The document discusses supporting green innovation and sustainability for small businesses through entrepreneurship policies and financing mechanisms. It summarizes a presentation on green innovation for sustainability that covered topics like entrepreneurship policies, support for innovation-driven entrepreneurship, key financial support mechanisms, barriers to clean technology innovation, and recommendations. It discusses identifying and reducing risks for clean technology entrepreneurs through policies, access to funding, and an institutionalized green innovation program.

1. Green Innovation for Sustainability-
supporting small business with great
ideas
PRESENTATION SUMMARY
NCPC-SA CONFERENCE
14 SEPTEMBER 2017
REUBEN KADALIE

2. PRESENTATION SUMMARY:
 Background & Context
 Entrepreneurship Policies in South Africa & Global Policy Trends
 Supporting Innovation-driven Entrepreneurship
 Key Financial Support Mechanisms??
 Identifiable Barriers for Clean Technology Innovation
 Identifiable Claen Technology Policy Challenges
 Global Cleantech Innovation Index (GCII) on SA Performance
 Entrepreneurial Risk & Mitigation
 Institutionalisation ogf GCIP for sustainability
 Key Recommendations
 Conclusions
2

3. RESPONDING TO THE CHALLENGES
FACING INNOVATION-DRIVEN
ENTREPRENEURS…
3

4. BACKGROUND & NATIONAL CONTEXT…
 The increasing global challenge of climate change, environmental degradation,
energy access and water scarcity amidst declining economic growth require
developing countries to seek unusually creative approaches in new and
sustainable business models and innovation.
 Through international cooperation for implementation, supportive policy
instruments, funding mechanisms, institutional capacity building, innovation
programmes and strong public-private partnerships, developing countries such
as South Africa, India and Brazil, that have adopted sustainable development
policies and best practices have achieved successes in a number of green
industry initiatives.
 Innovation solutions that apply along the entire innovation value chain and
include both product and process technology changes, will have the greatest
potential for creating desirable outcomes and impact as it reinforces continuous
idea generation, research and development and demonstration and further
creates opportunities for commercialisation and financial sustainability
4

5. BACKGROUND & NATIONAL CONTEXT…
 The Global Cleantech Innovation Index (GCII) seeks to measure the drivers
of Cleantech innovation that are based on an average between the inputs of
innovation (the development of clean technology supply) and the outputs of
innovation that relate to a country’s ability to commercialise cleantech
innovation (creation of market demand). The GCCI (Global Climate Change
Initiative) Framework suggests that the inputs relate to:
 key innovation drivers such as entrepreneurship culture, government policies &
regulations as well as access to finance
 The outputs relate to:
 evidence of emerging Cleantech innovation in early stage private investment,
producing patents or evidence of commercialised Cleantech innovation
company revenues, resource efficiency and late stage investment.
5

6. Key Aspects of Entrepreneurship Policies that positively
impact on economic growth & job creation…
6
Entrepreneurship Promotion Access To Finance Framework Conditions & Policies
Entrepreneurship:
• Awareness & culture
• Training & Education
• Business Mentoring &Coaching
• Network Initiatives
Debt & Equity Finance
• Seed Funding
• Start-up grants & loans
• Venture capital support
programmes
• Angel finance
• Investment readiness
• Loan guarantees
• Ease of business regulations
• Tax Policy
• Competition Policy
• Technology Policies
Target-Group Policies
High growth companies – Innovative SMS and entrepreneurs – traditional under-represented groups (women, university
Students, previously disadvantage groups, unemployed

7. RECENT GLOBAL ENTREPRENEURSHIP POLICY TRENDS..
….SOUTH AFRICA TO CAPTURE LEARNING
 Greater attention is being given to improving access to debt and equity finances – credit guarantee
programmes have been ramped up
 Equity financing has been stimulated Removing impediments to foreign venture capital investment
 Creation of public-private co-investment funds to leverage private investment especially in high-technology
start-ups
 Support for entrepreneurial cluster development with business accelerator programmes especially in
knowledge-intensive sectors (life sciences & ICT) and clean technology
 HEI entrepreneurial support that fosters entrepreneurial culture, start-up grants and technology transfer
 Focusing on high-growthinnovative firms that can scale up and create jobs (intensive specialised training,
consultancy and support for the commercialisation of products in export markets
 Grant-based schemes for young innovative firms to subsidise R&D expenses, IP, and research facilities
 For mature small business guarantees offered on loans and private equity
 Simplifying business registrations that reduces time to business start
 Youth and women entrepreneurship are encouraged through dedicated lines of start-up funding
7

