FOR the next few weeks, I would like to focus on enterprise development as one of the opportunities for our communities whether at home or in the Diaspora.
With Zimbabwean unemployment levels hovering north of 70%, this option need to be clearly promoted as a career option because most of us have been brought up on just a job-focused mindset.
A few years ago, we were hosted by China’s Ministry of Science and Technology in the city of Shanghai with a population of more than 18 million. We visited the University of Pudong, Shanghai Business and Technology Incubator, the massive science part in the city and similarly related incubators. The purpose of the visit was to understand how China was using incubation as a means for enterprise development.
Incubation normally conjures images of premature babies in controlled environments waiting for further development before they are released into the real world. Business Incubators have been referred to as new venture “nurseries”, “accelerators” and “greenhouses”. Technology Incubators on the other hand, foster the growth of new technology-based ventures by helping to close the gaps in the innovation process and correct for market failures.
While we were in China, we noticed that in the science parks and incubators most of the key personnel spoke English and our hosts indicated that their main target for these centres were Chinese professionals based in the Diaspora. According to them, probably over 80% of the people locating there had Diaspora roots.
With a knowing wink, our host even mentioned that a good number of those new companies were from Chinese Taipei (as mainland China would like Taiwan to be referred to as) and Hong Kong. So even though they may have disapproved of their ideological slant, they were not averse to attracting them to set up business in mainland China. In fact, even rapidly growing companies such Alibaba have their genesis in such areas.
Business incubation and mentorship play a crucial role in accelerating technology commercialisation, fostering overall entrepreneurial development and maintaining a spirit of entrepreneurship. It offers exciting opportunities for countries emerging fromperiods of de-industrialisation like Zimbabwe. The advantage of the knowledge economy is that the knowledge economy does not really require a huge infrastructure like our dying textile company, David Whitehead, in Chegutu.
Business Incubationis an enterprise development strategy which is a unique and highly flexible combination of business development processes, infrastructure, and people, designed to nurture and grow new and small businesses by supporting them through the early stages of development and change. An incubator can create quality jobs at reasonable net public subsidy cost, widen the tax base and reduce gestation and costs of entering market, while enhancing chances of success.
Looking at Minister Tapiwa Mashakada’s Economic Development and Industrialisation strategy, the Diaspora is almost added as a footnote or an afterthought. He mentions that they would like to mobilise funds from the Diaspora as if they are a passive source of funding.
Business incubation can provide a soft-landing opportunity for Zimbabweans who have stayed too long in the Diaspora. Once they decide to return, they could bring with them some of their savings which could stimulate other economic activity including construction.
This opportunity would allow them to hit the ground running if on the first week of arrival they are set up in an incubator with broadband connectivity, meeting and board rooms. They could start conducting business without wasting time queuing at the local authority office or ZESA which would all be required if someone was setting up from scratch.
Mentorship in Zimbabwe can be delivered through the medium of business and technology incubation. Mentorship can provide a non-threatening, low cost, low risk and effective means of introducing small companies to innovation and cutting edge strategies. Mentors can engage emerging entrepreneurs as protégés and provide them with expert guidance and counsel in their early phase development while demystifying the notion that the innovation chasm cannot be bridged.
What can be measured usually gets done, so a technology incubator provides a formal setting for delivering a mentorship programmes whose impact can be evaluated and monitored through the service support regime already resident in the incubator.
Start-ups anywhere have a relatively low success rate and improving the rate is important for Zimbabwe. The dilemma is that Zimbabwe has a low uptake of new entrepreneurial ventures. A technology incubator particularly within a university environment widens the networking opportunities of tenant firms and makes it easier for academic personnel to exploit knowledge-based business ideas, thus lowering the barriers that inhibit direct commercial application of the results of university research.
The aim is also to promote technology transfer and diffusion while encouraging entrepreneurship among researchers and academics.
Technology incubation can be used as a means to support and lower the risk of techno-entrepreneurship which otherwise would be prohibitively costly for start-ups. While the set up may have been an attempt to bridge this gap, I will look at the pros and cons of this option.
Technology incubators are particularly important for developing countries because they provide a supportive infrastructure and environment where companies can be nurtured in the critical period of their life and they act as a catalyst for technologically educated entrepreneurs.
Business incubation support mechanism plays a midwifery role for start-up entrepreneurs but is not directly responsible for starting the enterprise. Business incubation is one of the most effective vehicles for lowering failure rates among start-up companies. Common reasons for failure of new ventures included insufficient access to capital, lack of managerial expertise, and insufficient marketing expertise.
Services commonly provided in an incubator include business plan development; accounting, legal, and financial planning; aid in attracting investors; marketing; and common shared services such as secretarial support and facility maintenance.
There is, however, a danger that incubation can turn into “life support”, as reported that 50% of the companies in one incubator studied remained in the incubator after four years. The idea is to give sufficient support until the company is strong enough to face the real world.
In an assessment of the incubator industry in the USA, Allen and McCluskey surveyed 127 incubators to evaluate the value added continuum ranging from property development to business development. They examined through multiple regressions analysis relationships between structural services, policy variables, job creation and tenant graduation.
The study showed that incubators were not quick fixes but showed a lot of organisational learning occurs through the life cycle process increasing positive outcomes. Technology incubation creates better conditions for the emergence of new entrepreneurship especially the technology-based enterprises.
There is a general worldwide consensus on the efficacy of business and technology incubation, particularly how it supports entrepreneurial ventures and reduces mortality rates of new ventures but the incubators are not magic bullets for every economic problem. The key to success for any entrepreneurial venture is ultimately determined by the entrepreneur.
Tafirenyika L. Makunike is the chairman and founder of Napachem cc (www.nepachem.co.za), an enterprise development and consulting company. He writes in his personal capacity