ChemCity, Sasol’s enterprise development subsidiary, is making significant strides in helping start up new companies in South Africa’s downstream chemi-cals sector.
Since its inception in 1998, the company has helped develop more than 23 new businesses in the chemicals and related fields, and in the process has created about 700 new jobs.
ChemCity MD Dewet Deetlefs says the company’s key focus is on job creation and the development of sustainable small, medium-sized and microenterprises (SMMEs). A secondary objective is helping the start-ups achieve black economic- empowerment targets.
“To achieve these goals, we target start-ups with differentiated, specialty offerings. “In particular, we look for com- panies with strong manufacturing and export potential. We focus on companies with the potential to compete effectively against imported products. “Developing such businesses requires research and development, necessitating close cooperation with higher technology departments and institutions,” says Deetlefs.
Businesses established through assistance from ChemCity include a plant-food recovery plant from a waste stream facility. This project was only viable through technology research of over R1-million, which created 30 new jobs. Support has also been rendered to a technology research centre established for the Vaal University of Technology, and a biotechnology venture in KwaZulu-Natal. Other successes include a small-scale bio-diesel plant and various cosmetics businesses.
Critical success factors required for the establishment of small businesses, says Deetlefs, include a strong pipeline of feasible business ideas, an effective and systematic screening process, a tried and tested business development model and maximum support for viable ideas. Further, these small-business development ventures receive expert advice and guidance from Sasol’s business units.
Deetlefs adds that effective external relationships, access to development and investment funding and post implementation support are other contributing factors in the success of developing small businesses.
He says that there are many challenges that face a small business entering the market. He believes that the chemicals sector, in particular, is not SMME investor-friendly owing to a range of safety, environmental and other regulatory requirements. Chemicals businesses are also capital intensive and require eco-nomies of scale. Deetlefs points out that South Africa imports about R28-million worth of chemicals a year. Small local and regional markets, compounded by a lack of relevant feedstock and technologies, have meant that local companies have not been able to successfully replace imported product.
Businesses can only compete with unique and differentiated products if a serious commitment is made in research and development, attention is focused on higher education institutions and skills development centres, and serious incentives are given to both the entrepreneur and the incubating business entity by government, concludes Deetlefs.