Turning SA’s chemical sector into an economic powerhouse

Chemical SMMEs in Gauteng have received a boost with a new small business development programme created by the University of Johannesburg Centre of Entrepreneurship (UJCfE) and the Chemical Industries Education and Training Authority (CHIETA).

The initiative aims to grow the number of small and medium-sized chemical businesses and their impact, boosting the overall chemical sector, which accounts for 6% of South Africa’s gross domestic product (GDP) and 25% of the total manufacturing output.

“In South Africa, smaller and medium-sized enterprises account for 54% of the country’s entrepreneurial activity, but unfortunately, the chemical sector is lagging. A change is needed urgently to grow the industry so it can become an even more powerful economic driver than it already is,” says CHIETA’s CEO Yershen Pillay. “This requires a series of targeted interventions over the next decades, including helping small businesses grow. This is good for the economy and employment.”

Pillay referred to recent McKinsey research, which shows that South African SMMEs represent more than 98% of all formal businesses operating in our country, employing 50% to 60% of the workforce across all sectors. “The data also shows that smaller ventures are responsible for a quarter of all newly created private sector jobs. Imagine what we could achieve as a nation if these companies would get more opportunities to grow and strengthen their operations!”

This is where the CHIETA Small Business Programme comes in, which besides the UJCfE includes partners such as the Chemin Incubator and Shell Downstream South Africa. For now, it intends to focus on SMMEs operating in the speciality and commodity chemicals spheres. “We will start by targeting 50 beneficiaries from the greater Johannesburg area, including Soweto, Orange Farm and Modderfontein, focusing especially on black women-owned start-ups,” Pillay says.

The reason is simple: while more than half of South Africa’s population is female, women own only 34% of all smaller businesses, 2019 research by the World Bank and the OECD shows. “Women entrepreneurs face unique challenges, including lack of access to funding and prevailing misconceptions that they are less capable of running successful businesses,” Pillay says, noting that women of colour are in an even smaller minority. “We want to help them realise their entrepreneurial dreams.”

The programme, to which CHIETA has contributed R2,5 million, revolves around helping beneficiaries to boost their chemicals manufacturing and product testing skills while providing them with crucial business skills and traction coach management. By aligning itself with the Department of Trade and Industry’s Policy Action Plan (IPAP), it will also work to improve SMMEs’ access to markets.

“Our core objective is to provide SMMEs with structured advisory, mentorship and coaching support,” he explains. “More importantly, we want to cement relevant partnerships within the sector to create a framework that provides beneficiaries with opportunities to unlock business success in both national and international markets and create jobs locally. The latter has become more crucial than ever.”

For the past years, CHIETA has kick-started various programmes to help smaller companies become powerful economic players while equipping work-seekers with high-demand skills to increase their chances of employment. In 2015, it funded a boiler making and welding-related training programme in Newcastle, targeting 118 unemployed youths.

“This initiative intended to create a pool of qualified and competent professionals to assist large and small organisations during shutdowns while creating much-needed employment,” Pillay notes.