South Africa has a rich and varied biological resources forming the region’s natural wealth on which its social and economic systems are based. These resources also have global importance, for the world’s climate and for the development of agriculture or industrial activities. Biological resources will be the backbone of the growth of the South African economy. Despite the fact that South Africa has a history of innovation potential embedded in its research and higher educational institutions, this potential has been limited in terms of translation towards new industry value chains, which in turn has stifled the creation of the value-added jobs that will create a skilled economy.
One such value chain that could benefit from a concerted and targeted intervention is the cosmetics value chain. The natural biodiversity and source of unique raw materials, skills, infrastructure, funding and capabilities within South Africa need to be synchronized towards fulfilling a value chain that materializes in the manufacture of cosmetics and ultimately nutraceuticals. This will facilitate the progress of the supply chain management, product and process development, product prototyping, clinical testing and manufacturing. In parallel the development of suitable skills for the relevant stages of the value chain would be supported, and most importantly those that will service the envisaged future cosmetic industry.
The traditional medicines market in South Africa is huge and includes “complementary medicines”, which are largely imported traditional and alternative medicines. However, the African Traditional Medicine market in South Africa alone has been estimated at R2.5m. Some South Africans regard this as a conservative estimate. Many of these plants have also been used in products for skin care, hair care, acne, blemishes and the like and can be broadly categorised as “cosmetic” ingredients.
There are a large number of micro-enterprises, typically black women-owned and operating in a rural or urban setting, that produces some hair or skin products based on a “family recipe” or on some Indigenous Knowledge System (IKS). Often these products are initially produced to address a personal, or family skin/hair condition and then shared with friends/family and the community around them. These often utilises indigenous natural ingredients obtained from South Africa’s biodiversity. These fall in the above described category of cosmetics.
These micro-enterprises sometimes start selling these home-made products to communities they live in and start earning a living like that – normally it is a stay-home mother who is the driver behind such an enterprise.
However, these products often do not have a long shelf-life (as this requires addition of certain anti-oxidants and preservatives) and are almost never tested in line with cosmetic regulations such as dermal safety and others. This implies these products can never make their way to a retail outlet and limits opportunity to a self-sustaining micro-enterprise of 1 to 2 persons.
What is needed is a targeted intervention to put necessary support in terms of formulation development (in line with industry standards and consumer preferences), regulatory compliance (Bioprospecting regulations if a natural indigenous ingredient is used), laboratory and testing facilities, scale-up facilities to produce product for market testing, assistance with branding, packaging and access to retail outlets where products can be sold. This can grow the micro-enterprise in a period of 9 to 24 months into a small or medium enterprise, employing 5 or 10 people (or more), and achieving annual turnovers of at least R5M or even greater that R10M.
There is a lack of dedicated cosmetic formulation infrastructure, supported by the necessary testing facilities to ensure compliance. A holistic approach to the full value chain, from raw material supply to a quality product is urgently needed.
It is in this context that we propose the establishment of a Cosmetic Enterprise Accelerator (CEA).
The CEA supports enterprises after-market launch for a period of 1 to 2 years and will be able to assist in tracking the job creation and financial development of each enterprise. The CEA provides a HOLISTIC support to enterprises as market success and growth have multiple dimensions. We are at a contracting phase with Sefa to setup an investment fund within Chemin to the value of about R15M, that we will be used to seed fund enterprises through short, medium & long-term loans to help them with cashflow in the earlier growth phases of their business.
The CEA is a targeted intervention to provide support to SMMEs. Three main stumbling blocks for SMMEs
a. Improve Formulation for compliance
a. Bulk Formulations
a. CTFA membership and support
a. On-line selling platform
a. Short term & medium loans
a. Business Plan development