

Bay, to meet the growing demand, it is suggested that the accommodation market is expanded

to cater for different categories of visitors.3

Reflection 2: The strategy defines three destination brand images for South Africa, namely business,

leisure and events. Hout Bay has the benefit that it is very close to the city centre and can

accommodate guests that need to e.g. attend business meetings in town. Hout Bay, however also

has the potential to offer far more than accommodation and has already proven its popularity as

a social platform, as the Hout Bay market has now established itself. As part of offering diversified

tourism activities in Cape Town, Hout Bay can create more seasonal and/or annual events that will

draw tourists into the area. Music and art events will gel with the environment and already growing

weekend crowd.

1.4. Constitutional Mandate

Constitution of the Republic of South Africa 1996

Schedule 4 and 5 of the Constitution of South Africa state that concurrent national and provincial

legislative competences, as relevant for Economic Development, are:

Industrial Promotion,

Tourism and

Trade.

2City of Cape Town Draft Tourism Development Framework 2013 to 2017 3City of Cape Town Draft Tourism Development Framework 2013 to 2017


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Schedule 4A of the Constitution lists Tourism as a functional area of concurrent national and

provincial competence. Section 4B of the Constitution identifies local tourism as a local

government functional area to the extent set out in sections 155(6) (a) and 7 of the Constitution.

1.5. The Constitution of the Western Cape 1998

The Western Cape Constitution states that the Western Cape government must adopt and

implement policies to actively promote and maintain the welfare of the people of the Western

Cape, including (inter alia) the creation of job opportunities and the promotion of a market-

oriented economy (Chapter 10:81).

Reflection 3: The development plans within the communities of Hout Bay must be in sync with

other government development plans. For the purpose of aligning to the existing provincial

strategies and the constitution of South Africa, this report will dovetail its recommendations to the

strategies and plans of the national and provincial and municipal economic development

departments, which separately and jointly seek to support and promote the development of the

South African economy through the development of local enterprises.

2. Executive Summary

The Enterpriseroom was contracted by Hout Bay Partnership to conduct a feasibility study with the

objective to investigate the viability of establishing an enterprise development hub in the Hout Bay

area that would benefit local Small, Medium and Micro Enterprises (SMMEs).

Highlights of the study that will be discussed in this report include the conclusion that there is an

absence of local black businesses active in the Tourism sector (especially providing

accommodation and hospitality services) and that this sector is growing. Tourism operators

indicate that their establishments are over-subscribed in peak seasons, and that there is also a

steady flow of clients throughout the year, that include both tourists and business travelers. There is

an opinion amongst Hout Bay accommodation establishments that there is an untapped market

of the so-called “Black Diamonds” middle class travelers, who have not yet identified Hout Bay as

a travel destination. This should be viewed in the context of Hout Bay being the ninth most visited

tourist destination in South Africa. 4

The weekly Hout Bay market, which operates every weekend from Friday night through to Sunday,

has developed beyond all expectations, having between 5 000 and 11 000 visitors per weekend of

which on average 46% are foreign tourists. The market creates excellent off-take for both food

and craft products and may be an excellent point of introducing excursions and niche outings to

the many visitors. All of these factors substantiate the opportunities that exist in the tourism sector.5

There is also an overall lack of small business support services, including business advice, access to

market and business information, mentorship and serviced shared workspace. For example, the

closest SEDA satellite offices are in Wynberg, Cape Town central business district and Khayelithsha

4Conversations with owners of Poseidon and the Beach House

5Interview with Anthony Stroebel, owner and founder of Hout Bay market


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and Mitchells Plain. These offices offer limited and generic support services and are not used by

the Hout Bay residents who were interviewed, also due to the cost to travel there.

The qualitative and quantitative data conclusively support the establishment of a hub or

economic development centre that would, as its core business, provide focused programmes to

develop and support enterprises in the tourism sector. These enterprises will typically provide

products and/or services in the following tourism sub-sectors:

Hospitality, including accommodation and food services

Facilitated tourism, including excursions, events, adventure, cultural, nature, historical and

niche market tours like living heritage

Arts and crafts

The economic development hub is recommended to follow basic rapid incubation model. In

addition, we recommend adding over time some job-centre functions to serve job seekers in the

tourism sector and to offer from the onset a limited resource allocation to serve walk-in

entrepreneurs from various other sectors. For the centre to be effective, it will have to limit

resources dedicated to general business advice, as the successes from walk-in businesses will be

very limited. We recommend that the hub becomes a tourism development centre of excellence;

with the ability to provide tourism business with market intelligence and that it develops the

networks to connect Hout Bay tourism businesses to relevant organisations, programmes and

specialist mentors.

It should also be noted that a major function of the proposed hub in Hout Bay will be to provide

market access to small business i.e. to create the network linkages to the greater potential markets

that are outside Cape Town. Basic business skills training will be conducted as well as assistance

given to the small enterprises to meet the regulatory compliance and certification requirements in

the sector in which they wish to operate.

The hub will also link local small businesses owners to SETA and other available free government

training.

Access to, and the ability to use, technology have become the key barrier to entry to markets for

entrepreneurs and small business owners. An economic development centre will have to skill and

support entrepreneurs to access resources and markets using appropriate technology platforms.

Typical high level impact indicators of the hub are anticipated to be the following (over a period

of 3 years):

1. 30local businesses (of which 80% South African and black-owned), with revenues each in

excess of R500 000 in the tourism sector.

2. 450 businesses / entrepreneurs trained in basic businesses skills.

3. 100 placements of job-seekers in the tourism sector.

This study, combined with the data collected by Towards Uhuru, provides the required substance

to furnish business plans to appropriate donors for consideration.

The hub should be positioned centrally, in an area that is easily accessible to entrepreneurs from

Hangberg, Imizamo Yethu (IY) as well as the Valley and should be perceived as politically neutral.

The central harbor area, close to the Hout Bay harbour seems to be an ideal location. Marketing


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activities will be targeted and will include information sessions in all communities. Existing small

black tourism businesses identified during the data-gathering phase, will be included in the

marketing campaign.

As a closing note, we need to draw the attention of Hout Bay Partnership to a major concern

observed, from the bulk of interviews and research, there is significant despondency and lack of

absorptive capacity in Hangberg, where IY seems to be more entrepreneurial and positive as a

community. An economic development centre that is designed to serve the greater Hout Bay, will

have to address the excessive distrust and lack of motivation to access opportunities for

development through very targeted interventions.

Such programmes, addressing self-efficacy and establishing an internal locus of control, could pre-

cede the actual establishment of the economic development hub. The will to utilize the hub and

the tenacity of entrepreneurs to let a business succeed, will be important for the hub to deliver

successful entrepreneurs. We recommend that programmes are run in both Hangberg and IY to

bring about a greater entrepreneurial spirit and motivation to start and succeed with a business.

3. Overview of the Geographical Study Area

Hout Bay is located just 22 kilometres from the centre of the city of Cape Town. It is nestled

between the scenic Chapmans Peak and Mount Sentinel.

There are three main points of entry and exit to Hout Bay. The main inbound point for tourism and

business related traffic is the Atlantic seaboard. Along this route lies the most scenic route into Hout

Bay.

Most of the economic activity of Hout Bay is concentrated between the industrial area just below

Hangberg at the Hout Bay harbour and it is connected by Harbour Road to the Westerford Park

business district.

Lower down Victoria road is an active business hive, particularly accommodating small businesses.

Most suburbs are located away from the somewhat congested main roads that occasionally sees

road closures when the Pick n Pay Cape Argus Cycling event passes through Hout Bay.

Hout Bay falls under the Sub council 16 of the Cape Town Metropolitan Municipality. For many

years Hout Bay has been synonymous as both an historical fishing village and also a popular tourist

destination.

It is an active fishing village with two operating fish factories as well as a bustling tourist town,

which caters for day visitors (many as part of the Red Bus route) and multi-day visitors who stay in

the various hotels, guest houses and self-catering accommodation. The busiest season is the

summer months from October to March.

Activities include sightseeing, snorkelling with cape fur seals, fresh daily catches of various fish, visits

to the World of Birds and tourists can also escape around to Duiker Island to view the local colony

of cape seals. The adventurous can also do a tandem paramotoring tour, viewing the Bay from a

different angle. 6On weekends, visitors stream to Hout Bay in their thousands to visit the popular

6Source: Hout Bay Tourism website www.houtbay.org


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Hout Bay market that offers arts and crafts, food, live music and an interesting social engagement

platform.

Today Hout Bay is a cosmopolitan area characterised by its resident mix being either very affluent

or extremely poor. The high population growth rate aggravates the poverty level in the already

struggling communities of Hangberg and IY.

Source: City of Cape Town – Census 2011, Suburb: Hout Bay

During the peak holiday season of December, traffic counts escalate drastically at an average of

above 6000 vehicles per day (Victoria Road alone). Traffic congestion frustrates local businesses,

like the fish factories, due to their reliance on road-transport to get their product out and supplies

in.

4. Study Approach and Methodology

This feasibility assessment considered data gathered from both primary and secondary data

sources. Secondary data sources consist of publicly available reports from past studies. Studies on

Hout Bay have been mainly conducted by social researchers or academics with specific thematic

interests. Two masters study reports that were based on businesses activities in Imizamo Yethu

provided foundational understanding on the key issues confronting the area.

One PhD study report which focused on township tourism businesses in Imizamo Yethu and

Khayelitsha provided some deep insights into the challenges and opportunities in this business

segment. The secondary data analysis also drew heavily from the Harbours Value Chain Study that

was done conducted by Kaiser Associates on behalf of the Western Cape Government. Primary


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data collection and consultations built on insights gathered from the secondary data analysis

process.

These studies are referenced at the back of the document in the document source list.

4.1. Primary Data Collection

Data was collected directly from respondents using the following methods:

Direct interviews with stakeholders at a macro level i.e. government and government

funded organisations.

Direct interviews with unemployed small-scale fishers and big business in the fishing industry

as well as tourism business operators.

Interactions with micro and informal businesses owners in the communities of Hangberg

and IY respectively.

Interviews with individual small business owners from all three Hout Bay communities.

Focus Group sessions with all levels of small business owners – across sectors and industries

represented in Hout Bay.

The Business Opportunities and Needs Analysis study conducted by Towards Uhuru.

All interviews notes and detail of respondents are listed in the Appendices.

4.2. Secondary Data Collection

Various publications were reviewed to understand the economic development context that will

influence a potential economic development hub:

Review of related economic development strategies; Operation Phakisa strategy;

SEDA Rapid Incubation Programme documentation

Economic data from Statistics South Africa – 2011 Census

Community Data from Community Cohesion forum for Imizamo Yethu and Hangberg

communities

Related studies on Hout Bay; details listed in appendices

B-BBEE strategy documents from relevant local large businesses

City of Cape Town’s local economic development plan

City of Cape Town’s Tourism Development Framework

Report on the Economic and Socio-Economic State and Growth Prospects of the 12

Proclaimed Fishing Harbours in the Western Cape – Premiers Office

4.3. Data Collection Challenges and Limitations

Hout Bay is an under-researched7 area and as a result it was difficult for the study team to get hold

of good quality secondary data to guide the primary data collection and stakeholder

consultations. It was also challenging to formulate a quantitative understanding of the area’s

economic inflows and outflows. The team pulled together pieces of information from existing

studies and overlaid them with findings from primary consultations to formulate a complete picture

of the local economy and its drivers.

7There is a shortage of information on local economic output by sector. Most information is aggregated and reported at

metropolitan level and that obscures the picture at Hout Bay local level.


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4.4. Hub Feasibility Decision Criteria

In making the financial recommendation on the feasibility of the Hout Bay Hub concept, the team

applied the following criteria:

The Hub would need broad support from local stakeholders and its mandate should be

understood and condoned by business and community leaders

There should be appropriate (neutral territory) rental space available and it should be

affordable

There should be long-term funding or funding commitments for a period of at three to five

years available.

There should be an adequate demand base for hub services

The local community must support and “own” the hub

The Hub must have the potential to attain financial and operational sustainability

There must be willingness of relevant partners (NGOs) in Hout Bay to co-operate to

establish an economic development hub for the benefit of the broader entrepreneurial

community

5. Context and Background

This section provides background on Hout Bay’s socio-political structure and its economy. The

purpose of this analysis is to create some context of the social standing of the Hout Bay

communities as it pertains to the establishment of an economic development hub.

5.1. Hout Bay Demographic Overview

The population of Hout Bay has been growing rapidly and it is likely that any published data is

already outdated. The 2011 census report puts the population at just over 17 300 residents. Recent

estimates from a local NGO, Community Cohesion, estimates the combined population of IY and

Hangberg at 87 300 residents and other sources quotes 100 000. There is consensus however, that

the growing population in the poor neighbourhoods of Hout Bay is exerting social and economic

pressure on the area and economic opportunities and social services are inadequate.

Over 67% of the total Hout Bay population consists of 15 to 64-year-olds and this number stands at

72% for the Black African sub-category. These figures bear testimony to the need for Hout Bay to

create more economic opportunities, as this population group represents the economically active

that needs access to employment and entrepreneurial opportunities. It is also interesting to note

that, as illustrated in Figure 1, 68% of the Hout Bay population has at least a Grade 12 education.