8. SALIENT INSIGHTS ON INNOVATION CT
POLICY LANDSCAPE IN SOUTH AFRICA:
 South Africa has an extensive Cleantech-supportive policy environment
and provides funding and incentives directed at specific sub-sector
innovation
 Green growth forms part of six overarching national development
strategies
 South Africa has all 8 important Cleantech-supporting policies in place as
per Global Cleantech Innovation Index (GCII) highlighting its strong policy
approach to promoting Cleantech.
 South Africa is an active participant in global climate change mitigation
and the reduction in GHG Emission.
8

9. FAVOURABLE CLEANTECH-SUPPORTING
POLICY INSTRUMENTS…
No Policy Instrument No. Policy Instrument
1. Carbon tax/ Carbon Market 5 Transport obligation; Transportation efficiency or
emissions standards
2 Clean energy tax incentives; Tax incentives
specifically for clean technology companies
6 Renewable energy standard and/or feed-in tariffs;
Electric utility quota obligation
3 Green bonds; government-backed or -
green investment banks; green investment
funds.
7 Government tendering/ green procurement
4 Government investment/loans/grants for
climate-friendly and eco-friendly technology
8 Research institutes or government support
university programs for clean technologies
9

10. Entrepreneurial Life Cycle…
 Stand-Up:
 Attitude (mindset, risk taking nature, perseverance)
 Skills (Job related, behavioural skills)
 Culture (Support in entrepreneurial ecosystem)
 Start-Up:
 Access to capital (private/public)
 Regulatory & policy framework (licencing, patenting, taxation)
 Business model/validation process
 Scaling Up (Road to sustainable growth)
 Enabling the business to scale
 Building competitive capability & capacity
 Collaborative partnerships
 Creating growth & jobs
Key Elements include:
 FOCUS (Identify & Invest in momentum building initiatives)
 CONNECT (link to relevant sector database; network of initiatives and programmes for entrepreneurs – link to othe actors in
innovation chain)
 PARTNER (build on enabling partnerships and collaborate across provinces, sectors and relevant businesses to achieve scale)
10

11. SUPPORTING INNOVATION-DRIVEN ENTREPRENEURSHIP….Start-Up
(Source: Project Team, based on financing stage OECD)
Seed Stage Early Stage Expansion Phase
Production Concept:
• Checking ideas
• Business Analysis
• Market Analysis
Business Start-Up:
• Market Concept
• Further Development of
products
Start of Production:
• Market Launch
• First Sales achievements
Initial Scaling:
• Market Launch
• Market Leader
Startingupthe
entrepreneuriallife
cycle
Availability of Access to Capital
Founder & Friends & Family
Incubators
Business Angels
Venture Capital
FocusArea:
Availabilityandaccessto
capital
Individual
Factors 1. attitude 2. Skills
3. Cultural
Framework
Loss zone
Profit Zone
Loans
Ecosystem
Factors
4. Regulatory Framework 5. Market Framework 6. Network Access
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validation validation validation

12. KEY FINANCIAL SUPPORT MECHANISMS FOR
CLEANTECH ENTREPRENEURS/START-UPS….
 South African national and regional public finance provides the majority of risk capital
at the early stages in the form of large Green Funds (e.g. Department of
Environmental Affairs’ Green Fund), regional funds (e.g. Cape Capital Funds) and
general SME-support schemes
 These offer a variety of loans, grants, seed- and growth stage investments to
cleantech start-ups. The USD$172 million National Treasury Green Fund channels
through various government departments and agencies to offer financial support in
the form of grants and loans, with the most active being Department of Trade &
Industry, Small Business Development Agency and the Renewable Energy and Energy
Efficiency Partnership.
 The scope of these can be large, with the DEA’s Green Fund having contributed to
2355 direct jobs being created in 55 projects, ranging from R&D stage to active
investments.
12

