Rapporteur Report
Plenary Session 1
1.0 Title of Discussion
Business Incubators as a Tool for Promoting
Small and Medium Enterprises
2.0 Presenter
Dr. Kachesa Bbenkele (
3.0 Moderator
Dr. Jonathan Chileshe
4.0 Rapporteurs
4.1 Shahrin Hj Mohd Tamit
4.2 Siti Rozana DP Hj Mohd
Yunos
5.1 Abstract/Overview
5.2 Main Points and Issues Discussed
5.2.1 The problems faced by SMMEs: (1) The political environment as a problem i.e. misallocation of
resources; (2) Market access i.e. not enough information to make full use of
the market; (3) SMME access to finance i.e. start up and bridging finance is
costly for SMMEs; (4) Lack of business skills and (5)
Technology acquisition i.e. there is a need to acquire the right technologies
to offer appropriate products and services to clients.
5.2.2 Role of business incubators: To minimize the problems stated
above and to provide comprehensive assistance and the conducive
environment.
5.2.3 Types of business incubators: Targeted population,
international incubator, industrial subcontracting incubator, single business
incubators, university incubators, hub incubator, virtual incubator and
regional/rural incubators.
5.2.4 Benefits of using incubators: A business incubator aims at (1)
Increasing the rate of new business formation; (2) Increasing the rate of
survival and success of new enterprises (i.e. reducing the failure rate); (3)
Increasing the rate of development of new enterprises; (4) Increasing the
efficiency of the dissolution process (i.e. using assets elsewhere in the
economy). This is done through, entrepreneurial development, training in
various skills, shared use of equipment and facilities, technology transfer,
lower operational costs, networking and business linkages.
5.2.5 Challenges for business incubators:
(1)Artificial environment created that will not allow the SMMEs to experience the reality after graduating; (2)
Permanent squatters i.e. the comfort zone makes it difficult for some SMMEs to move out; (3) Show casing SMMEs
i.e. this is mainly for attraction of funds; (4) Low support from governments
i.e. even if support was to be gained eventually, it takes time and only
partially; (5) Poor management of incubators i.e. prepare essential
fundamentals before establishing an incubator and (6) Cultural problems i.e.
realization of how the social process will change and the effect on the
entrepreneurs.
6.0 Suggestions and Conclusions
·
Government
support is needed in getting good quality incubator managers and if possible
leveraging this with bilateral assistance programmes.
·
Management
have to be keen witted with a zeal to provide efficient services to tenants, and
that add value by providing a range of superior services to support the new
enterprises.
·
·
Location
– an incubator should be situated nearby where the necessary technology and
infrastructure can be offered.
·
This
paper highlights business incubators as an instrument for promoting SMEs and
the challenges and solutions that need to be addressed. Great emphasis was made
on the role of the government to ensure that these incubators will achieve
their objectives.
7.0 Question and Answer Session
7.1 Q: What are the alternatives if the country
lacks the government support in initiating an incubation
center due to lack of resources? (
A: Resources are not enough in the
government and it is not just finance, it is also support through goodwill in
running the programmes. The incubators have to be
innovative and link themselves with the large corporations. Once the large
corporations see that the incubators have low operational costs to develop
technologies or raw outputs, it will be attracted to work with the incubators.
7.2 It is no doubt that access to
finance is a problem, but the real problem would be financial management once
funding has been obtained. The linkage to MNCs is a
dangerous learning process because it is the same as putting all your eggs into
one basket. Normally, SMEs that can define their main niche will be more
capable in getting the funding. It was also noted that the idea of having
in-house training will be beneficial to SMEs. (
A: People do not have access to
financing, let alone to manage the finance.
7.3 Q: What is the effect of globalisation on SMEs and how can incubators be effective?
(
A: SMEs have to continuously
evaluate themselves where they are in terms of technology. The government
should assist the SMEs to keep abreast with the technology trends so that they
can compete in the markets. Empower the SMEs for them to assimilate
technologies that can be seen as more advanced than the developed countries.
7.4 Q: What is the performance of the incubatees after 3 years leaving the incubators? (
A: It has been reported, 3500
incubators in the world, 87% of graduates have developed and grown their
businesses. Private and non-profit incubators, the latter has higher rent to
pay, whereas the former only have to pay minimal rent but those that manage the
incubators are involved in an equity scheme to create a sense of ownership and
control.
7.5 Q: How should incubators be set up? (
A: Government should form a
dedicated unit to support the business incubators and the unit has the
responsibility to recommend the essential policies that are required by the
SMEs to the higher authorities.
Funding – the government has a lot
to contribute in terms of money. An incubator would look at the government to
provide the financial support.
Location – to be identified by the
government as the incubators would not be able to readily identify the best
location in which to set up.
7.6 Q: How should training be conducted? (
A: Education will continuously and
rigorously take place within the incubation center. The supervisors of the
incubators will ensure that the graduates will continuously implement the
skills that they have developed in the incubation period. The idea is to
empower the entrepreneur through education so that they are able to identify
opportunities and modern technologies.
7.7 Q: Is political commitment the
main ingredient to the success of business incubators? (
A: Entrepreneurial spirit must
exist for incubation to work but people would normally wait for the governments
to help them.