This points to the existence of a fairly educated population that should be capable of actively

participating in economic activities.

Figure 1: Educational Attainments for the Hout Bay Population (aged 20+)


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Township populations in Hout Bay mirror the national situation in the sense that they are fully

reflective of intra and cross immigration. Despite the competition for resources and opportunities,

the diverse groups co-exist in relative peace and economic development efforts for Hout Bay

need to consider this diversity and enhance integration.

5.2. Hout Bay Economic Overview

For decades, the Hout Bay economy has been based on the fishing industry, which includes

harvesting and processing activities. The economic dynamics of fishing has since shifted from a

situation where many small scale fishermen were actively involved to the current consolidated

state, where the industry is dominated by Pescaluna and Oceana. The tourism industry has

traditionally existed as a secondary sector to the dominant fishing industry in Hout Bay. However,

current trends signal a need to realign strategies and to attain a balance between the shrinking

fishing industry and the more promising tourism industry. This may entail the re-skilling of the fishing

community to be ready for opportunities in the tourism sector.

Hout Bay’s economy is supported by restaurants, bars, and many niche tourism activities.

Additional business activities found here are listed in Table 1. The list is not a comprehensive outline

of all business activities conducted in the area, but provides an idea of some of the economic

activities in the region.

Table 1: Hout Bay Business Snap Shot

Hout Bay Business Profiling Type

Electrical, gas and water Electrical installations

Cable and satellite services

Solar Energy businesses

Construction Plumbing services

Security services

Food and beverages, primary, mainly for

household consumption

Small retailers

Coffee shops

Catering activities

Business services Internet café services

Art Businesses/ art gallery

Curtain & blinds makers

2%

6%3%

19%

24%

44%

2%

Educational attainments

No schooling

Some primary

Completed Primary

some secondary

Grade 12

Higher

Other


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Ceramics businesses

Fitness clubs

Dry clean and shoe repairs

Transport, storage and communication services Furniture removal and delivery

Taxi drivers

Tourism services Boat trips

Sea fishing

Museums

Imizamo Yethu township tours

Hout Bay Harbour

Source: Hout Bay.org.za

Imizamo Yethu(IY) is an informal settlement in Hout Bay, housing approximately 57 500 people

people8. There is little infrastructure for sustainable living. Many residents live in abject poverty with

little or no hope for a better future for themselves or their children.

The Hangberg area has an estimated population of 28 800 people.9 Families living in this area are

exceptionally poor, live in over-crowded homes, and are at the mercy of gangs and illegal drug

trafficking. According to the 2011 National Planning Commission’s diagnostic overview, high levels

of poverty and inequality have a historical basis in apartheid and are driven principally by the fact

that too few people work and that the quality of education for many black and coloured people

remains poor.

Bright Start, a local NPO, has as its goal to provide a brighter future to the children from these

communities, through access to better and holistic educational opportunities. Their intention is that

these children leave school, equipped with the skills and resources to improve their lives and

ultimately to contribute towards the transformation of South Africa.

The economy of Hout Bay is currently going through a period of transformation. The main factors

behind this transformation are explained below:

Immigration: Immigration from within and outside South Africa into the informal settlement in IY has

accelerated population growth without a commensurate increase in public service delivery and

economic opportunities. The increased competition for limited employment opportunities and

municipal services has led to heightened tensions between Hangberg and IY communities.

Establishment of the Hout Bay Market: Over the last two years, the Hout Bay Market has grown to

“an experience” and a “community based social platform” where locals and visitors meet and

connect. The Market has created 120 sustainable jobs for Hangberg residents. Between 5000 and

11000 visitors stream to Hout Bay over weekends and the numbers continue to grow. The Market

offers South African produce through 100 stalls that pay between R350 and R400 per day for the

managed and serviced retail space. Products are carefully selected for quality and product mixes

managed to prevent unhealthy competition. The owner of the market is also adamant that

traders should have a positive disposition and pleasant, client oriented personality to be selected

8Community Cohesion 2013 9Community Cohesion 2013


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to run a stall. Stall owners are allowed to store stock and equipment on site when the market is not

open during the week.

It is important and interesting to note that, at the start of the market, 40 women were identified,

trained and assisted to set up stalls at the market. Sadly, all but one of these small business owners

“dropped out” for various reasons, including attendance and un-sustained quality of stock and

service. There are lessons to be observed in this case study as a R200 000 investment in building

local entrepreneurial capacity rendered limited results.10

It will be important to unpack this event fully as a case study to establish a full comprehension of

what the reasons for the failure of these businesses were. One of the interviewees, Mr Anthony

Stroebel, owner of the Hout Bay market, was of the opinion that the entrepreneurs lacked

motivation, self-efficacy and the tenacity to see the process through. and that the lack of an

entrepreneurial mindset could have altered the outcome.

5.2.1. SocialDynamics

Social tension exists between the Imizamo Yethu and Hangberg communities. Discussions with

community members suggest that these tensions result from perceived differential treatment in

terms of service delivery. The fight for limited economic resources and opportunities rests at the

centre of the social tensions. Official statistics bear witness to the growing disparities between

these two communities as Hangberg has a much higher unemployment rate and lower labour

absorption rate compared to IY. This is likely due to the contraction of the fishing industry that

impacted Hangberg residents more due to their historical connection to fishing.

It is important to note that segregation tends to exist within each community. For example, in IY

residents are recognised on the basis of their migratory status: original residents that ‘founded’ IY;

South Africans that came after the township was founded; and foreign migrants. These

differentiations have implications on how economic development initiatives can target

beneficiaries from these communities.

In the location choice, marketing and design of interventions it will be important to ensure that

both Hangberg and IY residents feel accommodated.

5.2.2. Entrepreneurship and Small Business Context in Hout Bay

Limited data exists on the status of entrepreneurship and small business activity in Hout Bay. Review

of past studies reveal that small business activity in the area are built around fishing and tourism.

Past studies and observations made by the research team, point to a higher level of

entrepreneurship and enterprise formation in the informal settlement of IY. In a study on the

township economy, Charman and Petersen noted that there were 39 businesses per 1 000 in IY11.

The Hout Bay market has contributed over the last two years to opportunities for entrepreneurs in

the handmade art, crafts and food sectors. The market is also drawing weekend visitors to the

hotels and guest houses.

10Interview with Anthony Stroebel, founder and owner of the Hout Bay Market 11The layout of the township economy: the surprising spatial distribution of informal township enterprises, Andrew Charman,

Leif Petersen, 2 March 2015

http://www.econ3x3.org/users/andrew-charman

http://www.econ3x3.org/users/leif-petersen


16

5.2.3. Tourism Sector Businesses

The available data shows that tourism related businesses constitute the majority of small business

ventures in the Hout Bay area. A study by Koens12 showed that the most common business areas

for small business operators are accommodation, catering, crafts, performing art, tour guiding,

tour operation and tour guided visitor attractions. The same study estimated that, in 2013, there

were 81 tourism businesses in IY alone. As illustrated in Figure 2, the majority of those businesses

were craft-based and largely informal.

Figure 2: Estimated Number of Tourism Businesses in IY

Source: KoKoens, 2013

In IY, three restaurants are active, two of which are combined with an accommodation business.

One catering business is run in combination with the local tour operator, which provides evening

township tours that include dinner. This data was collected in 2014 and is observed to have

increased since, though this is a recommended area for further research and there is also a need

to expand the research to Hangberg and the Valley. In both Hangberg and IY, the greatest

number of tourism entrepreneurs, own craft businesses. They sell alongside the road or near visitor

attractions, show their work in restaurants or produce items for decoration or for sale at larger

organisations.

5.2.4. Fishing Sector Businesses

Small business activities in the fishing industry consist of a combination of direct harvesting and

value chain support activities. In 2012, the Kaiser Habours study established that in 2011, there

were14 small-scale fishing businesses that were involved in fish harvesting.

Primary data collection interviews held with fishing companies showed that small fishing businesses

are not strongly linked to the value chains of the large fishing companies, as they often operate on

the basis of different quality standards and target different markets. An interview with one of the

large fishing companies revealed that some individuals were running small filleting businesses in the

harbor area and were occasionally engaged to fillet on behalf of the large companies.

12KoKoens (2014): Small businesses and township tourism around Cape Town, PhD Thesis

2

4

68

3

1

3

Accommodation

Catering

Craft worker

Performance artist

Tour Operator

Tour Guide

0 10 20 30 40 50 60 70 80

Estimated number of Tourism Business in IY (2013)


17

Participation of small business owners in the upstream support functions of boat maintenance and

repairs is very scant.

Reflection 4: The Fishing sector in Hout Bay is increasingly viewed as dwindling with the future lying

in tourism and related activities. The hub initiative could enable a transition from a fishing-based

economy to an increase in tourism-based economic activity. As transformation will not take place

overnight and as the economy re-orientates itself, the hub can direct some part of its efforts to

easing the transition.

5.1. The Hout Bay Economic Outlook

Of the economic activities identified in Hout Bay, growth is expected to come from tourism and

associated industries in crafts, creative industries and fine foods. The harbours study noted crafts as

the fastest growing sector with a year-to-year growth of 9%. The tourism sector was noted to grow

at 3.5% and fine foods at 2.3%. The growth of the creative industries was expected to stay positive

at twice the country’s GDP growth rate.

While Hout Bay’s unique geographical location and natural environment makes it a great tourism

attraction, to date this tourism potential is still under-developed, as “Hout Bay is not seen as a

“destination” but as a “stop off point” en route to Cape Point and other southern destinations.13

Repositioning Hout Bay as a destination in its own right calls for the development of a support

industry that is geared to provide the requisite products and services.

Reflection 5: The socio-economic background indicates that the demographic education profile

of Hout Bay has over 44% of people that have attained higher education. In terms of the active

economic sectors, fishing, retail and tourism sectors seem to be the dominant sectors. From the

three most dominant, the tourism sector seems to have the potential to be tapped into, but it will

require a transition strategy and a systematic intervention plan.

6. Challenges and Opportunities Analysis

This section reports on the challenges faced by entrepreneurs and SMEs in Hout Bay and provides

an analysis of the opportunities that exist for building a more vibrant local economy in which start-

ups and new enterprises can thrive.

6.1. Findings from Secondary Data Analysis: SME Challenges

6.1.1. Marketing Access

In both Hangberg and Imizamo Yethu small business owners have similar target markets and offer

similar products. The identification of these contextualised business orientations helps understand

13http://www.houtbayheritage.org.za/Red%20Tape%20hot%20line%20v2.pdf


18

the behaviour of small township tourism businesses, particularly with regards to their lack of market

access and limited cooperative relationships.14

6.1.2. Accounting and Financial Management Skills

In a study of 20 youth-owned businesses in Hangberg and IY, only two participants had acquired

bookkeeping skills, while two others had acquired skills through learning-by-doing and the

remaining thirteen (65%) stated that they managed their businesses and finances as they go.15

6.1.3. Lack of Digital Skills

In Ndlovu’s study, it was also established that the majority of entrepreneurs in the informal space

lack the requisite skills that they need to take advantage of available digital technologies to

optimise their businesses. This was echoed by a small business owner by Koens in ImizamoYethu

who, in response to the question on how she used internet to market her business, gave the

following response:

No, it’s because. It’s difficult. It’s because we. I’m going to talk about us because we don’t have

computer skills. So we don’t know how to do some things in computer. Like web site or sort of

things. So we don’t know how to market. We don’t know marketing; we don’t have marketing

skills.” (Undisclosed Respondent)

6.1.4. Work space challenges

Four of the twenty applicants in Ndlovu’s sample of 20 indicated that they were disadvantaged

by not having a designated business area and business premises from where they could run their

businesses. Due to lack of appropriate premises they had no option but to operate from home.

Some of the participants resorted to operating from open spaces and this was not helping their

businesses to move beyond a survivalist mode. The challenge of basic business operating premises

is closely linked to the housing problem in Hout Bay, as some of the entrepreneurs live in improvised

houses that are congested and unsuitable for business activity. It is also noteworthy that in both

Hangberg and IY there are no business areas that were allocated by the government or the city

council; a space where all who run businesses can operate from.

6.1.5. Access to Technology

The digital divide is still hindering most entrepreneurs from disadvantaged backgrounds. Out of the

20 businesses interviewed by Ndlovu, only three indicated that they use the internet and mobile

phones in conducting business. The rest of the respondents showed a preference for the

conventional way of doing business. The reason cited for not using modern technologies in their

businesses was the high cost needed to maintain such technology.

14KoKoens, (2014)

15Ndlovu, S(2014): An exploration of the challenges facing youth owned small enterprises in ImizamuYethu and Hangberg,

Hout Bay


19

To get my product out there, l had to send in lots of emails to various government departments to

get them to buy my product. At that point l had an internet modem so it was costly for me; it was

just too much. (Internet café owner)

6.1.6. Access to Finance and Work Assets

In the study on challenges faced by youth-owned businesses, all 20 participants stated that a lack

of financial resources was preventing their businesses from growing. This corroborates an

observation made by Koens (2014) that youth participation tended to be low in business

undertakings that require assets, such as tour operations and accommodation. The following

quote captures the constraining effect of lack of access to capital for small enterprise owners:

Finances are also a challenge because l have two household machines, a tumble drier and a

washing machine, so they are not strong, they break down a lot, time and time again. But if l had

industrial ones and the space, l would be able to run a proper laundromat, so the finance to buy

bigger equipment is a problem. (Laundromat owner interviewed by Ndlovu)

Meanwhile, the lack of access to capital should be interpreted within the context of other

challenges such as lack of information and the informal nature of their operations.

