Description
Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises
Integrated Strategy on the
Promotion of Entrepreneurship
and Small Enterprises
Unlocking the
Potential of
South African
Entrepreneurs
AsgiSA Accel erated & Shared Growth Ini ti ati ve ? South Afri ca
BEE Bl ack economi c empowerment
B-BBEE Broad-based bl ack economi c empowerment
BUSA Busi ness Uni ty South Afri ca
CHAMSA Chambers of Commerce & Industry South Afri ca
CSDF Corporate Smal l Busi ness Devel opment Forum
DEAT Department of Envi ronmental Affai rs and Touri sm
dplg Department of Provi nci al and Local Government
DST Department of Sci ence and Technol ogy
EIDD Enterpri se and Industry Devel opment Di vi si on
EPWP Expanded Publ i c Works Programme
FED Forestry Enterpri se Devel opment
GDP Gross domesti c product
GEM Gl obal Entrepreneurshi p Moni tor
GEP Gauteng Enterpri se Propel l er
ICT Informati on and communi cati ons technol ogy
IDC Industri al Devel opment Corporati on
IDP Integrated Devel opment Pl an
ISRDP Integrated Sustai nabl e Rural Devel opment Programme
LED Local economi c devel opment
Libsa Li mpopo Busi ness Support Agency
Mafisa Mi cro-Agri cul tural Fi nanci al Insti tute of South Afri ca
NEF Nati onal Empowerment Fund
NGO Non-governmental organi sati on
NPI Nati onal Producti vi ty Insti tute
RIA Regul atory i mpact assessment
RIDS Regi onal Industri al Devel opment Strategy
Sabtia South Afri can Busi ness and Technol ogy Incubati on Associ ati on
Salga South Afri can Local Government Associ ati on
Samaf South Afri can Mi crofi nance Apex Fund
SARS South Afri can Revenue Servi ce
Sawen South Afri can Women Entrepreneurs Network
Sawic South Afri ca Women i n Constructi on
Sawima South Afri can Women In Mi ni ng Associ ati on
seda Smal l Enterpri se Devel opment Agency
Seta Sector Educati on and Trai ni ng Authori ty
SEZ Speci al Economi c Zones
SIFE Students i n Free Enterpri se
SME Smal l and medi um-si zed enterpri se
SMME Smal l , medi um and mi cro-enterpri se
SOE State-owned enterpri se
SPII Support Programme for Industri al Innovati on
TEP Touri sm Enterpri se Programme
the dti The Department of Trade and Industry
TWIB Technol ogy for Women i n Busi ness
UYF Umsobomvu Youth Fund
VAT Val ue added tax
Woesa Women i n Oi l and Energy i n South Afri ca
L I S T O F A C R O N Y MS L I S T O F A C R O N Y MS
Minister’s Foreword
Thepromotion of entrepreneurship and small business remains an important priority
of thegovernment of SouthAfrica. Our commitment istoensurethat small businesses
progressively increase their contribution growth and performance of the South
African economy in critical areas such as jobcreation, equity andaccess to markets.
Since1994, withtheadvent of anewdemocratic era, government hastakenmeasures
toensurethat small businessdevelopment becomesakeypolicyfocus. InMarch1995
an important milestonewas achieved when government released its White Paper on
national strategy for the development and promotion of small business in South
Africa, the first time a comprehensive policy and strategy on small business
development wasformulatedinthecountry.
Since then, government owned institutions and programmes have evolved all three
spheres with the aimof providing comprehensive support to small business. These
institutionshavemadeprogressindeliveringawiderangekeysupport services. These
services continuetobenefit anincreasingnumber of small businesses year after year.
Weare, however, mindful that important gaps still remain. As an ongoing challenge
that requires us to improvethescopeand quality of our offerings to small business.
Keyamongtheseistheneedtorapidlyimprovetheintegrationof support providedby
thevariousgovernmental departmentsandinstitutions.
Government will continue to lead efforts to increase the level of entrepreneurship
through supporting small business creation, but we are mindful that this important
task cannot be successfully undertaken by one player alone. Partnerships between
government and various stakeholders and role players remains a critical success
factor. Thus, wehavebeenencouragedby theincreasinginvolvement of thecorporate
sector, organised business, private financing institutions, non-governmental
organisations, universities as well as media efforts in fostering entrepreneurship and
small business. Government appreciatestheseeffortsandcallsfor evenmoreof these
collaborations.
Thisdocument shouldbeviewedasastrategic framework rather thanablueprint or a
detailed implementation plan. This is important, given thecloseinteraction between
this field of policy and all the other spheres of public-sector support for economic
development and growth, and the rapid changes in the global, national and local
businessenvironments, whichoftencall for flexiblepolicyandprogrammeresponses.
Finally, theongoingreviewof theimpact of thisstrategy remainscritical toenableus
to make the necessary support and services improvements on a continual basis, in
keeping with the dynamic nature of entrepreneurship and small business and the
environment we operate in. Yearly reviews of the state of small business in South
Africa will provide us timely feedback while the five-yearly impact reviews will
reveal what progresswearemakingover timeandwhat adjustmentsarenecessary.
Mandisi Mpahlwa, MP
Minister of Trade and Industry
Preface: Deputy Minister: Trade and Industry
Thecrucial barometer for thesuccess of theIntegratedStrategy onthePromotionof
Entrepreneurship and Small Enterprises is the continued creation of new start-up
firms by all segments of society and in all corners of our country resulting in the
improvement of economic and social well being of the poor communities. I have
always believed that the Small business sector has both the potential as well as the
historic task of bringingmillions of peoplefromthesurvivalist/lower level including
theinformal economy tothemainstreameconomy. Constraintstonewentrantsinthe
SMME sector must beunblockedthroughtheprovisionof adequatesupport toensure
that SMMEs survivetheharshintroductionto thestiff competitionof bigbusiness in
themainstreameconomy.
Success and failureis a normal part of business processes but effectivenetworking,
adequateskilling, mentoring, developinggoodbusiness acumenandsoundprinciples
and practices coupled with a high degree of business integrity will ensure that the
prevalent environment does not perpetuate a culture of failure but rather a winning
culture. That is why wearepublishing theIntegrated Strategy on thePromotion of
Entrepreneurship and Small Enterprises aimed at identifying factors that directly
contributetothesuccessof thesmall businesssector.
We need to ask to what extent our own SMME sector has geared up to meet the
opportunities presentedby theacceleratedeconomic growth, newexport markets and
to what extent they have been able to enhance their prospects by drawing on new
technology. This document responds to this challenge by maximizing the
opportunitiescreatedbyafavourablelegislativeenvironment andbyeffectivesupport
institutionsandmechanisms.
The strategy provides a framework that can be used by all role players that seek to
make a contribution in assisting the entry of new players into the formal economy,
strengtheninggrowthandsustainability of existingenterprises andcreatingnecessary
linkages in the continuum of enterprises graduation from local micro to globally
competitivebusinesses.
