South African Company Grows at Rapid Pace with U.S. Help
Guidance on breaking into larger markets key to success

by Phillip Kurata, Staff Writer, America.Gov

Cape Town, South Africa — A predominantly black-owned South African manufacturer of electric power transformers is growing at a breakneck pace, in large part because of a strategic boost from the U.S. government.

Electro Inductive Industries (Pty) Ltd. (EII) has seen its sales rocket from less than $8 million in 2005 to more than $27 million in the last fiscal year.

“The big kickoff came in 2004 when EII got a contract from the Johannesburg city government,” said Mark Going, EII’s chief of electrical design and part owner of the company.  “That got our name known in the market.  Since then, our growth has been exponential.”

Going said that EII’s production and sales accelerated after the company received assistance from a U.S. government program, South African International Business Linkages (SAIBL), which is designed to help predominantly black-owned South African small and medium-size companies.

In 2005, SAIBL analyzed EII’s business practices and paid half the costs of getting its transformers tested and certified by an independent agency.  Transformers are used to channel electricity from high-tension power lines to individual houses and businesses.  They are most frequently seen atop poles holding up electricity lines.

Since the certifications were obtained, EII has been working overtime to meet the orders from Eskom, South Africa’s national power provider, as well as from municipal governments.  South Africa is in the midst of a building boom of new houses, roads and communities, creating surging demand for electricity.

“EII should do well.  It has a good chance for success,” said SAIBL’s Bertram Richards.  SAIBL has given EII $23,000 over three years, most of it going to product testing costs.  “That is not a lot of money, but it has been very effective in helping EII create new jobs and become a bigger player in the marketplace,” said Tina Dooley-Jones of the U.S. Agency for International Development, which oversees the SAIBL program.

“SAIBL has been a big help for us,” said Going.  “Obviously, we are having growing pains in all aspects of our business — systems, people and cash flow.  When we started in 1999, we had six workers.  Today we have 280, and we don’t have enough.”

If EII is going to continue to prosper, not only will it have to fill Eskom’s order, but it also will need its smaller business partners to grow.  “Some of our black service providers have been able to grow along with us.  Some have not and have fallen by the wayside,” Going said.

SAIBL’s Richards said that he will contact EII subcontractors with offers to help them plan growth strategies.  The companies that SAIBL identifies for help are ones that are able to have a beneficial impact on other companies in the same sector.

Going said that once EII has stabilized from its current growth spurt, it will seek SAIBL’s help in developing markets for its transformers in other African countries.  “We see the potential for future markets in Zambia, Kenya, eventually Zimbabwe,” Going said.