6.1.7. Access to information

Both primary and secondary data collected shows that small business owners in Hout Bay lack

information on the different sources of financial and non-financial support for their enterprises.

Figure 3: Awareness and Usage of SME Support Organisation Services by SMEs in Hout Bay

Source: Ndlovu, 2014

This lack of information and knowledge is in line with the observation that there is no designated

information collection points, where entrepreneurs can go and enquire about available forms of

enterprise development support.

6.1.8. Informality

There is a high level of informality amongst small businesses operating in Hout Bay and in the

townships in particular. In Koens study, it was noted that very few craft workers and performance

artists register their business. Craft workers were reported to be skeptic about the benefits of

registering their businesses.

Figure 4: Registration and Compliance (Tourism-based Businesses in IY)

0

5

10

15

20Have used

Have never heard of

Have heard of

Know


20

The challenge of informality was observed to limit businesses’ access to business opportunities that

require an enterprise to be formally registered and in good standing from a tax perspective. One

business owner interviewed was in the process of formally registering his business and getting a tax

clearance as well as seeking accreditation from the ICT SETA. In this particular case the

entrepreneur delayed the formalisation due to the perceived difficulty of executing that process.

Reflection 6: The noted challenges are highly interlinked. The lack of an SME support facility

institution in Hout Bay tends to compound the challenges.

6.2. Primary Data Collection Findings: Stakeholder Consultations

Stakeholder consultations covered a broad spectrum of role players including the following

specific groups:

Corporates

NGOs

Business support organisations

Government agencies

Potential funders

Small and medium enterprises

Training institutions

Individual entrepreneurs

Community leaders

The stakeholder consultations were conducted to achieve the following objectives:

Understand different vested interests in the development of the local economy.

Capture the needs and aspirations of specific and relevant interest groups in Hout Bay.

Gauge the potential for future financial and non-financial contributions to the enterprise

support hub.

Understand the expected benefits from the planned hub facility.

Establish the potential of other organisations to complement offerings of a local economic

development centre.

Gain the experience and knowledge to critique proposed options, based on a deeper

local knowledge and experience in engaging with the local population.

Validate the problems to be solved by the planned hub.

0% 20% 40% 60% 80% 100%

Accommodation

Catering

Craft worker

Performance artist

Tour guide

Registered

Unregistered


21

6.2.1. Local Community Stakeholders

Community stakeholders met, included respective community leaders for IY and Hangberg. These

engagements confirmed the tensions that exist between these two communities. Each

representative wanted to be assured that economic development interventions to be availed

through the hub would be readily accessible to their communities. Representatives of the two

communities, however, concurred on some challenges facing their constituencies as follows:

High and ever rising unemployment, estimated at 70% for Hangberg

Lack of appropriate skills training for youth to enable them to get jobs

Lack of access to finance for small businesses

Limited internet connectivity for the population

The emphasis from this group is that youth should be supported to create livelihoods that are

diversified from the fishing industry.

6.2.2. Fishing Companies

Consultations with large fishing companies shed light on the following issues:

Companies’ operations are hampered by a combination of operational and legislative

constraints. Quotas limit output and expansion plans.

The industry is becoming unpredictable due to changes in fish migratory patterns.

There is a common encroachment between industrial activity and residents, leading to

protest action that sometimes interfere with operations.

Dwindling fish stocks call for more consolidation to maximise economies of scale.

There is limited opportunity for integrating small businesses within the value chain.

There is willingness to consider support to SMEs in a hub facility.

Room for exercising “Enterprise Development” for small-scale fishers exists, although limited

and potentially not sustainable.

6.2.3. Training Organisations

The study team consulted some Hout Bay-based community training organisations that are mainly

involved in vocational and professional skills training. Training provided by the visited organisations

consist of courses on crafts-making, computer repairs, sewing, building and computer literacy.

These organisations expect the hub to assist their graduates who choose to pursue an

entrepreneurial pathway.

Key issues faced by these organisations are as follows:

Shortage of skilled trainers in such areas as entrepreneurship and business management.

Lack of updated equipment for training purposes.

Limited pathways for graduates; limited employment and entrepreneurial opportunities.

Cumbersome processes for accreditation with relevant Seta’s.

Limited access to markets for training organisations who also have a production arm.

6.2.4. Civil Society

Main challenges faced by NGOs are as follows:

Lack appropriate operating premises (many NGOs have no fixed location).

Dependency on donor funds and inability to monetize services for sustainability.


22

Limited coordination and therefore some overlap and duplication.

Lack of tailored organisational capacity development.

6.2.5. SMES

Below are some selected profiles of Hout Bay Entrepreneurs. Table 2 indicate some of the Small

Medium Enterprises that have been interviewed for the purpose of this report.

Table 2: Hout Bay Small and Medium Enterprises

SME Business profile Key challenges

Life

Technologies

CC

End-user computer training and

repairs

The business is currently using the

Community Learning Centre

computer lab

Access to operating premises

Lack of business development

support (business planning, legal

compliance, taxation advice and

training course accreditation)

Lack of project financing for new

service offerings

Stonehill

Collections

Specialty clothes manufacturing

The company turns over about

R500 000 p/a

No marketing strategy to guide

marketing efforts

Lack of access to marketing

mentors

Inability to establish viable

marketing channels

Robin Kutinyu Stone sculpting and crafts

Robin currently runs sculpting

workshops for youths

This company turns over about 4

million p/a

Expansion capital

Access to markets outside Hout

Bay

Lack of adequate visibility and

branding

Lack of appropriate display

space

Mkuseli

Lembeni

Owner of successful Imzu Tours

Author of “Introduction to Cape

Town Townships”

Operates tours all over Cape

Town and twice a month in IY

Access to capital – would like to

expand

Would like to negotiate further for

Hout Bay tours

Would like to operate form a

more central location

Needs access to additional

markets within the sector

Teabag

Project

Operating since 2000

Diverse product range

Employs 21 people from IY

Captures mostly international

tourist market

Turnover – R3m – R4m

Requires new adequate space

New suppliers

Access to local markets

Process for making products

affordable to domestic market

Southern

Ambition

Establishing new Tourist Ticket

Office

Converting old trawler into back-

packers quarters with lounge and

wine cellar

Part of the cooperative with

license to operate only

underwater abalone farm in

South Africa

Needs access to capital for asset

for tour operator

Access to seed capital to convert

trawler

Already has space at quay but

needs to have old trawler in

floating condition

Tarragona

Lodge

Well known in market

Best months are December to

International tourist asking more

questions about safety


23

February

Turnover R1,5m – R2.5m

Tourism accommodation sector

for Hout Bay definitely growing

Crime seems to be increasing

Hout Bay Industry needs more

beds

Tintswalo Upmarket scale of

accommodation

Industry on the rise

Undisclosed revenue

Attracts more international

patrons

Turn away patrons over summer

months

Traffic ways can become

congested

Crime has been increasing in

Hout Bay

Bay Market Growing significantly over the last

two years

Employs 120 people from

Hangberg

Contributed to tourist flow over

weekends – also to Hout Bay town

and establishments

Draws national and international

tourist

Open every weekend from Friday

night to Sunday

5000 to 8000 visitors per weekend

and 11000 over Festive season

Traffic flow impacted as the total

harbour road is congested

Sustainability of stalls owned and

run by IY and Hangberg residents

– commitment and dedication

required to make it work

Poseidon

Guest house

Situated on Hangberg border

Good relationship with local

community – draw staff from

Hangberg

Have seen spin-off from weekend

market (increase in demand)

Low crime in area

Limited competition in town at

their price point (R700 – R1300 per

night per room)

Steady flow of customers

throughout the year

Affected directly by smell created

by Oceana (occasionally), since

it is right above the harbour

Have tried to develop walking

tour business with Hangberg

entrepreneur, but felt that they

had to do all the work and push

to ensure traction – lack of

initiative and energy from

Hangberg entrepreneurs

Source: Primary research, June 2016

6.3. Scoping Opportunities and Challenges

Insights from both primary and secondary data sources show that despite the challenges currently

confronting Hout Bay, there is still a strong base for regenerating the economy of the area.

Table 3: SWOT Analysis of Hout Bay from an Enterprise and Economic Development Perspective

Strengths Weaknesses

Strong sense of community from the affluent

areas and willingness to invest and

contribute to NPOs

Established culture of volunteerism

Diverse base of NGOs working with

communities

Proximity to SME facilities in Cape Town

Commitment from the CoCT

Fairly highly educated workforce

Established Hout Bay market – popular with

broader Cape Town and tourist populations

Craft shops mostly white/foreigner owned;

limited empowerment of local community

Limited tourism spin-off: tourist groups

arriving in buses only stay in the harbour for

a short while

Too many tour guides and arts & craft stalls

in the harbour

Lowly skilled workforce, especially in the

Hangberg community


24

Opportunities Threats

Indoor boat building facilities and/or light

industry in empty harbour buildings

Guided harbour tour (and other) that

includes Hangberg community

Potential for traditional cultural focal centre

and small- scale fishing value adding

facilities (processing, retail) for traditional

fishing community.

Might serve as service hub for small-scale

fishing

DEDAT and the Cape Craft and Design

Institute

Growing tourism sector

Due to community tensions between IY

and Hangberg there is a risk of having the

hub initiative perceived through a political

lens

A downturn in the tourism sector is likely to

cascade to linked craft & fine foods

subsectors

It may be challenging to strike a balance

between empowering the local black

population and creating an inclusive

centre catering for broader

entrepreneurial needs in the community

A value chain assessment study commissioned by the office of the Western Cape Premier

conducted by Kaiser Associates in 2012 revealed that economic development opportunities in

Hout Bay lie within the following subsectors:

1. Boat industry: this coves boat repairs, storage and boatbuilding. Boat support services will

be there to support both the fishing and tourism industries.

2. Tourism and recreation: this covers the promotion of activities water-based tourism

activities such as boating, diving and sailing.

3. Fine foods: this includes restaurants and selling of local produce to tourists and customers

from the Cape Town metropolitan area.

4. Film location and performances: this entails building on the cultural diversity of Hout Bay

and using the area’s tourist appeal as a basis for launching arts and cultural businesses that

can expand beyond Hout Bay.

5. Craft production and retail: this covers production, marketing and retailing of craft-based

products within and outside Hout Bay.

To revive the economy of Hout Bay, the same report recommended the following:

Coordinated strategies and actions to provide support to initiatives across role players,

Enterprise and cooperative development support customised to target sectors

Capacity-building / skills development for individuals

Access to finance, including capital investment and working capital, including in areas

such as boat repair and food processing

Marketing support to create viable markets for community caught fish and unique local

products

Reflection 7: An economic development centre, in any form, will have to serve the growing tourism

sector as a priority. The need exists to not only support this sector and to formalise the existing small

tourism businesses, but also to provide workspace, information on premises, connectivity, skills

development/training, business linkages support, business intelligence services and general

business support functions (including access to finance).

The inclusion of more black businesses offering accommodation and tours, may attract additional

tourists to the area if profiled appropriately. Local accommodation establishments feel that the

“Black Diamonds” sector and African American tourists enjoy Hout Bay, but this market is not yet


25

fully understood and catered for. This sector is keen on live music and jazz and enjoys relatively

luxurious accommodation options and high end merchandise, according to Servaaas van der

Berg, Professor in Economics at the University of Stellenbosch (Black middle class play catch-up,

Business Day Live, 26 January 2014). They are not keen on back-packers and camp sites.

The perceived political neutrality of such a facility will be critical to its acceptance by all segments

of broader Hout Bay. Marketing of the facility will have to be deliberate and specific. Businesses

from broader Hout Bay will have to be specifically invited to participate in the programmes that

the centre will run.

Exceptionally high levels of unemployment may necessitate the inclusion of job-centre facilities in

addition to entrepreneurial support.

6.4. The Case for an Enterprise Support Hub in Hout Bay

This section summarises the challenges gleaned from secondary and primary data so as to scope

the support for local economic development and small enterprise support.

Table 4: Gap Analysis

Enterprises and Economic

Development Challenges Available Support Observed Gaps

No structured BDS

programmes

Limited access to market

Lack of access to

enterprise support

information

Lack of appropriate

workspace

Lack of access to finance

Low skills levels

Lack of business

management skills

Lack of linkages to

enterprise support

programmes

Limited pathways to post-

training entrepreneurial

guidance

Fragmented approach to

BDS

High level of enterprise

informality

High rate of enterprise

mortality

Basic skills training

Serviced workspace

Office rental for

professional entrepreneurs

Start-up networks for tech

entrepreneurs

Business development

support

Information services

centres

Job information service

Formal market linkages

Basic entrepreneurial

training

Business registration

support

Sector specific

programmes

Access to various types of

financing, including seed,

growth and venture

capital financing solutions

The challenges listed above can be grouped as follow:

Weak coordination amongst economic development role players: economic development

efforts are taking place in a piece-meal fashion


26

Entrepreneurial physical infrastructure deficiencies: there are no designated spaces from

which entrepreneurs and small business owners can access support

Weak information systems on available services: a significant portion of reported challenges

are a reflection of lack of access to information on opportunities and support sources that are

already existing at national level

Weak linkages with the external economic support system: Hout Bay is still much of an island

from enterprise support perspective. There are no clearly defined relationships and avenues to

facilitate the linkages of Hout Bayans to the national business development ecosystem.