It is the intention of this strategy to deepen and strengthen government’s effort to
transform the economy. Acceleration of the entry of new players is critical to
addressing the historically skewed patterns of socio - economic quality of life,
especiallyblacksingeneral, women, youthincludingpeoplelivingwithdisabilities.
ELIZABETH THABETHE, MP
DEPUTY MINISTER: TRADEAND INDUSTRY
1
TABLE OF CONTENTS
I. SUMMARY OF STRATEGICAPPROACH.........................................................................................3
Thisstrategyisbasedonthreestrategicactions......................................................................................4
Corethrustforthisstrategyframework..................................................................................................5
II. BACKGROUND AND CONTEXT.....................................................................................................6
1. Rationalefor small business promotion........................................................................................7
2. Small businesssupport sincethe1995..........................................................................................7
2.1 Publicsector support initiatives.............................................................................................8
2.2 Privatesector support initiatives.........................................................................................12
2.3 NGOanduniversityprogrammes........................................................................................13
2.4 The media............................................................................................................................14
2.5 Entrepreneurshipandsmall business awards......................................................................14
III. SUPPORTIVE NATIONAL POLICIES.............................................................................................15
3.1 Themicro-economic reformstrategy..........................................................................................16
3.2 AcceleratedandSharedGrowthInitiativeSouthAfrica(AsgiSA)............................................16
3.3 Draft Regional Industrial Development Strategy (RIDS)...........................................................17
3.4 Broad-basedblack economic empowerment strategy.................................................................18
3.5 National strategy for thedevelopment andpromotionof franchisinginSA..............................19
3.6 Strategic framework ongender andwomen’s economic empowerment....................................20
3.7 National youthenterprisestrategy...............................................................................................20
3.8 Co-operativespolicy anddevelopment draft strategy.................................................................21
3.9 Draft strategyframework for forestryenterprisedevelopment...................................................21
4. Remaining challenges.................................................................................................................22
IV. POSITIONINGTHE INTEGRATEDSTRATEGY ONTHE PROMOTIONOF
ENTEPRENEURSHIPANDSMALL ENTERPRISES......................................................................23
1. Theaimof theStrategy...............................................................................................................24
2. Key guiding principles................................................................................................................24
2.1 Entrepreneurshipandsmall businesspromotionisasharedcompetency...........................24
2.2 Integration is key.................................................................................................................25
2.3 Thestrategymust cover theentireentrepreneurshipcontinuum.........................................25
2.4 Thestrategy attends to special foci.....................................................................................25
V. STRATEGIC ACTIONS AND INSTITUTIONAL ARRANGEMENTS..........................................26
1. Ensuringintegrationandimprovedco-ordination......................................................................27
1.1 Proposed actions..................................................................................................................27
1.2 Proposedinstitutional arrangements....................................................................................28
2. Encouragingincreasedprivate-sector participation....................................................................29
2.1 Proposed actions..................................................................................................................29
2.2 Proposedinstitutional arrangements....................................................................................29
3. Ensuringactionacrosstheentireentrepeneurshipcontinuum....................................................29
3.1 Pre-start-up..........................................................................................................................29
3.2 Start-ups...............................................................................................................................30
3.3 Businesssurvival, growthandexpansion............................................................................32
3.4 Business turnaround............................................................................................................33
4. Focusingonspecial target groups, regions andpriority sectors.................................................34
4.1 Focusingonyouthandwomen............................................................................................34
4.2 Focusingonspecial geographic areas.................................................................................35
4.3 Focusingonpriority sectors................................................................................................35
VI. SUMMARY OF STRATEGIC PROGRAMMES..............................................................................37
1. Fosteringentrepreneurshipcultureandincreasingtheenterprisecreationrate.............................38
2. Establishadedicatednetwork of SMME finance.......................................................................38
3. Createdemandfor Small Enterpriseproductsandservices........................................................38
4. Strengtheninglocal network for small businessdevelopment support services.........................39
5. Improvingsmall enterprisecompetenciesanddelivery capacity................................................39
6. Strengthening Enterprise Networks............................................................................................39
7. Providing necessary support incentives......................................................................................39
8. Improving regulatory environment.............................................................................................40
9. Entrepreneurshipandsmall business research............................................................................40
VII. BUILDING PARTNERSHIPSAND CAPACITY FOR PERFORMANCE......................................41
1. Prosposed actions........................................................................................................................42
2. Proposed institutional arrangements...........................................................................................42
VIII. MONITORING PERFORMANCE..................................................................................................43
IX. CONCLUSION..................................................................................................................................44
2
CHAPTER I
SUMMARYOF STRATEGICAPPROACH
3
Since 1994 the South African government has recognised its important role in
fosteringanenablingenvironment for thecreationandgrowthof small enterprises. In
March 1995 the government articulated a number of measures to foster an enabling
environment in the White Paper on national strategy on the development and
promotion of small business in South Africa. Theseincluded:
Creatinganenablinglegal framework
• Streamliningregulatoryconditions
• Facilitatingaccesstoinformationandadvice
• Facilitatingaccesstomarketingandprocurement
• Facilitatingaccesstofinance
• Facilitatingaccesstoaffordablephysical infrastructure
• Providingtraininginentrepreneurship, skillsandmanagement
• Improvingindustrial relationsandthelabour environment
• Facilitatingaccesstoappropriatetechnology
• Encouragingjoint ventures
• Capacitybuildingandinstitutional strengthening
• Introducingdifferential taxationandother financial incentives
Sincethepublishingin1995of thisWhitePaper, anumber of support institutionsand
measures have been put in place. While these have assisted in the pursuit of the
objectives outlined above, some critical challenges remain. The Government
recognises that it has to continue addressing these challenges and finding ways to
improvetheoperatingconditionsfor small enterprises.
Thisincludeseffortstoaddressmarket failures, particularly wherethey impact onthe
Government’sspecial development goals. Therefore, theGovernment will continueto
developandimplement measures focusedon targetedbeneficiaries, includingmicro-
enterprises; informal enterprises; enterprises owned by black people, women and
youth; growth-orientated enterprises; as well as enterprises in priority sectors like
tourism, construction, agriculture, cultural industries and information and
communications technology (ICT). This document, which is the outcome of a
thorough process of review, consultation, research and refinement undertaken from
2003to 2005, sets out astrategic framework for thenational Government’s efforts in
fostering entrepreneurship and promoting small enterprise in South Africa over the
next tenyears. It shouldnot beviewedinisolationandisreleasedaspart of apackage
of reports, including the Review of Ten Years of Small Business Support in South
Africa, 1994 to 2004, as well as the Reviews of Small Business in South Africa,
releasedannuallysince1995.
