Business Development

This summary is part of a research project carried out between March and October 2006 in support of the International Institute for Communication and Development (IICD), one of The Communication Initiative (The CI)'s partners.

According to this case study, the UUNET Bandwidth Barn was a flagship project of the Cape Information Technology Initiative (CITI), a non-profit organisation funded by the governments of the Western Cape Province and the city of Cape Town, along with over 40 local, regional and national corporate contributors such as UUNET (an MCI subsidiary), Microsoft, and Telkom. Launched in 2001, the project’s goal was to illustrate how information and communication technology (ICT) could best be used by grassroots organisations working on alleviating economic poverty. The project focused on small and medium-sized enterprises (SMEs) in the Western Cape Province of South Africa.

Recognising that startup office operating costs can be prohibitive for small organisations, the Bandwidth Barn has, since 2001, offered shared office space to small businesses to reduce the costs of such services as internet access, telephone lines, and administrative staff. Rent and other building maintenance costs are also divided among the occupant companies and supplemented by a subsidy from CITI.

South Africa was selected for this project because it has a high rate of unemployment coupled with a significant “brain drain” of highly skilled workers moving overseas to fill international labour force gaps. Particularly felt in South Africa over the last decade has been the emigration of technology workers, such as computer engineers, often immediately upon graduation from university. Because of this, the indigenous ICT sector is suffering. Where there is growth, it is often concentrated in affluent white suburban communities, at the expense of poorer rural areas. In order to stimulate small, local business growth, an affordable and sustainable technological infrastructure is needed. The Barn also facilitates the exchange of industry and related government information between tenant/participants, and acts as a mentor to help business people acquire the entrepreneurial skills they require to succeed. The number of Barn tenants numbered 60 businesses, as of this case study.

As a result of this project, Cape Town has received acclaim around the world for transforming itself into an emerging ICT centre in South Africa. In addition, CITI has formed partnerships with Enterprise Ireland, in the Republic of Ireland; GorillaPark in the United Kingdom; and InnovationHub in the Gauteng Province of South Africa to allow local entrepreneurs the opportunities to communicate and do business internationally. This is furthering the project’s goal of reaching international businesses from Cape Town.

The following lessons were observed during this project:

• Start small and make incremental steps when expanding the reach of the project. When first establishing a physical hub for the new ICT industry in Cape Town, CITI offered the space to three small businesses that were in need. As word got out and more entrepreneurs expressed interest in the concept, the project moved to the first Bandwidth Barn in downtown Cape Town. Two years later it moved to a larger space, with the option to expand further if demand warranted.
• Continually gather client feedback and relate this to project stakeholders. This keeps the channels of communication open and the opportunities for growth viable.
• To keep costs low for Barn tenants, subsidies from government or industry sponsorship is critical.
• For an initiative such as this to work, the tenant mix tends to be in a cluster model that is dynamic as opposed to being determined by an investment mandate.
• It is important to attract university graduates before they decide to emigrate. Strategies to work with educational institutions to recruit students to pursue international entrepreneurship from a local starting point after they graduate must be implemented.
• The UUNET Bandwidth Barn project has been successful largely because of the close collaboration between government, industry and CITI.
• Still needed by Barn tenants is knowledge and support in the areas of strategy formulation and business development in the form of sales and marketing. Once this is acquired, businesses are more likely to become self-sustainable and to create secure job opportunities.

As an offshoot of the initial UUNET Bandwith Barn project, CITI has begun a "LaunchPad" initiative to link local business professionals with emerging black entrepreneurs. The hope is that this level of support will elevate the proportion of businesses in the Barn that are wholly black-owned. The focus of CITI in the future is to facilitate relationships with international markets, exchanges, and entrepreneurs to help Cape Town become a recognised centre of ICT outsourcing.