High level of informality: this has become somewhat endemic to the disadvantaged

communities of Hout Bay.

Lack of access to job opportunities: rising unemployment is fed off job losses, arrival of new jobs

and the organic entry of youthful into the working age-group. The inability of the economic

base to generate new jobs has therefore led to the precarious situation existing now.

Skills development: in a huge way Hout Bay finds itself stuck with skills of the past. Fishing skills

will not be able to take Hout Bay to the next phase of its economic development.

In light of the challenges highlighted above, Figure 5 depicts the indicative structure of the Hout

Bay enterprise support ecosystem based on the study team’s findings. The names of organisations

placed under each block are illustrative and not exhaustive of constituent players.

Figure 5: Entrepreneurial Support Ecosystem Configuration (Illustrative)

As illustrated in Figure 5, Hout Bay has a base upon which to build an effective local economic

development and enterprise support system. For that to happen, the six key stakeholder groups

represented need to be coordinated and strengthened to work together in a mutually reinforcing

way. To escape the “micro-business” syndrome that currently prevails in Hout Bay, it will be

important that the Enterprise Support Hub assumes the following roles:

Convene and coordinate economic and enterprise development efforts within Hout Bay

Enterprise

Support Hub

"catalyse, convene, support &

coordinate"

Corporates

Pescaluna

Oceana

Woolworths

Hotels & Guest Houses

Tour operators

Civic/Pub Org

Bethesda

Iziko Lo Lwazi

Lions Club

Rotrary Club

Hout Bay Museum

Financial Institutions

Capitec Bank

MicrofinanceSMEs

Crafts

Hospitality

Mechanical

small-scale fishing

Existing Business Support

Workspace

Digital & Innovative Executives

Volunteers

Training

Sijonga-Pambili CLC

Cape Craft & Design Institute


27

Play role of a “one-stop” enterprise development center for existing and aspiring

entrepreneurs, although the focus must be on the Tourism sector to ensure focused support

Co-ordinate initiatives to introduce tourism as a sector to aspiring entrepreneurs (migration

from fishing)

Facilitate access to enterprise support opportunities by running an information desk and

hosting information sessions by enterprise support organizations

Co-ordinate training and placements of staff in the tourism sector

Avail space for the co-location of enterprise support entities including business

development service providers, NGOs and satellite offices for government agents such as

SEFA and SEDA or shared office space service providers.

Reflection 8: The Hout Bay environment hosts several larger corporate players that have shown an

interest to contribute either in kind or financially to an economic development centre. SEDA, as an

example, has a Western Cape mandate to create a rapid incubator in the Tourism sector, which

may be appropriate to also provide the basic operating model (including Finfind and Growth

Wheel) to support local entrepreneurs. The rapid incubation programme is compatible to the

needs experienced by local entrepreneurs.

The active NGO environment in Hout Bay provide appropriate partner support to a potential

economic development hub.

7. Analysis of Potential Hub Models

This section reviews and explains the different enterprise support hub models and SME support

mechanisms that have been implemented in South Africa and elsewhere. Drawing from South

African SME support literature and practice, the section provides a conceptual background to the

enterprise support hub concept and its variant models. The discussion further drills intothe specific

models that can be considered for the Hout Bay Enterprise Support Hub. In South Africa the terms

‘enterprise hubs’ and ‘business incubators’ are used interchangeably. Variations of these terms

include “business centre” and “enterprise centre”.16

Taking a South African perspective, Masutha and Rogerson (2014) define business incubators as

facilities that “offer targeted business support and technical support services to accelerate the

growth of emerging and small start-up business enterprises into financially and operationally

independent enterprises”.

Enterprise support hub initiatives in South Africa take a variety of forms, ranging from privately run

entities to fully governed sponsored and controlled hubs that exclusively focus on black-owned

businesses. In between is a variety of hybrid hub forms tailored to cater for the diversity of SMEs

operating within the country. Therefore, the ultimate form of an enterprise support hub is often a

function of SME support goals and other practical considerations relating to the targeted area.

A working definition of an Enterprise Support Hub

16Masutha, M. and Rogerson, C.M., 2014: Small enterprise development in South Africa


28

Drawing on the foregoing literature, this feasibility study will define an enterprise support hub as “a

support organisation that offers a range of integrated guidance and support services to

entrepreneurs and small business businesses with the objective of promoting local economic

development, enterprise growth and job creation.” An enterprise support hub can take the form of

or encompass a specific type of business incubator, though a hub can also be an SME promotion

structure that includes a physical space element.

7.1. SME Support Hub Concept within the South African Policy Context

The concept of SME support hubs in South Africa dates back to 1995 when the Small Business

Development Corporation (SBDC) was constituted to champion SME development in the country.

The SBDC promoted the establishment infrastructural initiatives and established in order to bridge

the gap in opportunities for growth between small and large business enterprises in South Africa.

This morphed into the Godisa incubation programme, which focused on setting up business

incubators run through public-private partnerships.

The Godisa programme was succeeded by the Science and Technology Programme (STP) that

sought to promote the establishment of new business incubators and strengthening of existing

ones. Government’s current incubation support policy is embodied in the Seda Incubation

Support Programme (ISP), which was introduced in 2012.

The ISP programme covers business development services (e.g. business advisory, coaching and

mentoring, training, facilitation of funding, production efficiency and improvement, quality and

standards acquisition); market access improvement and feasibility studies for establishing and

expanding incubators. The figure below shows the evolution of government SME support initiatives

since 1995.

Figure 6: Evolution of Incubation in South African Government SME Support Policy

7.1.1. Incubation Principles and Approaches

The New Rapid Incubation Approach by Seda Technology Programme.

The rapid incubation model arose out of a need to address the issues of youth unemployment in

South Africa. Brainstorming and consultations around a potential programme to address this issue

was held between the DSBD, Seda, The Department of Trade and Industry (dti) and the

Department of Higher Education and Training (DHET).

Incubation Support Programme - ISP (DTI) - 2012

Seda Technology Programme (Seda) - 2006

Godisa Incubation Programme (DTI, DST and EU) - 2000

The Hives of Industry (Small Business Development Corporation) - 1995


29

From this was born the Rapid Incubation Programme. An agreement to pilot the programme in

South Africa was reached in 2013 and Seda and dti signed a funding Agreement committing R40

million for piloting the programme in 9 TVET colleges, selecting 1 per Province.

Conceptual Underpinnings

The conceptual framework underpinning the rapid incubation model are a combination of

international best practice drawn from the Lean Startup Methodology and the Nest Principles.

SEDA has since merged these two conceptual positions within STP (Seda Technology Programme).

These two are unpacked as follows:

Lean Start Methodology (LSM)

LSM is based on the principle that a lean approach to assessing the needs of the market, it allows

for failure and learning to occur rapidly. The typical LSM programme is six months from entry to

launch of a minimum viable product, based on a build-measure-learn feedback loop.

Nest Principles (NP)

The phase allows the small enterprise to focus solely on the main capability or strength of the

business and not be distracted or side lined.

Seda Technology Programme is launching nine incubators with the False Bay College at all nine of

their sites across the country – the innovation spaces will have a look and feel based on the

pictures approved by Seda;


30

7.2. Unpacking the Different Enterprise Support Hub Models

Enterprise support hub models are primarily defined according to the nature of services they offer

to entrepreneurs and SMEs and to the extent of their sector or technology specialisation in terms of

activities supported.

Incubation literature identifies nine incubation and SME support-type organisations on the basis of

support offered to business and the level technological specialisation required as qualification

criteria for admitting beneficiary businesses. The categorisation of hub organisations is based on

two variables as illustrated in the table below. The horizontal axis represents the level of

technological or sector focus in terms of the enterprises supported by the hub. The vertical axis

represents the degree of management and business development support provided to supported

businesses. The type of hub organization is, therefore, a function of the degree of sector

specialization and the intensity of support services provided to supported businesses.

Table 5:Categorisation of Hub Models

Hub Model Sector and Technology Specialisation

Low Medium High

Management

support level

Low Industrial estate Business park Science park

Medium Managed

workspace Enterprise centre

Innovation

centre

High

Multipurpose

business

incubator

Business &

innovation centre

Specialised

incubator

For the purposes of this study and in light of the needs identified for the Hout Bay SME community,

we will only focus on four hub categories:

1. Managed workspace

2. Enterprise centre (also known as an SME Walk-in Centre)

3. Multi-purpose incubator

4. Specialised incubator

A full description of each of the above hub models is provided in the section below.

7.2.1. Model 1: Managed Workspace

Managed workspace schemes are property developments that provide premises from which small

businesses can trade. Such schemes typically provide core activities such as shared office services,

equipment, security and, sometimes, some business support and advice. Managed workspaces

are similar to the incubator model in that they provide serviced units for small companies. The

main difference with incubators lies in the fact they do not provide more intensive sources of

support for their tenant companies and do not operate on a strict selective entrance and exit

policy. There is therefore a minimum throughput.

Some co-working spaces attract particular sectors, but generally they are open to any small

business or individual who needs a workspace. The other key difference lies in that workspaces

work on the basis of a non- competitive, fee based membership.

The global managed spaces revealed the following defining characteristics:


31

Often established using a local authority’s capital budget

Private corporates contributed to the budgets through CSI contributions

Often operated from disused factory buildings that were converted to new use

Have a mix of start-ups and branches of established companies

Local small businesses constitute the majority of tenants

The majority, 85%, are managed by local authorities; 15% were managed indirectly by a

development company (an arm of the local authority).

The typical suite of services offered by a managed workspace include the following:

Physical workspace for office or production activities

Meeting spaces

Social networking events, all for a monthly fee.

Centralised administrative support relating to space occupancy

Access to independent, non-place based incubation programs.

Note that, in terms of business development support, workspaces are near the “no support” end.

There are no structured incubation or business development programmes and any support that is

provided is often by default and not by design. An example of a managed workspace that exists

in Hout Bay is the DIY Workspace that is located in the harbour area.

Case Study 1: Managed Workspace – DIY in Hout Bay

Workspace was established by Craig Dunlop in 2013. Like examples of workspaces noted in the UK,

this DIY Workspace was built on an old fish factory. The 500 square meter Workspace facility

comprises of the following zones and tools:

Woodworking area

Turning, bowl making, shaping, cutting, gluing, planning, carving, sanding, painting, joining,

cabinet making, clamping

Metalwork

Cutting, shaping, turning, arc welding, MIG welding, grinding, brazing, soldering, casting

Automotive

• Oil change, service, fit, fix, restore

Concept development

• Design, conceptualise, create, presentations, product development, product launches, 3D

printing

Hobby / Handicraft

• Sewing, leatherwork, beadwork, glass, wire, plastic, carving, electronics, etching, paint

techniques, picture framing, candle making

Ceramics / Glass slumping

• Slip casting, firing, glazing, glass slumping, Raku, mould making, Bisque fire, pots, sculpture


32

Lounge

• Chill out zone

• Free WIFI

• Wood fired bread baking oven

• Wood fired, pedal powered coffee roaster

• Espresso machine

Image: DIY Workspace Premises in the Hout Bay Harbour Industrial Area

7.2.2. Model 2: Enterprise Support Centers

The enterprise support centre is the most common and basic support structure that is set up to

provide support and advice to SMEs and entrepreneurs. A wide range of names is used to

describe an SME support structure and these include business centres (ILO and UNIDO), enterprise

information centres (SEDA), Business Support Centre (European Commission) and Walk-in Centre

(National Small Business Council). ILO defines an enterprise centre (EC) as “a structure set up to

deliver services to entrepreneurs and business start-ups with the aim of strengthening the job

creation potential, productivity and competitiveness of micro and small enterprises (MSEs)”.The

key defining features of enterprise support centers are the following:

Strong focus on increasing SME access to information and business development support.

Everybody who “is willing to pay” for services is served.

Services are charged for from the onset but the fees for SMEs are subsidised.

Running costs are defrayed through a combination of service fees and external funding

from donors, corporates and local authorities that contract the centre to provide services

to sponsored SMEs.

A variation of the enterprise support centre is the virtual centre – a tailored model of the enterprise

centre that provides low cost support services, access to shared equipment and networking

opportunities to business operators, without requiring members to relocate to the centre. A virtual

centre uses electronic and visiting services (access to temporary meeting and conference room

space and administrative services).

The typical suite of services offered by an enterprise support centre include the following:

Start-up consulting and business planning

Consulting in business development (legal, marketing etc.)

Consulting for and/or access to financing

Training


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Meeting rooms

Exhibition hall/room

Internet and email services

Telephone and postal facilities/addresses

Copying and faxing

Case Study 2: West Coast Business Development Centre (WCBDC)

Background

Saldanha Bay provides a unique environment as it is a traditional fishing area whose economy

became diversified with the establishment of Arcelor Mittall, Namakwa Sands, Duferco Steel

Processing, PPC Saldanha, Transnet National Ports Authority and Spoornet/ OREX. Situated 150 km

from Cape Town, Saldanha presents an opportunity for SMEs to provide services to the larger

corporates.