A key strategic shift since the adoption of the White Paper is the integration of a
wider group of institutions into the realmof small-enterprise development, and the
inculcation of a more co-operative approach among a growing number of partners
bothwithinandoutsidegovernment. Inthiscontext, themaininstitutional reformsset
out inthestrategyincludetherecent establishment of theSmall Enterprise
I. SUMMARYOF STRATEGICAPPROACH
•
4
Development Agency (seda), which will, in collaboration with other role players,
localisenon-financial support tosmall businesses. It will dothisthrough:
• anational networkof accesspoints
• theestablishment of theSouthAfricanMicro-FinanceApex Fund(Samaf) to
localiseaccesstomicro-finance
• therepositioningof Khulatogiveamorefocusedretail approachtosmall and
medium-sized enterprise (SME) finance, primarily focusing on black-owned
businesses, start-ups needing small loans with limited security, as well as
SMEsinunderservedprovinces.
Asexplainedlater inthedocument, theprincipleof “integration”, whichisat thecore
of thisnewstrategy, relatestoat least threedifferent dimensions, namely:
• integrationof different socio-economicpolicyareas
• integration of programmes within the public sector (cutting across national,
provincial andlocal government), andbetweenthepublicandprivatesectors
• integration of theactivities of different entrepreneurship and small enterprise
promotioninstitutions.
The strategy covers the entire continuum of needed support from pre-startup and
startupassistancemeasurestogrowingenterprisesandenterprisesindistress.
This strategy is based on three strategic actions:
Thesestrategic actions will beunderpinned by efforts to improvetheavailability of
quality business information and knowledge through expanded research and
communicationoutreach.
Strategic Pillar 3:
Reduce small enterprise
regulatory constraints
Strategic Actions
Increase supply for
financial and
non-financial support
services
Strategic Pillar 2: Strategic Pillar 1:
Creating demand for
small enterprise
products and services
Collaborative Approaches
Streamline resources from
the public sector and crowd-
in private sector resources
New Policy Directives
Public sector procurement
strategy and BEE codes of
good practice as
a lever for increased demand
Enabling Environment
Establish a regulatory impact
assessment framework and
Business Environment
monitoring mechanism
5
Core thrust for this strategy framework
The strategy acknowledges the need for focused support to designated target
special institutional arrangements. Central to strategic actions and institutional
arrangements, and to the shift fromunco-ordinated to integrated service delivery, is
the broadening of support programmes and the streamlining of support institutions.
This is the fundamental guiding principle of the new “integrated strategy.
Encapsulated in this fundamental guiding principle is the resourcing of support and
themonitoringandevaluationof progressintheimplementationof thestrategy.
measuresoutlinedinthe1995WhitePaper.
Cutting across all of the above, is the ongoing profiling of the small business
sector, improving access to small business support and information,
strengthening small business advocacy, delivering effective service and
monitoring impact.
Finally, reference in this strategy to “small enterprises”, “small businesses” or
SMMEs (small, medium and micro-enterprises), unless specifically demarcated,
covers the full spectrum of business enterprises other than “large enterprises” or
corporations and publicly owned enterprises. This includes categories known as
micro-enterprises, survivalist enterprises, informal sector enterprises, and formal
small and medium-sized enterprises. It also covers businesses in all stages of
evolution, frompre-establishment to start-up, emerging, stableor expanding, as well
asenterprisesindistress. Furthermore, it includesenterprisesthat canbecharacterised
as family-owned, black-owned, women-ownedor co-operatively owned. Thestrategy
refers to all sectors of the economy, even though the need for sector- or industry-
focused support programmes is duly recognised as one of the key principles
underlyingtherevisedstrategy.
Thereviewof theimpact of thestrategy will beconductedevery fiveyears, whilethe
yearly reviews of thestateof thesmall business sector in SouthAfricawill provide
constant feedbackandmonitoringof theimplementationof thestrategy.
The core thrust for this strategy framework makes no significant shift from the
groups and priority geographical areas and sectors, as well as support for fostering
enterprise organisation forms (such as co-operatives), and the inculcation of
6
CHAPTER II
BACKGROUNDAND CONTEXT
7
Thepromotion of entrepreneurship and small business remains an important priority
of theSouthAfrican Government. In March 1995, theGovernment released aWhite
Paper on National Strategy for the Development and Promotion of Small business in
South Africa, inwhichanelaboratepolicy andstrategy framework onsmall business
development was delineated. TheWhitePaper articulatedtheGovernment’s rationale
for small businesspromotionasfollows:
With millions of South Africans unemployed and underemployed,
the Government has no option but to give its full attention to the
fundamental task of job creation, and to generating sustainable and
equitable growth. Small, medium and micro-enterprises (SMMEs)
represent an important vehicle to address the challenges of job
creation, economic growth and equity in our country. Throughout
the world, one finds that SMMEs are playing a critical role in
absorbing labour, penetrating new markets and generally
expanding economies in creative and innovative ways. We are of the
view that – with the appropriate enabling environment – SMMEs in
this country can follow these examples and make an indelible mark
on this economy. The stimulation of SMMEs must be seen as part of
an integrated strategy to take this economy onto a higher road – one
in which our economy is diversified, productivity is enhanced,
investment is stimulated and entrepreneurship flourishes.
createanenablingenvironment for small enterprises.
2. Small business support since the 1995
The 1995 White Paper identified a number of constraints facing small enterprises.
These relate to the legal and regulatory environment, access to markets, access to
finance and affordable business premises, the acquisition of skills and managerial
expertise, access to appropriate technology, the tax burden, and access to quality
businessinfrastructureinpoor areasor povertynodes.
Various key players intheSouthAfrican economy sharetheimportanceof investing
in stimulatingsmall business. Thegrowing andwidespreadcommitment to fostering
entrepreneurship and promoting small enterprises goes beyond the Government and
its institutions. It extends to other actors in theeconomy, such as largecorporations,
the media, non-governmental organisations (NGOs), chambers of commerce and
commercial banks. This is evidenced by the growing number and range of support
programmes, productsandservicesinitiatedby thevariousplayersthat haveemerged
bothinsideandoutsidethepublicsector, asdiscussedinmoredetail below.
II BACKGROUNDAND CONTEXT
1. Rationale for small business promotion
Government statedthat theprimary objectiveof thenational policy framework wasto
8
2.1 Public sector support initiatives
2.1.1 Easing the regulatory and compliance burden on small enterprises
The 1995 White Paper identifies the regulatory constraints imposed on small
enterprisesasfollows:
Inappropriate or unduly restrictive legislative and regulatory conditions are
often viewed as critical constraints on the access of small enterprises into the
business sector and as obstacles to their growth.
Therehas been growing focus in this area. Within the dti, business registration has
been significantly simplified and improved. Under the auspices of the then Ntsika
Enterprise Promotion Agency, a national small business regulatory review and an
impact assessment of theBasicConditionsof EmploymentAct werecarriedout.
In 2004, commissioned astudy on administrativeburdens imposed on small the dti
enterprises by value-added tax (VAT) and Regional Services Council Levies
legislation. More recently, a process has been initiated to establish a system of
regulatory impact assessment (RIA). This will introducewell-designedprocedures to
reduceor eliminatetheunintended consequences of laws and regulations, especially
onjobcreation.
