The Shell LiveWIRE entrepreneurship programme is the only global corporate- sponsored programme of its kind. As a global programme, it supports entrepreneurs to tap into a wide network of other entrepreneurs and opportunities. A recent review of the programme revealed some interesting insights about how to best structure support for entrepreneurs for the purposes of job creation and creating a pipeline of suppliers in Shell’s core business.
The Shell LiveWIRE programme is a global programme that aims to help young entrepreneurs establish businesses. It has been running in South Africa since 1995 and was relaunched in partnership with Raizcorp as LiveWIRE 2.0 in 2014, with renewed emphasis on supporting businesses in high-performing sectors that can feed into Shell’s supply chain.
Approximately 3.3 million young people (age 15 to 24 years) in South Africa are unemployed, 60% of whom have never had a job. South Africa also has highly concentrated product and service markets where a few suppliers provide the majority of goods and services in many industries, making it almost impossible for new entrants to stake a claim. Programmes like Shell LiveWIRE aim to address both of these challenges. By supporting previously disadvantaged youth-owned businesses in sectors aligned to Shell’s supply chain, Shell is giving these businesses a chance to become a supplier to a global corporate. For most small, medium and micro- sized enterprises (SMMEs) in South Africa, this kind of market access opportunity is rare.
Making SMMEs part of the supply chain also makes good business sense. SMMEs can be more flexible and innovative in providing products and services. They are often also more connected and responsive to local markets. By offering enterprise development programmes, corporates are awarded Broad-Based Black Economic Empowerment (BBBEE) points and can make a valuable contribution to socioeconomic transformation in South Africa.
Shell’s LiveWIRE model is unique in South Africa’s ecosystem of entrepreneurial support that, according to the Seed Academy’s The Real State of Entrepreneurship Survey 2017, is made up of around 340 service providers. In addition to being a global programme, Shell is one of a few corporates that currently provide support for entrepreneurs at the ideation stage of business – entrepreneurs need only have a good business idea in order to apply. The programme is structured across four phases, with 50 candidates starting off on a two-day ‘Bright Ideas’ workshop. Candidates then compete against one another, applying what they learnt in each phase in a business pitch to a panel of Shell employees and entrepreneurship experts. Only 10 candidates are selected to participate in the third phase of the programme, a six-month ‘pre-prosperator’ programme, designed to nurture business ideas into viable business plans that are investor-pitch ready. Hopeful entrepreneurs present their business plan to the panel which selects a handful to progress to the incubation phase of the programme. Incubation support is provided to the successful entrepreneurs for between one and three years, depending on the needs of the entrepreneur and their performance and commitment to the programme.
Shell has invested R6.5 million in the programme since 2014, reaching 141 aspiring entrepreneurs. Twenty-seven entrepreneurs have produced business plans to pitch to investors as a result of the programme, and five have received incubation support. In a recent evaluation of LiveWIRE 2.0 by Trialogue, three- quarters of participants surveyed rated the programme as ‘excellent’ or ‘good’. The 34 participants surveyed were found to have created 33 full-time (or full-time equivalent) jobs. Entrepreneurs have seen an increase in annual turnover of between 70% and 500% as a result of the programme. Two-thirds of participants sampled said they gained a better understanding of what it takes to be an entrepreneur, while half said the programme provided them with valuable networking opportunities, including helping them to find new clients. Other benefits reported by beneficiaries included improved governance, financial management and sales and marketing structures and processes in their businesses.
Entrepreneurs on phases three and four of the programme are assigned personal guides in various areas of business such as strategy, finance and marketing and sales. They also have personal guides to help them cope with the pressures that come with building a new business.“[The guides] helped me as a person, the way I think and speak and look at business is completely different. They taught me that I have to be able to solve problems. They taught me how to be brave,” said a participating entrepreneur.
According to entrepreneurs, the programme is intense and requires a lot of commitment, but that this is also what makes it so effective.