13. Identifiable Financial Barriers for Cleantech
Entrepreneurs…
 Evident progress made in addressing green funding that covers especially high-risk R&D technology
innovation (Green Fund & TIA’s Sees Fund) but greater investment or continued funding needed that
ensures commercialisation and scaling up of Cleantech businesses;
 Enabling and Emerging technologies have been boosted by high R&D investments in HEIs and science
councils and carry uncertainties, including potential risks which are crucial to small businesses working at
the cutting edge with novel materials and processes; a need exists for validation that things are being
done right, safely, and within the law, to minimise the barriers to market success and consumer
acceptance.
 The Cleantech entrepreneurs do not have clarity on what financial incentives are being offered by
government or other financing institutions that matches their needs and are discouraged to apply for
funding due to stringent qualifying criteria and complex bureaucratic procedures.
 There is very little effort from entrepreneurs to understand the modalities of funding at the various
phases of the innovation chain which results in wasted effort and costs
 The low-carbon innovation industry suffers from a lack of interaction between the innovators of small
and medium enterprises and the potential investors. Moreover, it helps businesses and organisations to
secure investor, workforce and customer trust, protects reputations, and guards against potential future
liabilities.
13

14. Identifiable Financial Barriers for Cleantech
Entrepreneurs…
 Venture Capital and private equity interest is developed but often requires risk sharing
with public entity. The supply of Venture Capital is in decline due to higher levels of risk
aversion as a result of the current economic decline
 Family & Friends and Angel capital is available but access is highly uneven among
population
 Commercial bank loans are available for SME’s, but there is a need for significant
collateral to access credit services
 While Public Research institutes and research councils are sufficiently funded and
encouraged to develop applied technologies, incentives for start-ups or entrepreneurs
to take on and commercialise these technologies remain weak. This effectively
undermines technology transfer policies
 SA’s overarching emphasis is on supporting HEIs and the contribution that public
research councils make to innovation performance without necessarily linking it to
priority areas on the basis of a careful analysis of competitive advantage. With high levels
of unemployment, South Africa may be best served to focus support on the absorption
and adaptation of existing cutting edge technologies in medium to low-tech sectors such
as labour absorbing sectors such as food and textiles. The Technology Localisation
Implementation Unit is a case in point.
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15. IDENTIFIABLE CLEANTECH INNOVATION
ENTREPREURSHIP POLICY CHALLENGES….
 Despite incentives and funding, entrepreneurship intentions remain limited which adds to the
woes of unemployment
 Lack of coordination between government departments/agencies as well as red tape in
starting a business remains a problem
 South Africa shows very little evidence of commercial Cleantech success
 Low evidence of patent filing
 Ambitious Cleantech Roadmaps have not shown real success
 Private Equity investors are risk averse and only invest in Cleantech entrepreneurs if risks
shared with public sector
 Over-Emphasis on public R&D in the creative capacity with neglect of critical areas of the
innovation chain
 Inability to bring highly innovative solutions to market and difficulty in attracting requisite
capital to commercialise and achieve scale at competitive levels
 The unique characteristics of clean technologies (high risk, capital intensity and long timelines)
do not align with South Africa’s traditional investment models.
15

16. POTENTIAL EFFECTIVENESS OF POLICIES IN
ADDRESSING KEY CHALLENGES….
 It is acknowledged that the development, growth and dissemination of clean technologies are
strengthened by:
 a favourable policy and regulatory environment that will justify the introduction of policy instruments
and strategies that promote technology innovation, mitigate GHG emissions, offer appropriate
incentives, alleviate barriers to implementation and invest in research and development that will address
sustainable development, unemployment and contribute to economic growth
 South Africa’s favourable policies are not enough to advance green technologies but require
coordinated efforts and investments in the areas of technical, legal, financial and leadership
competences to be effective an successful.
 In a recent interview with the CSIR’s Resource Efficiency and Energy Efficiency Implementation
Unit, the National Cleaner Production Centre –South Africa (NCPC-SA), has seen greater
traction in the execution of policy in the Energy space and attribute the significant shift on the
coordination and collaborative approach by key government departments such as the
Department of Energy and Department of Environmental Affairs.
 Previously national flagship projects were silo-driven which negatively impacted on desired goals
and outcomes. The Desired Emission Reduction Outcomes (DEROs) flagship project that forms
part of DEA’s Climate Change Mitigation Strategy is an example of a well - coordinated inter-
government project in South Africa as well as the National Energy Efficiency Project.
16