Onthetaxationandtaxcompliancefront, theSouthAfricanRevenueService(SARS)
established aworking group on tax compliance to adviseon measures to reducethe
compliance burden for small enterprises. This resulted in measures introduced
recently by the National Treasury and SARS to reduce the administrative and cost
burdenonsmall enterprises.
2.1.2 Access to finance
the dti offers awiderangeof products and services comprising loans, and incentive
grants that play an important rolein enabling access to financefor small enterprises
throughthefollowinginstitutions:
The South African Micro-Finance Apex Fund ( Samaf) has been established to
provideaccess to micro-loans and support to thesocial capital mobilisation. It has a
national footprint.
Khula Enterprise Finance Limited, tasked with facilitating access to finance, has
developed a variety of financing products including credit guarantee schemes in
whichit has partneredwiththecountry’s major commercial banks to unlock lending
to small enterprises. The Thuso Mentorship Scheme provides business plan
development and other advisory assistance to small enterprises seeking to access
financeunder theCredit GuaranteeScheme.
9
Khulacontinues to seek newways to improveaccess to financial support across the
country. This includes partnering with sector departments to develop new sector-
specific financingprogrammes for small business, andstudyingdifferent approaches
tostrengthentherealisationof government goalsfor small businessfinance.
The National Empowerment Fund ( NEF) offers a range of start-up, business
growth, and rural- and community-upliftment financing products with a focus on
blackeconomicempowerment (BEE) transactions.
Through its various business units, the Industrial Development Corporation (IDC)
provides sector-focused financing products ranging fromR1 million upwards, with
designated finance products focused on small business development and black
economicempowerment.
An important development is the collaboration in product design among the
development finance institutions to close the critical financing gaps for small
businesses. Provincial development corporationsareorgansof statethatfurther provide
small ngproductsandother support measures. enterpriseswitharangeof financi
Inadditiontotheabove, thereisarangeof sector-focusedaccesstocredit instruments
created by other departments and their institutions, example, theLand Bank and the
Micro-Agricultural Financial Instituteof SouthAfrica(Mafisa), under theDepartment
of Agriculture.
2.1.3 Business development services
In line with its mandate for the retail rather than the wholesale model of service
provision, theSmall EnterpriseDevelopment Agency (seda) isspreadingits presence
countrywide through branch offices and a network of independent partners, with a
viewtoincreasingaccesstobusiness-development services.
Provincial government agencies such as the Gauteng Enterprise Propeller (GEP) in
Gauteng, Limpopo Business Support Agency (Libsa) in Limpopo, and the Western
Cape’s Red Door continue to provide a range of business-development services to
small enterprisesat provincial level strengtheningpartnershipswithseda.
Many municipalities also offer small business support under their local economic
development agencies, or dedicated small business and co-operative programmes
within their LED divisions and public-private partnership-based business-incubation
centres.
2.1.4 Youth enterprise development
Since 2001, the Umsobomvu Youth Fund (UYF), an agency dedicated to youth
development, has been providing various financial and business-development
products to this target market, some in partnership with private-sector financing
institutions. A linkage programme li nks youth-owned small enterprises to
10
procurement opportunitiesinthecorporatesector, state-ownedenterprises(SOEs) and
government. UYF has established a number of funds – the SME Fund, the UYF-
Business Partners Franchise Fund and the UYF-FNB Progress Fund – which offer
financeto young entrepreneurs and include micro-loans as well as funds to expand,
buy into or buy out existing businesses, or start new businesses. Partnerships
establishedwiththeprivatesector areleadingtotheestablishment of dedicatedfunds
for target groups.
The UYF is also implementing the country’s first business-development services
voucher programme to assist young entrepreneurs to access quality business-
development services. Thefundalsooffers entrepreneurshiptrainingfor scholars and
out-of-school youth. The aimis to introduce entrepreneurship education in schools
countrywide.
2.1.5 Support for women-owned enterprises
TheGovernment has initiated various measures to increasewomen entrepreneurship
andtosupport womeninbusiness. Theseinclude:
Sawen (South African Women Entrepreneurs’ Network), a dti-initiated national
networking forumfor individuals and organisations committed to thepromotion and
advancement of womenentrepreneurs.
Sawen represents and articulates the aspirations of women entrepreneurs, and holds
organisededucational andtrademissionsfor members. BusinesslinkagesbetweenSA
womenentrepreneursandtheir counterpartsinother partsof theworldhavealsobeen
facilitated. Sawen continues to be an advocacy network for women in business,
ensuringthat policiesandstrategiesaresensitivetogender issues.
TWIB (Technology for Women in Business) is a dti initiative that supports the
advancement of womeninbusinessthroughtheapplicationof scienceandtechnology
intheir ventures. Thisisaimedat overcomingconstraintstoenterpriseinnovationand
growth, aswell asfosteringlocal andglobal competitiveness.
The sector departments have also developed initiatives to give targeted support to
women in business. These have led to a grid of sector-specific women in business
networks, including Sawic (construction sector), Woesa(oil and energy sector), and
Sawima(miningsector).
2.1.6 Incubation and technology acquisition and transfer services
Theseda TechnologyProgrammeisagrowingnetwork of incubatorsandtechnology-
support centres with a current footprint across all provinces. Linked to this is a
dedicated fund that enables SMMEs to access funding for technology and technical
services.
With the programme’s assistance, the South African Business and Technology
Incubation Association (Sabtia) has been established to, among other objectives,
foster best practicein SouthAfrican incubation through links with similar bodies in
other partsof theworld.
11
Tshumisano Trust, asmall business support agency of theDepartment of Science&
Technology (DST), has established technology stations across the country. The
sector-focused stations, located at universities of technology, facilitate technology
transfer between these educational institutions and small enterprises. One of the
technology station programme’s critical contributions is to expose students at the
stations’ home institutions to small enterprises, thus helping to foster a culture of
entrepreneurship.
1
Tshumisano Trust’s initiative also involves placing engineering
graduates in internship programmes with small enterprises. The increasing rate of
client referrals between seda Technology Programmeand thetechnology stations is
playing an important rolein bridging support initiatives between sector departments
andmainstreamenterprise-development support agencies.
2.1.7 Productivity enhancement measures
The National Productivity Institute (NPI), a Ministry of Labour agency, supports
small enterprisestoenhancetheir productivecapacitythroughitsProductiveCapacity
Building Programme. The NPI also works in partnership with seda to train small
enterprises and service providers in productivity concepts such as entrepreneurship,
life skills, economics and productivity improvement. It works in partnership with
certainprovincial small businesssupport agencies, suchasGEP(inGauteng) andRed
Door (intheWesternCape).
2.1.8 Sector-focused support measures
The Tourism Enterprise Programme (TEP) is an initiative of the Department of
Environmental AffairsandTourism(DEAT) in partnershipwiththeBusinessTrust. It
focuses on small business development in the tourism sector. This public-private
initiative successfully demonstrates the efficacy of a sector-focused small business
support programme. Anemerginginnovation istheuseof peer learningmethodology
to transfer critical business skills through a programme that uses successful small
enterprisestomentor other small enterprises.
