Israel to show the S. Africans how to do business

More South Africans may soon be going to work thanks to Israeli expertise.

By SUZANNE BELLING
March 22, 2007 06:55
3 minute read.

 
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An agreement in the pipeline between South Africa and Israel, a world leader in small business startups and development, could break new ground in the area of job creation. Eli Opper, chief scientist at Israel's Industry, Trade and Labor Ministry, visited South Africa at the invitation of its Department of Trade and Industry in the initial stage of the anticipated agreement currently being negotiated. His week-long visit last month coincided with a budget speech by South African Finance Minister Trevor Manuel in which he emphasized the importance of small businesses. "Entrepreneurship remains a vital ingredient in the growth of our economy," Manuel said as he announced additional tax breaks for small and medium-sized businesses. These businesses, along with government public works programs, are the main source of new jobs in South Africa. But the huge failure rate of startups in this country - most don't make it beyond the first two years, far worse than the world benchmark - is a major problem. The two main reasons are financing and skills. Manuel is trying to help in the financial area with tax breaks. The Israelis' expertise and experience hopefully will help the South Africans acquire the skills they need, particularly in technological startups, Opper said. "The programs in Israel cover what I call the whole value chain," he said. Using the example of technological entrepreneurship, Opper said grants were provided to entrepreneurs in the early stages of their work, "followed by our famous program of incubators." Business incubators help keep young businesses alive and growing. Opper said incubators may hold 10 start-ups, providing experienced management and money from the government, for two years. Afterward a business must obtain private money to continue. Some incubators are in the fields of communications, computers, technology or medical devices. Others are more focused, Opper said. "For example, we have a special incubator dealing with biotechnology and one or two dealing with technology to improve water," he said. Opper was optimistic that exchanges in technology could aid South African agriculture and farming, particularly with the frequent droughts there. He said South Africa has potential for development in technological and scientific startups. "Your country is not behind," he said. "You have excellent engineers and scientists, but the entrepreneurship spirit is really what symbolizes Israel. "Also, for the sake of nourishing new ideas, you need lots of money. In Israel we have one of the best venture capital industries. Venture capitalists in Israel are equipped with huge sums of money and collaborate with the government to finance new startups." Opper was a partner in an Israeli venture capital firm and had a 27-year career at Rafael, Israel's leading armaments corporation and authority on research and development. He said studies by the Organization for Economic Cooperation and Development rated Israel first in the world in spending for commercial research and development. "We are investing 4.8 percent of our [gross domestic product] in this parameter," he said. "The R&D expenditure in South Africa is something like 0.9% but don't worry, you will catch up." Opper noted that only three countries globally are spending more than 3%, and the average expenditure throughout the European Union is about 1.5% Israel has succeeded despite its lack of natural resources. "We rely almost solely on our brainpower and entrepreneurial spirit," Opper said."Israel is motivated toward startups and new technology." Countries such as South Africa need state-of-the-art technology to exploit their natural resources efficiently. Canada and Australia, also rich in natural resources, have made major advances in scientific and technological spheres. Opper plans to return to South Africa in the later stages of talks toward the agreement, which he believes will take several months to finalize. "The whole idea is mutually beneficial," Opper said, "and I hope we will be able to make it happen."

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