The support programme for industrial innovation (SPII) is one of government's best-kept secrets, says its senior fund manager, Areef Suleman.
This is quite an admission, considering the programme is now 12 years old and its purpose is tightly coupled with government strategy. This is to support technology development in SA by assisting companies in funding the development of new products and processes.
"Our budget comes from the department of trade & industry but the programme is managed by the Industrial Development Corp," says Suleman. "Perhaps in the process SPII fell between the two organisations' marketing arms."
The fund also seemed inaccessible. "There were concerns that the application procedures were highly complex, and people believed you had to use consultants to access it," says Suleman.
With his PhD in economics and master's in business leadership, he is not your average technocrat. And he has been busy since joining the programme in July 2003. "The SPII has refocused two of the funds, introduced a third fund, tightened up on procedures, put in place good corporate governance practices and ensured our decision-making processes are transparent."
Suleman believes the SPII funds were vulnerable to abuse in the past. With this in mind, he stopped companies from applying for more than one grant at a time.
He has also voiced strong opposition to the use of consultants to prepare applications - a move that has not won him many friends. "They charge a fee that ranges from 5% to 20% of the entire grant allocated. Who are we funding ?"
Another change was to limit SPII's Matching Scheme to small and medium-sized companies. This provides small companies with a grant that covers up to half the costs of developing a new product (to a maximum of R1,5m). "This type of financial assistance is not a necessity for large companies."
But, he adds, SPII has not abandoned its traditional client base - the large companies. Far from it. "They are the best clients to have; deals are smooth and uncomplicated." Instead he is trying - not entirely successfully - to persuade them to access SPII's Partnership Scheme. Here, funds are made available for innovative developments on a risk and reward basis. "We will provide a conditional grant of up to 50% of the development costs. On successful commercialisation, the grant is repayable in the form of a levy on sales for a predetermined period."
The third scheme is meant for small and very small companies and offers a nonrepayable grant of 65%-85% to cover development costs.
The changes have led to a drop-off of grant applications and funding. Despite this, for virtually the first time since joining SPII, the hyper-tense Suleman is relaxed. "Numbers did drop off, but they are picking up again. I'm okay with where we are now. "
He is disappointed, though, that large companies are not taking advantage of the partnership scheme. "The way we see it, if companies are not prepared to enter a risky project on a risk and reward basis, then they didn't need the finance to start with."
The numbers of smaller and black companies applying for funding are slowly increasing.
It was the promise of delivering some tangible benefit to this sector that lured him to SPII in the first place. Before this he headed the team of IDC staff that provided expertise to the UN Industrial Development Organisation in Tanzania, Ghana, Nigeria, Ethiopia and Eritrea. "These were interesting and exciting times. We worked at a ministerial level to develop competitiveness strategies, and provided policy inputs for industrial strategies."
However, such labours take time to bear fruit. SPII, while local in context, offered the promise of making a direct impact on companies and individuals in the short term.
"I'm a bit of an idealist and I liked the idea of more immediate rewards," he says.