Vuk’uphile, a learnership initiative of the Department of Public Works’ Extended
Public Works Programme (EPWP), builds the capacity of emerging contractors to
executelabour-intensivework emanatingfromtheEPWP. As part of thelearnership,
participatinglearner contractorsreceiveformal institutional trainingaswell ason-the-
job training in the formof ring-fenced contracts issued by an implementing agency
(provinceand municipality). A banking partner for theprogrammeprovides learners
with finance, enabling themto develop a financial track record. Learners also have
access to a qualified and experienced mentor during the implementation of the
projects. Theaimof theinitiativeis to ensurethat learners exit theprogrammewith
the necessary capacity to tender for and execute labour-intensive projects under the
EPWP.
1
International literature shows that exposing individuals in society to small enterprises plays an
important roleinfosteringacultureof entrepreneurship.
12
The Small-Scale Mining Board of the Small-Scale Mining Directorate in the
Department of Minerals and Energy facilitates delivery of various support services
requiredby thesmall-scaleminingsector. Theboardco-ordinatesexpert capacity and
experience, and specialises in planning and developing a viable mining project
through the pre-feasibility stages. Aspiring small-scale miners receive a range of
support services, including (i) the establishment of a legal entity; (ii) guidance
towards the identification of mineral deposits; (iii) an environmental impact
assessment (EIA); (iv) legal and contractual arrangements, mineral rights, etc.; (v)
reserve estimation of the selected deposits; (vi) a mining feasibility study; and (vii)
market studies.
2.1.9 Skills development measures
As part of their sectoral skills-development mandates, various sector education and
training authorities (Setas) have developed and are implementing small business
skills-development programmes. Some of the Setas are also implementing the New
Venture Creation Learnership, with the aim of enabling the participating learners to
learn the skills and receive the support necessary to start and successfully manage
their ownbusinesses.
2.2 Private sector support initiatives
Several SouthAfricancompanieshaveheededthecall for private-sector participation
in small business development, and have responded by implementing a variety of
initiatives. While reference is made below to specific programmes, these are only
examples; thelist isbynomeansexhaustive
2.2.1 Access to finance
Over a period, certain major banks have partnered with Khula Enterprise Finance
Limitedtoprovidesmall businessfinanceunder theKhulaCredit GuaranteeScheme.
Other players, such as business partners and various venturecapital firms, also play
animportant roleinprovidingsmall businessfinanceproducts.
2.2.2 Business development services
Through collaborative action, banks created Sizanani to offer advisory services to
their small business clients. Individually, the various major banks offer support
instruments that range from small business start-up and management seminars to
networking forums. They have also set up internal divisions for small business
support, giving advice on business planning and management. Business Partners
Mentorsofferssmall businessmentorshipcountrywide
13
2.2.3 Fostering business start-up
Certainlargecorporationshavedevelopedandimplementedtheir ownin-house
programmes, suchastheyouthenterprisesupport programmesof SouthAfrican
Breweries(SAB Kickstart), Anglo-Zimele, andShell Petroleum(Shell LiveWire),
whichprovidetrainingandsupport andrunyouth-entrepreneurshipawards
2.2.4 Facilitating linkages between small and large enteprises
Several large corporations have designed programmes to increase their procurement
from small enterprises. Sponsoring corporations run their programmes either
individually or in collaboration with other corporations under the Corporate Small
Business Development Forum (CSDF). Efforts are being made by business-
membership organisations, such as the National Business Initiative, to increase the
number of largecorporationsinvolvedinlinkageprogrammeswithsmall enterprises.
2.3 NGO and university programmes
2.3.1 Entrepreneurship education and financial literacy programmes
Several NGOs have been implementing curricular and non-curricular enterprise
educationprogrammesover manyyears, invariouspartsof thecountry. Theseinclude
theSouthAfricanInstituteof Entrepreneurship, J unior Achievement SouthernAfrica,
the Foundation for Enterprise & Business Development, Education with Enterprise
Trust, Entrepreneurs on the Move, and, most recently, Mindset. Some major banks
sponsor financial-literacyprogrammes, mostlytargetinghigh-school learners.
Students in FreeEnterprise, an international organisation that is operational in some
South African universities, organises, trains and motivates teams of university
students to teach others the principles and value of free enterprise, incorporating
entrepreneurship, personal and financial skills, business ethics and free-market
economics. The SIFE World Cup, an international competition, exposes winning
national teamsandtheir projectstotheir international counterparts.
An increasing number of universities across the country are establishing centres of
entrepreneurship or small business, and entrepreneurship constitutes part of the
Master of BusinessAdministration(MBA) curriculumincertainuniversities.
2.3.2 Entrepreneurship and small business research
Entrepreneurshipresearchis also anareaof focus for someuniversities. Anexample
is theUniversity of CapeTownCentrefor InnovationandEntrepreneurship, withan
entrepreneurshipresearchprogrammethat comprisesthefollowing:
14
• conducting the South African component of the annual Global
EntrepreneurshipMonitor (GEM) project
• participating in an international comparativestudy on theinternationalisation
strategiesof youngfast-growingfirmsbasedinemergingmarkets
• conducting research aimed at developing a better understanding of the
capacities of entrepreneurs in South Africa, so that advisory services and
financecanbemorepreciselytargeted.
The SME survey is an annual small business research programme conducted by a
private company and backed by corporate sponsorship. FinMark Trust, an
international donor-funded entity, also conducts various small business research
surveys, focusingmainlyonissuesof accesstofinance.
2.3.3 Start-up and small business support
In addition to research and teaching, most university-based Centres of
Entrepreneurship or small business promotion provide assistance to aspiring and
existing entrepreneurs. For instance, the UCT Centre for Innovation and
Entrepreneurship:
• advisesacademicsonthecommercialisationof their intellectual property
• has assembled a group of entrepreneurs in the Western Cape in order to
financeandassist high-growthbusinessventures
• offerscoachingandmentoringservicestoentrepreneurs.
Endeavor South Africa, part of the international non-profit organisation Endeavor,
provides selected entrepreneurs with demand-driven services including mentorship,
training, resourcesandaccesstoanetworkof businessadvisers.
2.4 The media
The media increasingly plays an important role in fostering a culture of
entrepreneurship and enterprisein South Africa. A number of i ndependent and large
company-owned entrepreneurship and small business magazines and newspapers or
newspaper inserts have emerged over the years. The South African Broadcasting
Corporation (SABC) has also commisioned various enterprise programmes, such as
Enterprise Zone andVuk’Uzenzele.
2.5 Entrepreneurship and small business awards
Various organisations in the public and private sectors, and certain publications run
annual award programmes to recognise successful entrepreneurs and small
enterprises. Most of theseawards arewell publicised, helping to increasetheprofile
of successful entrepreneursandentrepreneurshipingeneral.
15
CHAPTER III
SUPPORTIVE NATIONALPOLICIES
16
Recently, a number of new government policies with a bearing on aspects of
entrepreneurship and small business development have emerged. These policies, by
their nature, affect this integrated entrepreneurship and small business development
strategy. Key to these policies is the National Industrial Policy Framework. The
National Industrial Policy Framework is not a new policy direction but a logical
evolutionof government economicpolicy.