17. GCII ON SOUTH AFRICA’S CLEANTECH
PERFORMANCE….
 South Africa ranks 37th of 40 countries in the general innovation drivers pillar, which
highlights that the underlying parameters of the national innovation ecosystem are
lagging behind the global average. While perceived entrepreneurial opportunities
have been consistently rising over the years, early-stage activity is still highly
correlated with historical wealth distribution patterns and institutional privileging.
 The Global Cleantech Innovation Programme for SMEs (GCIP-SA), offers a unique
competition/business accelerator-based approach to identify and foster innovative
small and medium sized enterprises (SMEs) that can address South Africa's urgent
energy, environmental and economic challenges in the areas of energy efficiency,
renewable energy, water efficiency, waste beneficiation and green buildings.
 With the increasing responses and number of participants on the Global Cleantech
Innovation Programme (GCIP) over the last three years, it is evident that clean
technology innovation forms an integral part of the transitioning to a green economy
in South Africa. It also contributes to the achievement of socio economic and
employment creation goals.
17

18. CT Entrepreneurial tolerance of risk, mistakes, failure…
 Indications are that there is a strongly positive societal attitude towards entrepreneurship in South Africa, with scores
for all three measures, good career choice, high status for successful entrepreneurs and media attention for
entrepreneurship, above the average for the African region, as well as for the efficiency-driven economies.
 Opportunity perceptions have more than doubled since 2001 – to the extent that this indicator measures positive
impressions about starting businesses in the current environment, as well as greater awareness about
entrepreneurship, this may signal a promising trend for South Africa
 The improved levels of opportunity perception, however, are counterbalanced by an increased fear of failure. For the
risk-averse person, the downside risk of failure often outweighs the most promising opportunities, while in some
countries the legal and social ramifications of business failure may act as a strong deterrent, reducing the pool of
potential entrepreneurs. This is in line with other efficiency-driven economies.
 Given the positive societal attitudes towards entrepreneurship, as well as the improved levels of opportunity and
capability perceptions, South Africa’s persistent trend of low entrepreneurial intention is of concern. Given that a
significant challenge faced by South Africa is chronically high levels of unemployment and underemployment, a key
priority is to improve job creation. The Report data shows that entrepreneurial intentions in South Africa have dropped
by almost 30% (from 15.4% to 10.9%) when compared to 2013 and almost halved when compared to 2010.
 Entrepreneurial intentions in South Africa are significantly lower than for the African region as a whole – the regional
average is 3.6 times higher than for South Africa. South Africa also performed poorly compared to other efficiency-
driven economies in the GEM 2015 survey – at 26,0%, the average for the efficiency-driven economies is more than
double South Africa’s score
(2015/16 South African Global Entrepreneurship Monitor (GEM) Report)
18