Rationale and Mandate for WCBDC

The mission of the West Coast Business Development Centre (WCBDC) founded in 1998 is to

develop and enhance the growth of Small, Medium, and Micro Enterprise (SMME) in the West

Coast Region through the delivery of quality and cost-competitive services. Started off with a 3-

year contract with SEDA in which WCBDC was contracted to provide enterprise information centre

services. The centre staff were trained and accredited to provide SEDA training to enterprises and

entrepreneurs.

Target Audience

The WCBDC focuses on individuals with entrepreneurial spirit, particularly, yet not exclusively ones

from previously disadvantage communities - youths, women and the physically challenged or

differently abled.

Core Services

WCBDC provides clients with tailored package deals and a one-stop service. Core services of the

Centre are:

Business skills training and advice,

Business linkages including tender advice,

Information dissemination,

Mentoring and counselling and

Project management.

The WCBDC established itself as a vital tool for SMME development and economic growth in the

West Coast region.

Sample Projects Implemented the WCBC:

Skills Training for fisher folk in the West Coast

Provide business development support in the Tourism Sector. Assistance to local entrepreneurs

is provided in the form of group training sessions.

Technical sewing training, for a community project that has been linked to Namakwa Sands as

a supplier of uniforms


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7.2.3. Model 3: Multipurpose Business Incubator Hub

Multi-purpose Business Hubs fall into the family of Incubators as they provide a high degree of

business management support to enterprises that they take in. They do cater for all types of

business regardless of sector or technology specialisation. The European Commission defines it as a

physical facility aimed at promoting economic development of its community by supporting start-

up companies and their business development. The provision of physical space is central to this

model.

The key defining features of a multipurpose business incubator are as follows:

Supported business are housed within the support facility for a defined period, normally up to

one year

The facility has a dedicated team of business advisors that assist tenant entrepreneurs on a

day to day basis

There is no rental fee charged to tenant business as this is covered by the facility’s overheads

budget

They are largely focused on spurring local economic development and hence their inclusive

approach in terms of admission criteria

The basic services provided by a multipurpose incubator include:

Start-up consulting and business planning

Consulting in business development (legal, marketing etc.)

Facilitating access to financing for SMEs

Shared office services such as typing and book-keeping

Case Study 3: Shanduka Black Umbrellas

Background

Shanduka Black Umbrellas is a non-profit enterprise development incubation organisation

partnering with the private sector, government and civil society to address the low levels of

entrepreneurship and high failure rate of 100% black owned emerging businesses in South Africa.

Description

The objective of Shanduka Black Umbrellas (SBU) is to address the low levels of sustainable

entrepreneurship amongst 100% black owned businesses in South Africa, primarily through business

incubation, which includes:

The provision of subsidised shared office facilities

The transfer of sound business practices and principles through training and mentoring

programmes

Facilitating access to procurement, finance and networking opportunities

10 Largest Contributors to Shanduka Black Umbrella Incubators

1. Anglo American Sebenza Fund

2. Exxaro Coal

3. Jobs Fund

4. International Flavours and Fragrances SA


35

5. Lonmin Platinum

6. NEF

7. Sanlam Foundation Trust

8. Shanduka Advisors

9. Todwill

10. Webber Wentzel

7.2.4. Model 4: Specialised Incubators

Specialised Incubators are distinct from other forms of SME support structures because they have

highly selective admission criteria, provide 'hands-on' management support, and have a highly

specialised sector focus. This type of structure is more suited to localities that have a sufficient

sectoral or technological concentration of SMEs and entrepreneurs.

Specialised incubators are, thus, linked to specific industries such as tourism, furniture

manufacturing and ICT. Examples of specialized incubator models in South Africa include the

SEDA Furntech that focuses of furniture manufacturing and the SEDA Nelson Mandela ICT

Incubator that specializes in supporting start-ups in the ICT sector.

In sum, key distinguishing features of a Specialised Incubator are as follows:

Highly selective technology/sector-based criteria for incubated businesses

Intensive technical and non-technical support to incubated businesses

Industry or sector promotion focus and involvement as opposed to general economic

stimulation

Strong links with research and educational institutions

Managed work space providing shared facilities, focused advisory services, and

interaction among tenants, available frequently on short- notice and with the requirement

for neither demonstrated financial resources nor a long-term commitment

Highly specialised support team with core competencies to provide early diagnosis and

treatment or referral through a wide network of professionals and friends in the local

community

Flexible exit policies and incubated business can stay up to 3 years.

The typical suite of support offered within a specialised are as follows:

Access to specialised technological infrastructure such as laboratories and equipment

Professional/technical advice and technology matching

Business and marketing advice, with market intelligence that is current and specific

Administrative support and office equipment

Access to venture capital

Market research,

Bookkeeping, legal, procurement and other relevant services,

Business incorporation support,

Internet and computer services

Case Study 4:Specialised Incubator - Nelson Mandela Bay ICT Incubator

Description


36

The SEDA Nelson Mandela Bay ICT Incubator (SNII) is a business and technology Incubator that

supports incubatees /clients with innovative business ideas in a technology related field

(information technology, communications technology and information and communication

technology).

Mission

1. To establish, support and grow small businesses in the ICT sector

2. To provide for effective and efficient value – adding services

3. To create an environment where highly motivated and innovative individual thrive.

Its stated objectives are as follows:

• To create and support enterprises in the ICT sector by offering a comprehensive incubation

programme

• To create and be recognised as an ICT solutions repository

• To ensure long term sustainability of the Centre.

Service Offerings

The program is tailored to meet the needs of individual clients as each client is unique.

Business Development Support:

• Specialised mentoring and coaching

• Financial management services

• Training and workshops

• Access to market and introduction into industry networks

• Facilitate access to funding

• Legal and commercial advice

• Project management support

• Human resource management support

• Research and development facilities and services

7.2.1. Summary of Different Hub Model Options

The following table summarises the main features of each of the four models described in the

section above. The characterisation of each model is based on eight-feature basis as follows:

1. Goal or aim of the hub model

2. Level of technological or sector specialisation

3. Admission or targeting criteria for supported enterprises

4. Hub revenue sources.

5. Facilities that form part of the infrastructure support provided by the hub

6. Services provided to supported enterprises.


37

Table 6: Description of Alternate Enterprise Support Hub Model

Managed

workspace

Enterprise Centre Multipurpose

Incubator

Specialised

Incubator

Goal Solve working

space

challenges

faced by

SMEs

Provide adhoc

support to all

forms of SMEs

Provide

structured and

dedicated

support to

diverse base of

SMEs

Foster initiation

and growth of

enterprises in

specific sectors

Sector/Tech

Focus

Relatively

open to all

types of

enterprises

Open to all

local

enterprises

Open to all

types of

enterprises

Specific to a

sector

Admission

criteria

Open and on

a first-come

basis. Ability

to pay for the

space is key

Open to all

local SMEs and

individual

seeking on-the

spot

assistance.

Commitment

fees may apply

Competitive

application.

Applicants

need to

commit to set

programme.

Business plan is

a requirement

Highly

competitive

and in line with

sector

requirements

Hub

revenue

sources

Membership

fees

Space rentals

Equipment

rental

Municipal

subsidies

Public grants

SME service

fees

Corporate

sponsorship

Project

management

fees

Donations

Public grants

Corporate

sponsorship

Paying tenants

Donations

Public grants

Investment

returns

Facilities Desks

Communal

meeting

areas

Equipment for

rental

Desks for core

staff

Communal

meeting space

Conference/e

vent rooms

Exhibition

rooms

Incubator

units

Communal

meeting areas

Event

space/hall

Shared office

equipment

Incubator

units

Communal

meeting areas

Specialized

equipment

Lab space

Office

equipment

Services Working

space

Curated

programs of

talks and

events

IT and admin

services

Knowledge

exchange

Consultation

Business

support

Virtual labs

/online services

Information

centre

Open training

Training

Mentorship

Corporate

services (legal,

financial,

digital, etc)

Linkage events

Business

support

Knowledge

exchange

Consultation

Networking

Mentoring

SME Support

Time frame

No set timeframes

Varies according

to support

arrangement

Up to 1 year

Up to 3 years


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8. Recommended Hout Bay Enterprise Hub Model

The research and consultations conclusively point to the fact that an economic development hub

is indeed relevant and needed for the greater Hout Bay. Although all business development and

business support services are not available for the entrepreneurs in the area, we recommend a

specialist hub that focuses on the area where the greatest economic growth exists, namely

Tourism. We acknowledge the need to also support other SMMEs, but suggest that the resources

allocated to these general services are limited.

We therefore recommend a hub with the following focus areas:

8.1. Tourism enterprise development

80% of the resources and structured programmes should service the development of businesses in

the tourism sector. We believe that a focused approach will allow the Hub to obtain deep

knowledge, skills and networks in and of the tourism sector. Over time, and as a result of impact

achieved, the Hub can then expand its services to the greater Cape Town, which will open up

opportunities for its growth and interest from more funders.

The three areas, within the tourism sector, is suggested to be the following:

Hospitality, including accommodation and food services

Facilitated tourism, including excursions, events, adventure, cultural, nature, historical and

niche market tours like living heritage

Arts and crafts

In the six months before its launch and in the first year of the Hub’s existence, we recommend that

it runs several Tourism information sessions. The industry will be new and the business potential

vague to many entrepreneurs. It is important to spark an interest and feed the entrepreneurs with

ideas and exposure to the opportunities in the Tourism sector. They need to be able to visualise

themselves running tourism businesses and have a good understanding of what the commitment

requirements, skills, lifestyle impact, resource requirements and competitive landscape entails. Site

visits to hotels and guest houses, restaurants and tour operating companies should be included in

the sensitisation.

8.2. Walk-in centre

As a service to the broader community, a walk-in centre can provide basic business advice

through a general business consultant. We recommend that this is limited to six hours per week;

with 30-minute consultation slots (12 slots per week) Entrepreneurs who want to access this service

should schedule appointments with the business consultant.

Typical

investors

Local

municipality,

local property

developers

SEDA, donors

(Unido, ILO);

impact investors

Local economic

agency; impact

investors,

universities

Corporates,

angel investors,

government

technology

agency

Estimated

set-up cost

Tbc Tbc Tbc Tbc

Examples in

SA

Workspace in

Hout Bay

WCBDC Shanduka Black

Umbrellas

Seda Nelson

Mandela Bay ICT

Incubator


39

The Hub can also offer four general entrepreneurship or training events in a year, as a service to

the broader community.

The motivation for the limitation is that this type of service seldom renders significant results as the

typical “walk-ins” are mostly looking for employment or very basic support like business registrations

or assistance to submit an online tender. The Hub can link walk-in entrepreneurs to existing online

support platforms to fulfill these needs. Should there however be a high-potential entrepreneur

outside of the tourism sector, a decision can be made about a tailored programme for such and

entrepreneur.

8.3. Job centre

As a next phase of the roll out of the hub, and only after the first 12 months of operation, we

recommend the establishment of a small job-centre service, where potential employees can be

matched to employers in the tourism sector. This follows naturally from the recruitment and

phased process that will be followed to develop the tourism businesses and where high-potential

individuals may not be entrepreneurial enough for the programme, but may indeed be very suited

for work in the sector.

8.4. Typical deliverables

We are currently still unsure of the exact quality and volume of entrepreneurial talent that the

recruitment process will yield, but we are certain of a large number of informal businesses already

active in the tourism sector.

It is however important to work towards specific objectives. The process to achieve these

objectives will be explained in the next section, but the high level impact indicators of the hub is

anticipated to be the following (over a period of 3 to five years):

4. 30 local businesses (of which 80% South African and black-owned), with revenues each in

excess of R500 000 in the tourism sector

5. 450 businesses / entrepreneurs trained in basic businesses skills

6. 100 placements of job-seekers in the tourism sector

8.5. Legal status

We recommend that the hub commences its activities under the guidance of the Hout Bay

partnership and that Hout Bay partnership oversees the initial process to create tourism industry

awareness. When it matures, over a period of six months to a year after launch, it should become

a stand-alone not for profit company, with a board comprising of its founders, funders and critical

community and business (tourism industry) stakeholders. The involvement of an academic

institution’s Tourism department can also be considered, to contribute not only skills and

knowledge but also to plug research gaps when required. An independent financial

manager/director can be contracted as a service provider to the hub and should also sit on the

board, either as a member or an official, like the hub manager.

It is possible that funders may have specific requirements regarding the legal status of the hub,

which should then be accommodated in the determining the business form.


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8.6. Operating model

The economic development hub is recommended to follow a basic rapid incubation model, but

eventually with the addition of some job-centre functions to serve job-seekers in the tourism sector

as well as limited resource allocation to serve walk-in entrepreneurs from various other sectors. For

the hub to be effective, it will have to limit resources dedicated to general business advice, as the

successes will be few. We recommend that the hub becomes a tourism development centre of

excellence; with the ability to provide tourism businesses with market intelligence and that it

develops the networks to connect Hout Bay tourism businesses to relevant organisations,

programmes and specialist mentors.