The following policies and strategies note advances already made in support of this
strategy;
3.1 The micro-economic reform strategy
Themicro-economic reformstrategy places small business development, theneed to
ensure equity (through broad-based black economic empowerment [B-BBEE] and
gender initiatives), prioritising of growth sectors, special geographical focus
(particularly inareasof highpoverty andunemployment), andtheneedfor strongco-
ordinationof support measures, at theheart of micro-economicreform.
Asfar assmall businessdevelopment isconcerned, thestrategycallsfor thefollowing
measures:
• specificsectoral initiativestopromotesmall businessdevelopment
2
• theintroductionof newproductstosupport small enterprises
• greater co-ordinationacrossgovernment
• theconsolidationof all mentorshipprogrammes
• improvedaccesstofinance
• increasedaccesstomarketsthroughcompetitionpolicyandexport promotion
• thepromotionof entrepreneurship
• theexpansionof business support infrastructureandtheprovisionof localised
support infrastructure.
3.2 Accelerated and Shared Growth Initiative South Africa (AsgiSA)
AsgiSA outlines a number of focus areas that need to be closely monitored and
supported through relevant policies, strategies and programmes. These are areas of
importanceintheaccelerationof small businesspromotionandenterprisegrowth, and
include:
2
Thestrategy identifiesfivepriority sectorsbasedontheir potential for increasedoutputs, exportsand
employment creation. The five sectors are (i) exports – clothing and textiles; auto, auto components
andtransport; agro-processing; mining, metalsandmineral beneficiation, chemicalsandbiotech, crafts,
andinformationandcommunicationtechnology; (ii) tourism; (iii) agriculture; (iv) ICT and(v) cultural
industries.
III. SUPPORTIVE NATIONALPOLICIES
17
Focusarea:
Small businesspromotion
Current or proposedactioncontemplatedinAsgiSA
Accesstoprocurement
opportunitiesfor small
enterprises
The State-Owned Enterprise Procurement Forum is
codifying and spreading best practices for affirmative
procurement.
the dti is developing a public procurement procedure
through which ten products will be targeted for
procurement throughsmall enterprises.
Efforts will be made to link small enterprises to
opportunitiesderivingfromthe2010FIFA WorldCup.
Private companies will be persuaded to engage in
affirmativeprocurement.
Theimplementationof therelevant provisionsof theB-
BBEE Codes of Good Practice and the relevant sector
empowerment charterswill becloselymonitored.
Easingtheregulatory
burdenonsmall enterprises
The Minister of Labour is to lead a review of labour
laws, includingtheir impact onsmall enterprises.
SARS is to continue reforms in tax administration
affectingsmall business.
the dti andthedplgaretopreparerecommendationson
how to improve the regulatory environment for small
enterprisesinmunicipalities.
Sector departments are to review the impact of their
lawsandregulationsonsmall enterprises.
A systemof regulatory impact analysis (RIA) is to be
introduced, whichwill addwell-designedprocedures to
reduce or eliminate the negative unintended
consequencesof lawsandregulations, especially onjob
creation.
Accesstofinance,
particularlyventure
capital
For the next stage of business development, venture
funding is key. Government is supporting efforts to
establish new venture funds for small, medium and
micro-enterprises.
Easingthecash-flow
problemsexperiencedby
small enterprisesdoing
businesswithgovernment
Timely payment by government for procuredgoodsand
serviceswill bemonitored.
3.3 Draft Regional Industrial Development Strategy (RIDS)
The Draft Regional Industrial Development Strategy proposes the establishment of
special economiczones(SEZ) – industrial parks, logisticsparks, industrial estatesand
innovation hubs – and other measures such as promoting regional growth coalitions
andsupport for industrial clusteringamongfirms, inorder tofoster regional industrial
development. The strategy also proposes the establishment of a Systemic
Competitiveness Support Facility or “Thematic Fund” to support innovativeregional
development initiatives. A component of the fund will be a support facility for
innovativestart-ups. Efforts will bemadeto ensurethat thesemeasures benefit small
enterprisesasmuchaspossible.
18
3.4 Broad-based black economic empowerment strategy
Several objectives of the B-BBEE strategy bear relevance to small business
development andthereforetothisstrategy. Theseare:
• achieving a substantial increase in the number of black people who have
ownershipandcontrol of existingandnewenterprises
• achieving a substantial increase in the number of black people who have
ownershipandcontrol of existingandnewenterprisesintheprioritysectorsof
theeconomy, which government has identifiedin its macro-economic reform
strategy
• achievingasignificant increaseinthenumber of newblackenterprises
• increasing the proportion of ownership and management of economic
activitiesvestedincommunityenterprisesandco-operatives.
Besidesincreasingenterpriseownershipby blacks, theB-BBEE strategy alsooutlines
measures to increase procurement fromblack-owned enterprises, and to strengthen
thesupplycapacityof black-ownedfirms.
Aspect relevant to
small business
development
Current or proposedB-BBEE strategyaction
Preferential
procurement
measures
Reviewof government procurement policy inorder toenhance
itsimpact onBEE.
Setting clear targets to increase the levels of preference to
black-ownedenterprises.
Enabling legislation on BEE, requiring all government
departments, state-owned enterprises and public agencies to
take into account code of practice issues emanating from
the legislation in determining and implementing their
preferential procurement policies
Strengtheningsmall
businesscapacityto
benefit from
procurement
initiatives
Government is to expand its supplier development
programmes to ensurethat moreblack enterprises arecreated
and enabled to meet the requirements of purchasers in the
publicsector.
Financing
mechanisms
the dti is to lead better co-ordination of incentive grants that
target SMME initiatives, and establish an administration
systemthat links the incentive grants to other financial and
non-financial support mechanisms in order to maximise
SMME access andBEE impact. Newincentivegrant schemes
and amendments to existing ones are also being considered –
the focus of these schemes is on those targeting
entrepreneurship, supplier development, and enterprise
development, including self-help schemes and co-operatives,
skills development, and the acquisition and development of
newtechnology.
19
State-facilitatedlendingistobedrivenbyKhulaandSamaf.
Project financingistobedrivenbytheIDC.
Empowerment transactionfinancingistobedrivenbyNEF.
Government will facilitate specific venture-capital projects in
particular sectors.
3.5 National strategy for the development and promotion of franchising in SA
This strategy seeks to: (i) promote the contribution of franchising to, among other
things, the economic empowerment of historically disadvantaged entrepreneurs
through increasing their participation in franchising; (ii) create an entrepreneurial
culturethrough franchising; (iii) createan environment conducivefor thegrowth of
franchising; and (iv) promotelinkages between big and small enterprises in order to
stimulate the creation of new franchise enterprises. To achieve its objectives, the
strategy proposes a number of actions that are relevant to this entrepreneurship and
small businessdevelopment strategy. Someof theproposedactionsfollowinthetable
below.