Shell has procured services from two LiveWIRE 2.0 entrepreneurs to date. Thabitha Malinga had just had an idea when she applied to the LiveWIRE programme in 2014. Her idea was to start a mobile beauty spa that provides treatments in the comfort of your home or office. She was on the incubation support programme for a period of three years and, with the help of Shell, has been able to purchase a vehicle and set up a flagship spa in Midrand. She now employs four full-time and 11 part-time staff. Being on Shell’s supply chain has also prepared Thabitha to enter the supply chains of other corporates: “Being a Shell service provider has had a major impact on my business – the moment someone knows you’re on [Shell’s] supply chain then they know there must be something you’re doing right.” Thabitha’s plans are to continue growing her customer base while also setting up a beauty training school for which she has already identified premises.
Lloyd Babedi is the founder of Barkzz World, a company that provides motivational speaking and DJ services, as well as branded clothing and corporate gifting. Lloyd did a motivational talk and was the DJ at a Shell team building event in 2016 in Cape Town. He joined Shell LiveWIRE 2.0 in October 2014, with a passion for entrepreneurship and to create work opportunities for people living with disabilities. As a person living with disabilities himself, Lloyd has had to face more challenges than your typical aspiring entrepreneur. The guides at LiveWIRE 2.0 helped him to stay motivated through di cult times. “My personal guide helped very much with ways of dealing with setbacks and disappointments.” The programme taught Lloyd valuable marketing and networking skills which have resulted in him taking Barkzz World to other provinces – a major milestone for the entrepreneur. Lloyd was also awarded the ‘Economic Developer and Changer of the Year’ at the Gauteng Premier Awards in 2017.
Shell’s vision is to continue to re ne its model until it is one of the best youth enterprise development programmes in South Africa. Its approach is to continuously make improvements through regular evaluations of the programme and to combine these with evidence-based research on the most effective and efficient ways of supporting SMMEs to create jobs. A number of adjustments were made to the programme after the first cohort graduated in 2015. Adjustments to the application process and selection criteria for the latter stages of the programme have already contributed to attracting higher quality entrepreneurs in the sectors that are relevant to Shell’s supply chain. The duration of phase three of the programme was extended from three to six months, offering participants a more thorough learning experience. Interventions by both government and the private sector have historically taken a trial-and-error approach, in part because of a lack of empirically-based research in South Africa’s SMME development sector. However, as the sector grows, more research is being done to figure out how programmes can best achieve sustainable outcomes, most importantly in job creation.
The findings of a recent evaluation of the Shell LiveWIRE 2.0 programme resonate with those of similar evaluations and research on job creation in the SMME sector.
Recent research has cast doubt on the job-creating potential of SMMEs in South Africa. Researchers at the University of Cape Town’s DataFirst research unit support the finding that smaller companies are shedding more jobs than they are creating. Prof Christian Friedrich, a leading researcher in entrepreneurship based at the University of the Western Cape, similarly finds that only 1% of micro-enterprises that have started with fewer than five employees have grown to employ 10 people or more. International research points in a similar direction. In a comparative study taking policy lessons from Brazil and India, Trade and Industrial Policy SA found that for the purposes of job creation, business support initiatives should be aimed at high growth and more sophisticated entrepreneurs. According to this study, evidence around the world shows that supporting high-growth businesses run by skilled and better resourced entrepreneurs creates many more jobs than supporting micro-enterprises.
Targeting already established businesses may also assist Shell with the supply chain objectives of the programme. Researchers have found that SMME incubators that facilitate access to corporate procurement opportunities are correlated more strongly with job creation (Impact Economix, 2018). Shell is a large global corporation with a sophisticated supply chain operating in a highly technical industry. As such, the time required to support a business from idea phase to one that resembles a typical Shell supplier may be longer than what the programme caters for. Some options, going forward, include extending the duration of support provided and/or selecting already established businesses to take part in the programme.
Research by Impact Economix, covering three SMME incubators sponsored by the Jobs Fund that have collectively created over 4 000 jobs, has found programmes that offer sector-specific support to be more effective. The potential benefits of focusing on specific sectors, or even product lines, are enhanced knowledge and understanding of operating markets, pooling of resources, skills transfer and information exchange. By aligning the entrepreneurs more closely with specific sectors in Shell’s supply chain, Shell could leverage its expertise to provide further advantage to entrepreneurs on the programme.
Ntobeko Mogadime | Social Investment Manager, Shell SA
Source: Trialogue Business in Society Handbook 2018.