19. Mitigating Entrepreneurial Risk…
If policy-makers and service providers are to be successful in their efforts to stimulate and
support new generations of entrepreneurs, they will need to identify and reduce factors
which inhibit entrepreneurial intentions in this country. A variety of national characteristics
contribute to the risk assessment:
 minimise ‘red tape’, which could present unfavourable administrative burdens or high costs
to those thinking about starting a business;
 Eliminate onerous labour regulations and disruptions that impact business development &
growth;
 Improve access to resources and technical assistance;
 Eliminate levels of corruption and crime;
 Promote the attractiveness of the market; and the competitive environment.
 Reduce structural problems that affect the education system that are likely to be a significant
stumbling block in this respect, as SMEs tend to be especially hard hit by difficulties in finding
skilled labour
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20. KEY DRIVERS FOR GCIP INSTITUTIONALISATION IN SA…
The following key drivers have been identified that triggered the need for the GCIP to become
sustainable:
 Programme Effectiveness - Managing and leveraging resources in an effective way in a changing
and challenging environment are key to the sustainability of the GCIP. At the same time transferring
best practices and appropriate to tools to local services providers, building strong and new
relationships and promoting broader policy initiatives.
 Institutional infrastructure efficiency - South Africa participates in an increasingly dynamic and
global economy. The South African institutional infrastructure and processes are inefficient at
moving R&D and innovations to the marketplace
 Policy – there are strong signals from government towards low-carbon growth with several
institutional and regulatory frameworks supporting low-carbon technology diffusion and
deployment. This is coupled with the government’s global commitments to climate action and
targets.
 Demand- consumer and industry preference for low-carbon/clean technologies is increasing and
stimulates the demand for low-carbon technologies
 Resources – Lack of resources and tools hamper institutions in progressing start-ups and SMEs
along the commercialisation value chain.
 Socio Economics – creation of cleantech businesses has knock-on effects on job creation
opportunities and the quality of life of all South Africans
 Clean Technology Innovation – showcasing novel African solutions for Global challenges.
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21. KEY RECOMMENDATIONS….
 Engage all relevant stakeholders and key actors such as all levels of government, business sector,
academia, entrepreneurs, technology experts, international Cleantech specialists, community
representatives in Cleantech policy development and implementation. This will strengthen the
relevance of Green Technology within the broader Green Economy space and National Innovation
Ecosystem
 Implement the following policy imperatives in a holistic and systemic way to strengthen collaboration
and partnerships in clean technology innovation:
 Align Clean Technology goals, policies, capacity and implementation models
 Develop appropriate financial and incentive models across the innovation delivery chain taking cognisance of
first and second economy factors
 Integrate collaborative practice metrics in clean technology innovation monitoring an evaluation and capture
best practice methodologies and business modelling through the institutionalisation of the GCIP within the
Technology Innovation Agency (TIA)
 Strengthening the governance structures through a Cabinet Oversight Committee over the entire S&T system.
This would ensure that coordination and cooperation between ministerial government departments that, offer
policy support across the S&T Innovation Chain, will result in more prudent funding; the prioritisation of key
S&T projects for implementation, reach and impact; relevant research areas that are aligned to government’s
national innovation imperatives and key performance indicators
 Location-based innovation policies in the form of project-based financial support, incubation and
science and technology parks are measures directed at well-defined geographical areas. It should aim
to promote and inculcate a culture of competitiveness and innovation and seek to stimulate
technological spill-overs
21

22.  Funding support instruments for SMEs and entrepreneurs must be aligned with their real
situation and needs and to ensure that the right product/solution is offered – Funding
models must be designed with the flexibility to address financing needs at the diffent stages
of Clean Technology development along the value chain
 Early stage funding should move away from conventional funding that is based on a due
diligence binary assessment and historical data – high risk and uncertainty should be offset
by a validation process (technology, product, validation & business model)
 Define categories of participation: emerging technology, adaptive technology, High growth
potential, job creation potential, stage of progress, competences, quality of plan, validation
methods, quality of business model
 Exploit the digital channels to access best practices and interchange of ideas and to market
products or brand
 Need to improve the coordination of government programmes amongst the myriad of
funding and support programmes to prevent clean technology entrepreneurs navigating
through a network of programmes and policy instruments that exhaust their energies and
resources
 Need for a one-stop “No Wrong Door” facility of experts that direct them to appropriate
mechanisms and relevant clean technology growth innovation hubs
22KEY RECOMMENDATIONS….

23. CONCLUSION…
The unique characteristics of clean technology innovation of hish risk, capital
intensity and long time frames do not align itself to traditional investment or
funding models or conventional business support mechanisms. South Africa
need innovative solutions to address the policy gaps and critical challenges
facing the entrepreneurs. Success would lead to improved commercialisation
of clean technologies and the growth of globally competitive clean
technology entrepreneurs!
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