Focusarea Proposedaction
Promotingaccessto
finance
Facilitate joint ventures between government, franchisors and
investment companies to stimulate greater availability of capital
for investment infranchise-basedbusinessventures.
Createfranchise-specificfinanceproducts.
Stimulate the creation of venture-capital funds dedicated to
franchising.
Incorporate a franchise focus within the dti incentives
programmes.
Establish the Franchise Development Fund to provide financial
assistance for prospective franchisors and franchisees to develop
or acquirefranchiseventures/systems.
Communicationand
education
Developandimplement acommunicationandeducationcampaign
to stimulate awareness about franchising, and to educate and
informpotential entrantstotheindustry.
Profilingof
franchise
opportunities
Establish and maintain a comprehensive database of franchise
opportunities, with special focus on affordable opportunities that
will attract entrantsfrompreviouslydisadvantagedcommunities.
Providesupport to
prospectiveentrants
intofranchising
Establish franchise support desks to provide quality information
on franchising; assist potential entrants to secure finance from
various sources; and, where necessary, provide a basic legal
serviceandprovidereferral support.
Providetraining Develop and deliver accredited training for potential franchisors,
franchisees, training providers and professional advisers in the
industry.
Entrepreneurship
promotion
Undertake various measures to stimulate a culture of
entrepreneurshipthroughfranchising.
20
3.6 Strategic framework on gender and women’s economic empowerment
This strategy proposes alargenumber of initiatives aimedat providingvarious kinds
of support towomen-ownedbusinesses, asfollows:
Focusarea Proposedinitiatives
Provisionof business
information
InformationBusinessForumfor Womenprogramme
Annual businesssymposiumfor women
The“Your government telli ngyoulikeit is” project
Entrepreneurial educationand
training
Self-employedDevelopment-support programme
YoungWomeninEntrepreneurshipprogramme
WomenEnterpriseProgramme
SouthAfricanWomeninBusinessprogramme
ExpertAdvisersfor Businesswomenprogramme
WomeninManufacturingprogramme
Financing Gender budget analysis
Financequotasystem
Improvingaccesstofinancefor womeninbusiness
Businessdevelopment fundfor women
International trade
Femalequotainforeigntradedelegations
International linkagesfor womenprogramme
International tradefor womenprogramme
Womeninexport programme
Researchandstatistics SouthAfricannational researchproject onenterprising
women
Scienceandtechnology
Technologyfundfor womeninbusiness
WomenandTechnologyBusiness-awarenessprogramme
InnovationsByandFor WomeninBusinessprogramme
Rural women
EconomicLiteracyDevelopment Programmefor Women
EconomicCapacityDevelopment for Womenprogramme
BusinessOrganisational Leadershipprogramme
Co-operativeCapacity-buildingTrainingprogramme
3.7 National youth enterprise strategy
Theyouthenterprisestrategy outlines threekey objectives to beattainedthroughthe
implementationof thestrategy. Theseare:
• to ensurethat entrepreneurial skills, talent andexperiencearenurturedamong
youngwomenandmentoenhancetheir capacitytoparticipateinall aspectsof
SouthAfricansocial, economicandcommunitylife
• to ensurethat youngwomenandmenarerecognisedas akey target groupof
need, and aresourcein thedevelopment of small enterprises within national,
provincial andlocal economies
• tomaximiseaccess tofinancial andnon-financial resources for youngwomen
andmenwhoareinbusinessor planningtoenter business.
21
The strategy proposes a number of recommended actions to provide adequate and
effective assistance to young entrepreneurs. These cover the areas of, among other
things, creation of a culture of enterprise; strengthening and expanding successful
youth enterprise-support schemes; addressing the financing needs of young
entrepreneurs; provision of training, specifically within SMMEs; expansion and co-
ordination of programmes such as the New Venture Creation Learnership; ensuring
adequate participation of youth-owned enterprises in procurement programmes and
other market access initiatives; integration of youth-enterprise development into
national and provincial policies and strategies; and monitoring youth-enterprise
development efforts.
3.8 Co-operatives policy and development draft strategy
The co-operatives strategy seeks to ensure that all policies, strategies and support
programmes developed to support SMMEs are aligned and available to support co-
operativeentrepreneurship, andstimulatetheparticipationof co-operativeenterprises
in the economy. Support programmes, providing access to finance, technical skills
and markets, will be designed across government and its agencies to grow the co-
operatives sector. Thestrategy does not envisionthecreationof any newinstitutions
to implement it. Existing dti and other small business support institutions will carry
out implementation.
3.9 Draft strategy framework for forestry enterprise development
TheDepartment of Water Affairs andForestry’s draft foresty enterprisedevelopment
(FED) strategy proposes aForestry EnterpriseDevelopment Programmethat seeks to
develop “market-driven, profitable business ventures involving previously
disadvantaged communities and individuals, based on the sustainable use of forests
and forest-based resources”. Four categories of enterprises are targeted, namely: (i)
timber-production enterprises; (ii) contracting enterprises; (iii) timber processing,
value adding and marketing enterprises; and, (iv) non-timber forest-product
enterprises. Theprogrammeenvisions the provision of, among other things, training
andextensionservices, andfinancial andbusinessservicestoforestryenterprises.
22
• Greater balance is required between the cost, reach and impact of support
interventions, inparticular, wherepublicfundsareconcerned
• Many support programmes only tackle the symptoms of deeper-lying
problems, thereby preventing a more systematic approach to those structural
issues(e.g. accesstofinancefor blackentrepreneurs)
• Lack of clarity about the roles and responsibilities of different levels of the
publicsector makestheir effortsunco-ordinatedandlesseffective
• Inadequate representation of particular small-enterprise interest groups in
existingor evolvingbusinessassociationsweakensfeedbackonspecificneeds
• Substantive differences still exist in the capacity to absorb small-enterprise
support programmes inthedifferent provinces andregions of thecountry and
indifferent sectors
• Thereis insufficient interactionbetweensmall enterprisesupport programmes
andother thrustsof theGovernment’s socio-economicdevelopment support
• TheCentrefor thePromotionof Small Business(the dti chief directorate) has
beenunabletoco-ordinateall thesupport programmes developedby different
national government departments
• Thorough and regular monitoring and evaluation of the evolving support
processeshasbeeninadequate.
4. Remaining challenges
While a great deal of progress has been made in government’s efforts to promote
small enterprises, someimportant challengesarestill toberesolved.
The Review of Ten Years of Small Busine ss Support in South Africa 1994 to 2004
identifiesthefollowingissuesthat needattention:
• The great diversity of small enterprises and their needs requires greater
recognition
• Far more knowledge and understanding is required across the full range of
support suppliers and thesupport each oneprovides, as well as to whomand
under what conditions
• Access to support services must be comparable in urban/metropolitan and
rural areas
23
CHAPTER IV
POSITIONING THE INTEGRATED STRATEGYON
THE PROMOTION OF ENTREPRENEURSHIPAND
SMALLENTERPRISES
24
The detailed reference to existing initiatives outlined under Section II-IV above,
showsclearly that great effort hasbeeninvestedby variousplayersintheeconomy in
responding to various aspects of entrepreneurship and small business development.