The centre will run a 12-month programme cycle, which is depicted in the following diagram:

Figure 7: Recommended Operational Model

The model indicates the broad recruitment of interested businesses and entrepreneurs, which then

follows a process to select the top ten beneficiary entrepreneurs, where both the entrepreneur

and business plan must convince a panel of adjudicators of its viability and capacity for growth.

All of the 200 tourism businesses will receive value in the form of training and skills development,

but the bulk of investment and individualized support will go to the 10 businesses selected for their

high growth potential. The development interventions preceding the various screening processes

will assist the entrepreneurs to become very clear about their business ideas and they will be

challenged to package and pitch these plans to a panel of experts, which will include potential

investors.

The phases, from marketing to the selection of the 10 strong candidate businesses, will take

between three and four months, which will allow a minimum of eight months for focused


41

development of the selected businesses. After the year on the hub programme, the selected

businesses will still have access to expert mentors and the support services offered by the hub.

8.7. Key activities and functions of the hub

The proposed hub will become a specialist tourism centre of excellence for the greater Hout Bay.

The hub will acquire the tourism data and support networks for tourism businesses that will render it

an unprecedented resource for such businesses. In time, the hub will grow to represent the greater

Hout Bay tourism businesses and will advocate on their behalf with the City of Cape town and at

other strategic forums. If the Hub manages to proof its value, it can easily expand its reach to

service the greater Cape Town area. This will allow sustainability, as more funding partners can be

brought in.

The activities of the hub will include, but should not be limited to the following:

Tourism business centre of excellence, providing

o Tourism orientation and sector sensitisation

o Business intelligence services, compiling and providing tourism data and

information on trends

o Tourism business training

o Business linkages service, connecting local tourism businesses to appropriate

opportunities and support services and networks

o Appropriate business support services, like training, expert mentorship and

coaching to especially tourism businesses

o Business support services like financial management, marketing, procurement and

human resources management

o Tourism programme co-ordination (supporting tourism businesses in a structured

way through a development and growth programme)

o Office support services, like copying, faxing, meeting facilities, internet services and

o Technology support, including access to the internet and support Staff structure

We recommend that the hub launch its operations with two staff members; a hub manager and a

technical and administrative assistant. All additional support and services should be contracted in

as required. Contracted staff and service providers will include a financial manager, technology

officer, training service provider(s), business development specialist(s) and expert mentors.

Technical experts, to train for example export craft businesses or guesthouse owners, may be

required from time to time.

The role of the hub manager will include the following:

General management of the hub, including day to day financial management

Stakeholder engagement and management, including negotiations with funders

Preparing and presenting feedback to the board

Planning of the activities preceding the launch and post launch of the hub

Securing relationships and formalising agreements with sector specialists and expert

mentors

Procuring the services of expert training organisations

Planning specific community programmes, like the self-efficacy workshops and tourism

sector information days and tours

The technical / admin assistant’s role will include:

Supporting the hub manager to execute on pre-launch and post-launch plans


42

Managing the process to recruit and select beneficiaries

Executing the marketing activities

Arrangement of training workshops

Day-to-day interaction with beneficiaries, contracted service providers and expert mentors

to co-ordinate activities

Maintaining a database of beneficiaries

Monitoring and evaluation of beneficiary progress

Building and maintaining a partner and stakeholder database

Keeping track of sector opportunities and events and feeding information back to the

beneficiaries of the hub (information office function)

Data collection for Board reports

As the centre grows and the beneficiaries increase, the need will arise for increased staffing. We

anticipate that the hub may require a dedicated beneficiary manager over time, who will be the

single point of contact for all beneficiaries. This role can double-up as an information officer, who

constantly scouts the environment for relevant leads and opportunities in the tourist sector.

8.8. Governance structure

The proposed governance structure of the Hub entails a simple structure, where the ultimate

accountability for the financial and operational effectiveness of the Hub resides with a Board of

Directors, representing the key funders and stakeholders of the Hub.

Two officials, namely the Hub Manager and Financial Manager (the latter a part time contracted

position) represent the Hub at the Board. The Hub staff as well as contracted service providers

report directly to the Hub manager, who also controls the processes of beneficiary selection and

monitors the quality of service delivery.

This basic structure is depicted in Figure 8.

Figure 8: Recommended Hub Organogram


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8.9. Hub Model Evaluation Criteria

In the selection of the most suitable hub model for Hout Bay, the following factors were

considered.

Table 7: Hub Model Considerations

Consideration

Nature of support

required

The nature of support services required by SMEs is critical to the

determination of the appropriate model to be used to deliver them. In

cases where businesses are already operating with own premises, there is

no need to consider an incubator-type facility

Hout Bay small business will require a comprehensive introduction to the

tourism sector to migrate their aspirations and ambitions from fishing to

tourism. This sector requires specific support development interventions, of

which some is not generic, but rather sector specific.

Level of sectoral

concentration

Level of sectoral concentration of small enterprises is helpful in making a

decision between a specialised vs general purpose/mixed facility.

Hout Bay’s growth potential lies in the tourism sector, as does growth for

the greater Cape Town area. A sector focused hub, developing tourism

entrepreneurs and serving initially Hout Bay, but later the larger area is

feasible.

Existing support

infrastructure

It is best practice to choose a model that builds on and complements

existing support mechanisms instead of duplicating them.

There is in general an under-supply of all SMME support resources in the

Hout bay area. The proposed hub will contribute to fill the need for such

services as expressed by the interviewed entrepreneurs.

Policy goals The hub model should be the best mechanism to deliver on expressed

policy objectives. To the extent that a model is better suited to do that,

then it must be chosen.

Tourism is a common theme that runs through the local, City of Cape Town

and provincial development plans. A tourism hub will support the

documented growth objectives.

Complementarity The appropriate model should build on existing local strengths and bridge

weaknesses in the enterprise support environment. The model’s

incremental value increases its appeal.

There are no affordable business development and entrepreneurial

support services in Hout Bay, but some skills development / craft centres

exist. The informal nature of the existing tourism businesses is a concern

and the planned hub will augment the existing facilities.

Inclusiveness Given that the hub should be ‘owned’ by diverse communities, the model

to be chosen should inclusive.


44

Consideration

The inclusivity will be a factor of both location and marketing efforts. Care

will be taken to establish the hub in a central and neutral geographical

area and to include all communities in comprehensive marketing

campaigns.

Cost effectiveness The set up cost of the model including the resourcing should be within

reach of available resources. The cost of the chosen model should be

reflective of the results expected from the support.

The set-up and operational costs will be contained to ensure that the

investment reaches the targeted beneficiaries. The SEDA partnership is

valuable because of shop fitting plans, programme content and

operational systems and models that have been tried and tested. The hub

will have the minimum fixed costs (especially salaries) and expert services

will be contracted in as needed.

Reach The breadth and depth of support intended for beneficiary enterprises has

a bearing on the model type as different models have different levels of

touch.

It will require a broad, but light touch to reach various groups with

information about the tourism sector and opportunities that exist. The

development of tourism businesses is however heavy touch, individualised

and intensive. This level of support can only be provided in a specialist hub

environment.

Alignment to local

conditions

The model should be able to easily fit within existing enterprise support

systems.

A tourism hub, with some walk-in services, will fill a much needed gap for

SMME support services in Hout Bay and will support other initiatives, like the

Workspace (which provide technical skills / product development and

support), with business skills and support for the business side.

The Hout Bay market has pledged their willingness to support with retail

space and product and service evaluation, especially for craft and food

businesses.

Reflection 9: The challenge faced in Hout Bay is the huge need that has developed for the support

of entrepreneurs and the reality that a general economic development centre / hub cannot

provide impactful and quality services to an impossibly broad client base.

The hub will therefore have to be focused around the Tourism sector and in the process build its

knowledge and product base to serve businesses in this sector expertly.

In order to address the unemployment in the area, it would be possible, as a second phase, to

provide a training and placement service to connect hospitality workers to jobs in the industry.

The centre should also consider offering a limited resource / time, but general business support

service to walk-in clients. This could typically be 12 sessions of 30 minutes each, once a week, to be

scheduled by appointment only.


45

Implementation plan

The following general steps outline the implementation plan:

Prepare for implementation (September to November 2016):

o Agree in principle with potential funders and stakeholders the mandate and

services of the Hub

o Appoint a senior consultant to act as “broker” of the various agreements and

contracts between relevant funders and stakeholders as well as manage

negotiations to obtain and shop-fit a Hub premises. This person will act and

negotiate on behalf of Hout Bay Partnership to ensure progress towards

implementation

o Facilitate contractual agreements between various parties

o The Senior consultant will prepare the job specifications for the two Hub employees

and will start the recruitment process

o Plan tourism information sessions, to be presented in the six months from January to

June 2017

Planning phase and set-up (December 2016 to March 2017):

o Establish relationships with critical service providers, including training providers and

potential business development support service providers

Develop scopes of work

o Establish relationships with relevant Seta’s and other relevant government

organisations

o Prepare scopes of work for contracted service providers and identify potential

service providers

o Appoint Hub Manager and Technical assistant

Marketing and community sensitisation (March 2017 to June 2017):

o Consultant hands over to Hub Manager

o Engage with community members and groups to identify potential tourism

businesses and entrepreneurs

o Launch media campaigns

o Refine processes to select beneficiaries

o Refine processes to develop the tourism businesses

o Refine the processes and mechanisms to create linkages for the small tourism

businesses

o Hold founding Board meeting, introducing the strategy, processes and stakeholders

to the Board

o Plan launch event

Beneficiary selection (May 2017 to June 2017)

o Run the first recruitment and selection cycle, testing the processes and selection

criteria

o Run the first boot camp / workshop for 100 first round selected beneficiaries

o Finalise Hub shop-fitting and connectivity

Hub launch (end June 2017)

o Public launch of the Hub


46

Hub operations (July 2017 -)

9. Establishment cost and Operational budget

A final decision regarding premises has been reached, and negotiations will ensue however we

suggest an allowance of R3,635,632 to renovate, shop-fit and equip a suitable Hub premises. The

breakdown of these suggested cost estimates are as follows:

Table 8: Estimated Establishment Costs for the Hub

Operational expenditure can be determined more accurately when all programme detail has

been finalised and when premises rental and salary negotiations have been concluded. The

following schedule suggests a rough estimated allocation of R3,165,000 million for the first 12

months of operation:

Table 9: Estimated Operational Expenditures for the Hub

HOUTBAYTOURISMHUBSUMMARYBUDGET

Fundraising&ContractingCosts 233800SiteRefurbishmentCosts

Refurbishment 1499000ProjectManagement 477400

OtherEstablishmentCostsMarketing/PR/LaunchEvent 349600HR/Recruitment 78000Travel&Accommodation 106832Marketing/Rental/Legal 35000ProjectManagement 276000

Sourcing,Selection&Bootcamp 263200HubStaffMentorshipSupport-6months 316800Total 3635632

2017FYOperatingCosts 3165000

TotalEstablishment&FirstYearOperatingCosts 6800632

FY2017OPERATINGBUDGET

Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 TOTAL

Infrastructure/Facilities 20000 20000 33000 33000 33000 33000 33000 33000 31000 33000 33000 33000 368000

Premisesrental 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 180000

Utilities 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 60000

Telephoneandinternet 8000 8000 8000 8000 8000 8000 6000 8000 8000 8000 78000

Cleaningservices 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 50000

Salaries 0 0 100000 100000 100000 100000 100000 100000 100000 100000 100000 100000 1000000

HubManager 60000 60000 60000 60000 60000 60000 60000 60000 60000 60000 600000

Technicalassistant 25000 25000 25000 25000 25000 25000 25000 25000 25000 25000 250000

Financeandaccounting 15000 15000 15000 15000 15000 15000 15000 15000 15000 15000 150000

Operationalcosts 3000 15000 20000 20000 10000 10000 10000 10000 9000 10000 10000 20000 147000

Transportation 3000 3000 3000 3000 3000 3000 3000 3000 2000 3000 3000 3000 35000

Marketingcost 10000 10000 10000 10000 40000

Printingcost 5000 5000 5000 5000 5000 5000 5000 5000 5000 5000 50000

Refreshments 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 22000

Programmecosts 0 30000 120000 150000 150000 200000 200000 200000 40000 160000 200000 200000 1650000

Trainingprovider 30000 30000 60000 60000 60000 60000 60000 10000 50000 60000 60000 540000

Businessdevelopment 90000 90000 90000 90000 90000 90000 20000 70000 90000 90000 810000

Specialistmentorship 50000 50000 50000 10000 40000 50000 50000 300000

23000 65000 273000 303000 293000 343000 343000 343000 180000 303000 343000 353000 3165000


47

10. Assessment and Selection of Potential Premises

10.1. Hout Bay Real Estate Overview

Hout Bay has a significant shortage of suitable commercial space.

Centrality and proximity in Hout Bay is a matter of perception. Centrality must be considered in the

context of access to markets and other businesses within the area. Traffic congestion, parking and

easy access by clients are the major considerations for site selection. IY and Hangberg are literally

no more than three to five minutes apart by a taxi when en-route. It is well known by speaking to

residents from all communities that public transport in Hout Bay is efficient.

Feedback from the largest commercial real estate company, Cape Coast Properties, indicates

the scarcity of commercial property to accommodate the hub or potential growth. An additional

four estate agents were approached, including ‘Just Commercial’ with no listed prospects to

consider.

An exhaustive process to locate suitable premises uncovered two potential sites that are currently

feasible.

10.2. Criteria for Site Selection

Based on the intended programmes to be offered from the hub, the following guide serves to

identify the most appropriate selection.

The ideal facility should be able to provide;

Ideally a facility that is ready to accept occupants

Ideally situated in a business district (business traffic)

Scope to expand over time

Accessible to public transport

Parking space for tenants and visitors

Have all ICT trunking in place

Require minimal upgrades or improvements

Have a sizable board room that can also serve as a training room

Reception area (communal)

Meeting rooms (at least two)

At least 4 – 7 offices or an open-plan area which can be used as shared working space

Space to install shared office equipment

Kitchenette

His / hers Bathroom

Ideal venue for training

10.3. Assessment of Potential Hub Sites Against Requirement Criteria

Table 10 indicates the recommended site selection for the housing of the proposed hub. The

recommendations are based on the site visits that were done.


48

Table 10: Assessment Criteria HBP Tourism Hub

10.4. Selection Process

The process of selecting an ideal hub location is informed by mostly centrality and affordability.

There is a very strong sentiment to focus on the tourism sector with the needs analysis and certainly

the desktop research unearthing many craft businesses.

The Bay Harbour Market operated by Mr Anthony Stroebel is the critical player in the proponent in

the future strategy for crafters and manufacturers of crafters and bringing their ‘craft’ to market.

The Bay Harbour Market is likely to become an even greater pinnacle point for tourists and there

might be synergy between locations within this proximity.

If we were to consider the fact that office space, separate of the hub operations are needed then

only one option remains viable. The cost analysis is clear from the space available.

Drawing on the research and outcomes of the feasibility study, the following must be considered:

What type of entity or business would select each site?

Given the research completed, where would most entrepreneurs travel from?

Who are the typical neighbouring businesses?

Is there a potential for developing business partnerships with more established businesses?

Will the hub require a cluster support mechanism?

The site selection process is narrowed down to two potential offerings – either on opposite sides of

Hout Bay and within business districts;

Requirements

Option 1:

Workspace

Option 2:

Checkers

Option 3:

A Grade

Office

Option 4:

TCT

Accessibility Suitable for

disabled

Accessible Not ideal Ground

floor, yes

Can be made

accessible

Centrality On main route

/ industrial

area

Industrial

area

Retail area Off Victoria

Drive

Next to fire

station, central

Affordability Depends on

Funding

R45 000 /

9000sqm

R10 400 /

130sqm

R28 950 /

262sqm

TBD

Facility

suitability

Cluster

approach /

convenient

space for

industry cluster

Suitable for

cluster

approach

and to house

HBP

Limited

space

Ideal if initial

scale is

limited to 8 –

10 offices

Could house

5-6 offices – no

boardroom

Size 300sqm -

1000sqm

9 000sqm 130sqm 262sqm Approximate

300-400sqm

Proximity To all suburbs Within

industrial

area and

next to Hout

Bay market

Within a

more

retaildistrict

Off Victoria

drive main

road – close

to many

businesses

On IY /

Chapmans

Peak main

road

Broadband

infrastructure

Range of

support and

coverage

Existing To be

installed –

own cost

Need to

install

Needs lots of

refurbishment

/ neglected


49

Table 11: Site Selection

Site 1 Site 3

Address: 31 Harbour Road, Harvest Centre

Identified Space: Office Centre on the top

floor above the Bay Harbour Market

Est. Floor Size: 300 – 600sqm

Features: Board Room / Training Room / 5

Offices / His/Her bathrooms / space for

shared equipment / Reception area / Studio

can be sub-divided into shared space /

Kitchenette / Security

Address: 29 Melkhout Crescent

Identified Space: A-Grade Office Space to Let

– Previously leased by a top Engineering

Company

Estimated Floor Size: 262sqm

Features: 9 secure parking bays / 8 well laid

out offices / well ventilated reception / server

room / first floor board room with balcony /

neat kitchenette / his & hers bathrooms / yard

with borehole / additional board room or

training room in yard

10.5. Prospective Funding Sources and Conditions

The following are some of the potential funders that can be considered.

10.5.1. Comprehensive List of Potential Funders

For many incubators, securing funding to cover all operational expenses can be a deterrent to

potential funders. Hout Bay presents a unique opportunity because of the proposed structure of

the intended hub. Below is a depiction of an approach the hub may consider to cover costs and

has been factored when approaching various stakeholders. Cross-pollination of services can also

reduce the demand for staff, reducing overheads and project related expenses.

Developing a stakeholder network that allows cross-pollination of services also allows funding for

all network partners to reach an expanded base. Another form of income for the hub is to

become a service provider to a select few of the institutions that subsidise BDS.

Table 12: Funders List

Project Based Funding Operational Funding Funding Strategy

STP (Seda Technology Programme –

Technology Transfer)

French Tech – SME development in fishing

industry

ACT – Arts & Culture Trust for creative arts

entrepreneurs

Tinstwalo Atlantic

Growthpoint Properties – Shawn Theunissen

Capitec Bank

AVI – Fishing

https://www.avi.co.za/guiding-principles/

(Has not achieved their threshold for

Supplier development)

Rental income

Fee for service revenue

Partnerships that support

shared space and shared

staff

Augment base services

with time bound projects

BDS Consulting Fees

% rental income based on

performance i.e. funder

pays rent for SME that

increases revenue – cash

saving goes towards

Enterprise Development

– hub

Virtual Incubation

Walk-in Clients

Project-based –

creative arts

TIA – Project – co-

funding available

Individual company

funding – network

partners i.e. Woolworths

Supplier Development

AVI for fishing industry –

https://www.avi.co.za/guiding-principles/


50

Pick n Pay – Mishinga Kombo

First National Bank - Heather Louw – Head

Vumela Fund

Dti ISP Incentive Programme

Cherie Blair Foundation

Rockefeller Foundation -

https://www.rockefellerfoundation.org/our-

work/bellagio-center/

Department of Arts and Culture – Creative

Industries

https://www2.fundsforngos.org/civil-

society/charles-steward-mott-foundation-

supporting-efforts-that-promote-a-just-

equitable-and-sustainable-society/ -

Rolling Deadline for South Africa

Woolworths SA – ElethuDelo

Ackerman Pick n Pay Foundation

graduating out in hub

Nominal fees for shared

equipment

Nominal rental from HBP

Board Members

Fishing Tourism

Cherie Blair Foundation

– for targeting Women

Co-fund Cherie Blair

with Department of Arts

and Culture for woman

in creative arts

Department of rural

Development and

Social Development to

focus on Micro-

businesses

https://www.rockefellerfoundation.org/our-work/bellagio-center/

https://www.rockefellerfoundation.org/our-work/bellagio-center/

https://www2.fundsforngos.org/civil-society/charles-steward-mott-foundation-supporting-efforts-that-promote-a-just-equitable-and-sustainable-society/





51

References

1. An example of an Enterprise Walk-in Centre is The Business Place. This is a privately

operated walk-in centre which thrives on co-locating business development service

providers within a single space so that SME owners and entrepreneurs have a one-stop

access to services that they need to grow their businesses.

2. BUSINESS INCUBATORS: FROM THEORY TO PRACTICE

3. CEDOS (2007): BUSINESS CENTRES: B briefing by CEDOS May 2007

4. Creative Edge (2014): A Creative Hubs Project: Project Report and Best Practice Manual

5. European Commission, 2002, Benchmarking of business incubators, Centre for Strategy and

Evaluation Services.

6. HASSELL (2015): Understanding different types of business incubators, accelerators and co-

working spaces

7. http://www.ccdi.org.za

8. https://www.bluechilli.com/blog/coworking-incubator-accelerator-not-all-spaces-are-the-

same

9. ILO (2003) Business Centres for Small Enterprise DevelopmentExperiences and Lessons from

Eastern Europe

10. Kaiser Associates (2012): Report on the Economic and Socio- Economic State and Growth

Prospects of the 12 Proclaimed Fishing Harbours in the Western Cape

11. Law No 124 of 31st January 2006 of the Republic of Kazakhstan Concerning Private

Entrepreneurship (as amended and added as of January 08, 2013)

12. Managed Workspace and Business Incubators A Good Practice Guide for Local Authorities

13. Moraa, H et al (2012): ICT Hubs Model: Understanding the Factors that make up Hive Colab

Model in Uganda

14. National Business Incubator Association, 2016. Website http://www.nbia.org/

15. Re-articulating the Creative Hub Concept as a Model for Business Support in the Local

Creative Economy: The Case of Mare Street in Hackney

16. Sedini, C.; Vignati, A.; Zurlo, F.(2013). Conceiving a (New) definition of hub for the

development of a transnational network for creative companies. Available at:

http://eujournal.org/files/journals/1/books/Cracow2013.pdf

17. The European Commission Enterprise DG, Benchmarking of Business Incubators, February

2002

18. Urban Enterprise Pty Ltd (2008): Macedon Ranges Business Development Centre Feasibility

Study

19. Walton & Browne (2010): Coastal Regeneration in English Resorts - 2010

20. Front cover picture from http://www.amblesideschool.co.za/


52

Annexures


53

Annex 1: WCBDC Summary

Annex 2: Sample of Projects Implemented by WCBDC

West Coast Business Development Centre

Business form Section 21 company, and registered NPO

Stated mission To develop and enhance the growth of Small, Medium, and Micro

Enterprise (SMME) in the West Coast Region through the delivery of

quality and cost-competitive services.

Management Executives (CEO and Operations managers) and board of directors

Services Training, Business linking, export development, and project

management. Finance, tender opportunities, resource centre.

Partners Casidra, Businesses required to do ESD, Tronox, Namakwa Sands,

Arcelor Mittal Saldanha Works, Sea Harvest, Duferco Steel Processing,

PPC Saldanha, Transnet NPA in terms of the accreditation process they

have agreed to contribute to the development of existing SMMEs as

part of the SME Development- and Business Linkage Programme.

Staffing Admin staff, BDS advisors, and contracted specialists

Funding sources Programme donors (WC Department of Economic Development and

Tourism, Tronox Namakwa Sands)

Project Donors/Sponsors (Anglo America, FNB

Annual budget R1.5 million

Website link • http://www.wcbusinessdevelopment.org.za/


54

Annex 3: WCBDC Governance and Staffing Structure

Annexure 4: Nelson Mandela Bay Science and Technology Centre

Annexure 5: Black middle class plays catch-up

NMB Science & Technology Centre

Business form NPO

Management CEO, CFO, Project manager, Enterprise Development Manager

Services Enterprise development, Education & Skills development, Town

regeneration

Eco-hub model (develop skills for self-dependency and sustainable

utilization of natural resources), the model encompasses 4 areas: Nursery

incubation, vegetable and medicinal plant production, recycling of

waste, compost making, arts and culture.

Infrastructural development/enhancement

Community development. Uplifting NGO within the area.

Partners Dept of Science & Technology, EC province, NRF, ECDC, SAASTEC,

Innovation Hub, Eskom, Volkswagen, NMB Business chamber, Continental

Staffing Business development officer, education programme coordinator

Governance Board of directors

Advantages They have a NMB Science & Technology Centre with various programmes.

There are school outreaches, school group tours, education support

programmes, grade 11 revision, and a holiday programme. The centre is

equipped with interactive exhibits, 150-seater auditorium, classrooms and

chemical laboratories.

Funding sources Fully Funded by Nelson Mandela Bay municipality

Annual budget

Website link http://www.uddi.co.za/


55

Black middle class plays catch-up

By Servaas van der Berg January 26 2014, 11:07

SINCE at least the 1960s, the prospects for growth of the black middle class have animated

commentators and marketers alike.

The reasons are obvious — a growing middle class holds out the hope of a more stable and

mature democracy, and the demographic dominance of the black population means that their

entry into the middle class promises lucrative prospects in the consumer market.

Yet, time and again, those observing consumer patterns of the middle class have been surprised

by the substantial differences in the consumer behaviour of white and black members of the

middle class. Why do black middle-class consumers have different patterns to their white

counterparts? What do these differences mean for the prospects for growth of the market for high-

end goods?

Analysts have advanced at least three explanations.

The first possible explanation is that, for historical and/or cultural reasons, black consumers have a

greater desire for conspicuous consumption — consumption that is visible and can be seen as a

statement of the individual’s or household’s status. This view has recently been advanced by a

German researcher, Wolfhard Kaus, who undertook a detailed study of the extent of conspicuous

consumption and found that black and coloured households spent about 50% more than white

households with similar income levels on visible-consumption goods “that are portable and easily

observable in anonymous interactions”.

He concludes that “concerns for status ... appear to be an important factor in explaining

differential spending on visible consumption across social groups”.

According to his analysis, this applies across the income distribution and not only to the middle

class. A less nuanced version of this argument holds that conspicuous consumption is more

common among black middle-class consumers because they constitute a first generation that has

had an opportunity to rise up the income ladder. According to this view, those who have been

economically successful wish to demonstrate this by their lifestyle and want to do so

conspicuously.

A second possible explanation of the differences in consumption patterns between white and

black middle-class consumers is the “black diamonds” perspective. According to this hypothesis,

black middle-class consumers have distinctly different tastes, which are culturally determined, to

their white counterparts. Marketers need to understand these cultural factors and tastes and

ignore them at their peril. This school of thought has been advanced particularly by the University

of Cape Town’s Unilever Institute, led by Professor John Simpson.

Many black people are reluctant to identify with the term “middle class”, given its association in

our history with white lifestyles, which were unachievable for most black people under apartheid.

They also often reject the idea that their consumer behaviour is different to that of their white

counterparts, and react against the term “black diamonds” and its implicit message that black

consumers in this income group are different.

Such objections do not in themselves nullify the possible value of the conspicuous consumption or

the black-diamonds view of consumer patterns of the black middle class. In fact, proper


56

understanding of the consumer market cannot occur without cognisance of cultural factors that

influence taste.

A third perspective offers a better explanation of the behaviour of black consumers and is in line

with the perspective that economic factors strongly influence behaviour. This is the asset-deficit

hypothesis.

The main explanation of the differences in consumer patterns between white and black middle-

class consumers, after considering their income, is the difference in the assets they own.

Assets would include houses, cars and appliances. Most black consumers in the middle class are

relatively new in this position. Unlike many of their white counterparts, they have not inherited

assets, nor have they earned good incomes over a long period (many are quite young), so most

of them are still busy accumulating assets: a good house, other property, cars, durable consumer

goods. Therefore, they consume less of some other consumer goods and services such as travel,

holidays and medical insurance.

When one considers both their income and their assets, middle-class black consumers behave

much like white consumers in a similar economic position. The difference is not so much cultural as

it is economic.

Economic behaviour depends not only on income; assets have to be brought into the picture.

Let us illustrate some of this. Among black households with an income of between R7,500 and

R22,000 in 2009, only 46% owned a car, whereas the corresponding figure among white

households was 83%. A similar discrepancy exists in regard to ownership of a deep-freeze: 23% of

black households and 52% of white households in this group have this asset.

Buying patterns show that black households are spending much of their income on reducing these

deficits, acquiring cars, property and durable goods and spending on education. In so doing, they

are left with less money to consume other goods and services.

Does all of this matter? It does. If the differences in consumer patterns between whites and blacks

in the middle-income range are explained mainly by an asset deficit, rather than cultural

differences that affect tastes, we would expect to see consumption patterns converge once they

have accumulated more assets.

New entrants to the middle class will again start with an asset deficit. So, forecasting of

consumption patterns in the middle class must take into account two groups not defined

according to race, but according to assets: an established and an emerging middle class. If our

economy grows, both groups will grow as time passes.

New entrants with few assets will be added to the emerging middle-class group, and the

established middle class will grow as members of the emerging group acquires assets.

So, although the growth of certain market segments has not been as rapid as many would have

expected, the potential for growth is large. Some of the growth was muted owing to the emerging

middle class starting with an asset deficit. As it becomes part of the established middle class, we

will see a demand boom for some of the consumer goods and services whose purchase they

initially had to postpone. Expect to see a take-off in the growth of middle-class consumer goods

that blacks initially shunned.

• Van der Berg is a professor of economics at Stellenbosch University and holds the National

Research Foundation’s South African national research chair in the economics of social policy. He


57

was the first researcher from Africa to become a fellow of the prestigious International Academy

of Education.

• This article was first published in Sunday Times: Business Times17

The next table indicate the list of people contacted for this study.

17 This article can be accessed at http://www.bdlive.co.za/opinion/2014/01/26/black-middle-class-plays-catch-up

Name of

organisation

Contact Person Position Physical

Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

Hout Bay

Partnership

Chantal Richey Chief Operating

Officer

Hout Bay 826 641

545

[email protected]

a

10-May-

16

OPS

Meeting

Small

Enteprise

Development

Agency -

Seda

Technology

Programme -

Furntech

TervernJaftha Senior Manager:

Incubation

Fields Office

Block A -

1066 Burnett

Street,

Hatfield

124 411

366

[email protected] 10-May-

16

Meeting /

Site-Visit

Peace and

Mediation

Forum (PMF)

Gregg Louw Chairman Hangberg 62337469

0


16

Meeting /

Site-Visit

Economic

Development

Partnership

(EDP)

Jodi Allemeier Project

Coordinator

24th Floor

Atterbury

House,

Riebeek

Street

847 927

305


16

Meeting /

Site-Visit

Bethesda Priscilla Jansen Chairperson Hout Bay

Church

(DRC) cnr

Albert and

Oxford

Streets

21790703

7


16

Meeting /

Site-Visit

South African

National Civic

Association /

Hout Bay

Partnership

Board

Clifford

Nogwavu

Community

Member -

ImizamoYethu

(IY)

ImizamoYeth

u

N/A 28-May-

16

Meeting /

Site-Visit

mailto:[email protected]







1

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

Member

SANCO - IY LindekaMbina Community

Member of

SANCO IY

ImizamoYeth

u

73142691

7

N/A 28-May-

16

Meeting /

Site-Visit

Stone Hill

Originals -

Entrepreneur

Debbie

Braunlich

Owner 21 Harbour

Road,

Harvest

Centre

82455160

1


16

Meeting /

Site-Visit

Robin Kutinyu Robin Kutinyu Owner 21 Harbour

Road,

Harvest

Centre

81780074

5


16

Meeting /

Site-Visit

Workspace Craig Dunlop Owner 21 Harbour

Road,

Harvest

Centre

82459928

0


16

Meeting /

Site-Visit

Oceana Kevin Changoo

/ Suleiman

Technical

Director / MD

Lucky Star

Oceana

House, 25

Jan Smuts

Street, Cape

Town

82823488 [email protected] 08-Jun-16 Meeting /

Site-Visit

SedaWynber

g Branch

Melchoir Collins Business Advisor Suite 1

Burlington

Arcade

Lester Road,

Wynerg

21762038

2


16

Meeting /

Site-Visit







2

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

SedaWynber

g Branch

Corlette Egypt Business Advisor Suite 1

Burlington

Arcade

Lester Road,

Wynerg

217 620

382


16

Meeting /

Site-Visit

False Bay

College

Steve Reid Manager:

Centre for

Entrepreneurshi

p

Westlake

Campus,

Westlake

Drive,

Westlake

83378448

2

[email protected] 21-Jun-16 Meeting /

Site-Visit

Pescaluna WP

Labuschagne

Operations

Manager

Lot 83, Hout

Bay Harbour

762 099

948


Site-Visit

Sijonga

Phambili

Malcolm Coppin Director Penzance

Avenue,

Hout Bay

21790181

7


Site-Visit

Lyfe

Computer

Technologies

Life Manuwe Owner Penzance

Avenue,

Hout Bay

71828122

1


Site-Visit

Department

of economic

Development

and Tourism

YoliswaGogela Manager 11th Floor,

NBS Waldorf

Building, St

Georges Mall

21483506

5

[email protected]

a

27-Jun-16 Meeting /

Site-Visit

Fresh Air for

Hout Bay

Kiara Worth Director Hout Bay 72283759

0

[email protected] 09-Jun-16 Electronic /

Abroad

National

Empowermen

t Fund (NEF)

Chris Louw Regional

Manager

Suit 2818,

28th Floor,

ABSA Centre

-

82577469

5


Site-Visit






3

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

RiebeekStree

t

Bay Harbour

Market

Anthony

Stroebel

Co-owner /

Founder

member

3 Harbour

Road, Hout

Bay

83275558

6

[email protected] 11-Jul-16 Telephonic

Woolworths Elethu Delo Specialist:

Enterprise and

Supplier

Development

93

Longmarket

Street, Cape

Town

21407911

1

08-Jul-16 Telephonic

Pick n Pay Mishinga Kombo Enterprise and

Supplier

Development

Manager

101

Rosemead

Avenue,

Kenilworth,

Cape Town

21658173

4

[email protected] 7 July

2016 (still

no

response)

Telephonic

/ Email

Imzu Tours Mzukisi Lembeni Owner / Tour

Operator

N/A 73507362

2


Innovation

Digital

Executives

Chad Bartlett Director Hout Bay 214 669

400

7 July

2016 (still

no

response

to

messages

and

linkedin

messages

)

Telephonic





4

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

French Tech Romain Petit International

Expert in

Innovation

JHB 79743443

2

[email protected]

m


Shantelle Meter Entrepreneur Hout Bay 83679394

9

N/A 08-Jul-16 Telephonic

Ikwezi Tourism

Fund

Fathima

Hafferjee

PA to Chief

Executive

2 Rosemary

House, 1

Mellis Road,

Rivonia

118 803

790


Ikwezi Tourism

Fund

Dr SalifouSiddo Chief Executive

Officer

2 Rosemary

House, 1

Mellis Road,

Rivonia

11880379

0

[email protected] 25-Jul-16 Electronic -

Funding

Tourism

Enteprise

Partnership

(TEP)

Shanaaz Taliep Programme

Manager

Penlyn

Estate,

Southern

Suburbs

79134352

4


Operation

Phakisa -

Ocean

Economy

Ms Sue

Mosegomi

Ocean

Economy

Secretariat

Pretoria -

Department

of Public

Works (DPW)

83326184

3

[email protected] 18-Jul-16 Email /

Telephonic

Operation

Phakisa -

Ocean

Economy

Mr Lucas

Williams

Ocean

Economy

Secretariat

Pretoria -

Department

of Public

Works (DPW)

82806380

6

[email protected] 18-Jul-16 Email /

Telephonic









5

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

Small

Harbours

Development

Unit

Sivene Lolwana Deputy Director Department

of Public

Works

[email protected] /

[email protected]

20-Jul-16 Email - no

response

SEFA Zanele Dodi Investment

Officer

FNB Building,

9th Floor,

Long Street

83442753

7

[email protected] 28-Jun-16 Telephone

Matt Mercer Hout Bay

Specialist

Hout Bay 83299113

3

[email protected] 13-Jul-16 Email and

Telephone

Tintswalo

Atlantic

Ryno du Rand General

manager

Hout Bay 21201002

5

[email protected] 08-Jul-16 Email and

Telephone

Riversands

Incubator /

Century /

Tintswalo

Tracy Henley Director JHB [email protected] 18-Jul-16 Email

Iziko Lo Lwazi Marilyn 1

Baviaanskloo

f Rd

21790227

3

[email protected] 30-Jun-18 Site Visit

CoCT

Property

Management

Wilson Baartman Manager Plumstead 21400129

9


CoCT

Property

Management

Mrs Ruby

Gelderbloem

Director Cape Town 21400136

1


Poweredbyit Bertram Richards Director Cape Town 81713055

7

[email protected] 19-Jul-16 email /

Telephonic







6

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

TCT Nathan Quimpo Manager Hout Bay,

Main Road

21790152

0

[email protected]

a

05-Jul-16 Site Visit

Lola Kramer Claire

Whittington

Rental Agent Victoria

Road

71313942

7

[email protected] 05-Jul-16 Office Visit -

Claire out -

Called

back

Seeff Hout

Bay

Esmeralda

Lowers - Not in

Rental Agent F3

Mainstream

Centre

21790103

2

[email protected] 05-Jul-16 Not in - did

not

respond to

email

Greef

Properties

Ruth Webb Rental Agent -

not dealing in

office /

commercial

Shop D1

Mainstream

Centre

828 237

339

[email protected] 05-Jul-16 Not in

Office

Cape Coast

Properties

Anton / Shaun

Bloch / Bernice

Muller

Commercial

Properties

10 The

Passgae

Way, Main

Road Houth

Bay

21790234

5

[email protected] 05-Jul-16 Office Visit /

Email /

Telephone

Rawson

Properties

Dawood Khan Property Agent Property

based at 29

Melkhout

Crescent

76592600

3

[email protected],za 05-Jul-16 Telephone

/ Site Visit /

Email

Traffic

Department

Sean Glass 21444901

1

19-Jul-16 referred to

David

Sampson

Traffic

Department

David Sampson Head: Transport

Network

Information

21812441

9

[email protected]

a

19-Jul-16 Email






mailto:[email protected],za




7

Name of

organisation


Address

Telephon

e

E-Mail Date of

contact

Type of

Consultatio

n

Oceana Mariam Peters PA to Suleiman 21415855

4

[email protected].,za 20-Jun-16 email and

telephone

Enteprise

Development

Council of

South Africa

Sisa Ntshona Chairman JHB [email protected] 20-Jul-16 Telephone

and email

Tarragona

Lodge

Derek Paxton Owner Valley Road,

Hout Bay

21790508

0


Southern

Ambition

Gregg Louw Owner Hangberg,

Hout Bay

62337469

0


Chris Smith Potential

Entrepreneur

Looking to

enter Bay

Harbour

Market

72657386

5

24-Jul-16 Harbour

Market Visit

Ashley Baily Existing Market

Entrepreneur

24-Jul-16 Harbour

Market Visit

Gavern Mitchel Potential

Entrepreneur

Works in

Harbour

market

24-Jul-16 Harbour

Market Visit

Janine Mosadi Applying for

Traders Permit

Employed in

market

24-Jul-16 Harbour

Market Visit

Cherie Blair

Foundation

Tallulah Perez-

Sphar

Head

Communication

s

United

Kingdom

[email protected] 22-Jul-16 Email

mailto:[email protected].,za





Establishment of an Enterprise Support Hub in Hout...

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