This also shows that in the recent past, a number of government policies and
strategies have emerged, which focus on various aspects of entrepreneurship and
small businessdevelopment. However, someimportant challengesremain.
Thesechallenges havean impact on theprimary objectiveof theIntegrated Strategy
on thePromotion of Entrepreneurship and Small Enterprises. Theprimary objective
of this strategy is to ensure that the overall task of fostering entrepreneurship and
promoting small enterprises, as articulated in various government policies and
strategies, is carried out adequately and effectively, and that a high level of
performanceandsuccessisachievedacrossall policyandactionareas.
Theimplementation of thestrategy will beguided by thefollowing threeprinciples,
whichalsoformthebasisfor thestrategy:
2.1 Entrepreneurship and small business promotion is a shared competency
Asisshownby therangeof thecountry’scurrent participantsinentrepreneurshipand
small business promotion in terms of policies, institutions and programmes, thetask
of promotingentrepreneurshipandsmall business:
• cuts across a wide range of policy areas; therefore, by nature, it cuts across
departmental boundariesandinvolvesseveral departmentsat national level
• cuts across the three spheres of government, with strategies, institutions and
programmesat national, provincial andmunicipal government levels
• goes beyond the public sector and its agencies, and encompasses the private
sector and its organisations, educational institutions and non-governmental
organisations.
Recognising this inclusive participation is critical to seeking ways and means to
ensurethat thetask of entrepreneurship and small business promotion is carried out
adequately, effectively and in a decentral ised manner. The need for a clear co-
ordination point is inherent in the success of any systemwith different role players
and decentralised service approaches. The co-ordination point is identified in this
strategy as theDepartment of TradeandIndustry (the dti) supportedby its agencies
tasked with the implementation of the small-enterprise development strategy. These
agencies areidentified in this document as seda (for non-financial support services),
Samaf (for micro-finance), andKhula(for small andmediumenterprisefinance).
IV. POSITIONING THE INTEGRATED STRATEGYON THE PROMOTION OF
ENTREPRENEURSHIPAND SMALLENTEPRISES
2. Key guiding principles
1. The aim of the Strategy
25
2.2 Integration is key
Following fromthe above, and to ensure that such a “decentralised” arrangement
producesthedesiredoutcomes, integrationiscritical. All roleplayers(institutionsand
programmes), particularly thosecreatedandresourcedby thestate, shouldbeguided
bythemantra: “Think SynergyFirst.” This meansthat nonewsupport programme, no
newproducts andservices, andnonewdelivery mechanismshouldbedevelopedand
implementedwithout first assessingthefollowing:
• Howthenewinitiativeadds to existing support or delivery mechanisms, and
howitsintroductionwill closegapsthat cannot beclosedbyexistingofferings
(insideandoutsidetheinitiative’ssponsoringinstitution)
• How the new initiative ensures that duplication of existing support and
delivery mechanisms – across thespectrumof roleplayers – is avoidedat all
costs
• Howthenewinitiativecomplements/reinforces/adds valueto existingsupport
anddelivery mechanisms inamanner that ensures “seamless” delivery across
all roleplayersandofferings
• How the resources deployed to the initiative will be accounted for in the
national small enterpriseservice-deliveryreport.
2.3 The strategy must cover the entire entrepreneurship continuum
Asanintegrator of policies, institutionsandprogrammes, thestrategy seekstoensure
that adequate support and delivery mechanisms exist across the entire
entrepreneurship continuumfrompre-start-up to start-up, business survival, growth
andexpansion, andturnaroundof ailingbusinesses.
2.4 The strategy attends to special foci
Special foci identifiedinthevariousstrategiesinclude:
• special target groups(youth, womenandthedisabled)
• special geographicareas(poor areasandareaswithhighunemployment)
• special sectors (growth sectors as identified in the Micro-economic Reform
Strategy)
• newenterpriseorganisational forms(suchasco-operatives)
This strategy does not promotethecreationof newinstitutions for implementationof
initiatives directed to thesespecial foci, but rather outlines themeasures that should
bein placeto ensurethat thereareadequateprovisions within thesupport systemto
addresstherequirementsof thesespecial focal categories.
26
CHAPTER V
STRATEGICACTIONS AND INSTITUTIONAL
ARRANGEMENTS
27
1. Ensuring integration and improved co-ordination
1.1 Proposed actions
1.1.1 Improving co-ordination within government
Improving co-ordination of entrepreneurship and small business promotion efforts
withingovernment remains animportant priority. TheInter-Departmental Committee
on Entrepreneurship and Small Business Promotion will be strengthened through
government cluster arrangements, drawing in all the relevant national departments.
This committee will ensure integration and effective co-ordination of policies and
measures to promote entrepreneurship and small business across government. The
committeewill also provideagovernment-widelink to theNational Small Business
Advisory Council, thus strengtheningthereviewof gaps inthesupport environment,
andwill takethenecessarystepstoclosesuchgaps.
Lastly, the committee will monitor the overall performance of government’s
entrepreneurship and small business promotion agencies, and will take corrective
actionwheredeficient performanceisobserved.
the dti, assistedby thePresidency, will bethe joint co-ordinationpoint for theInter-
Departmental CommitteeonEntrepreneurshipandSmall BusinessPromotion.
The B-BBEE Act 2003, the Co-operatives Act, 2005 and the Small Business Act,
2003all providefor theestablishment of advisory councils. the dti will developclear
terms of reference for each council and areas of possible collaboration between the
advisorybodiesidentified.
V. STRATEGICACTIONS AND INSTITUTIONALARRANGEMENTS
1.1.2 Improving co-ordinationamong support agencies
Guidelines for the design and implementation of support programmes and delivery
mechanisms will be developed based on the “Think Synergy First” philosophy. The
guidelines will requirethat thepublic-sector small business agency proposing anew
programme, product or service, or delivery mechanismdevelops a“newprogramme,
product/service or delivery mechanismconcept note” outlining key elements of the
proposed initiative prior to the conceptualisation and design of the initiative. These
government-funded “Programmes Identification Notes” will beused to register each
fundedprogrammeinthegovernmentservicesinformationportal.
All government departments and public-sector small business agencies at all three
spheresof governmentwill berequiredtocommitthemselvesto“ThinkSynergyFirst”
intheirconceptualisationanddesignof programmes,productsandservices,anddelivery
mechanismsbyadoptingandimplementingtheproposedguidelines.
28
1.2 Proposed institutional arrangements
the dti, in consultation with relevant government departments and various public-
sector small business agencies, will developthe“newprogramme, product/serviceor
delivery mechanismconcept note” guidelines, and circulatethemfor discussion and
adoptionbyall roleplayersconcerned, throughtheGovernment’scluster system.
An agencies network – the Small EnterpriseAgencies Forum– will be established.
Thiswill beledbyseda asanintegrator of public-fundedsmall businessinitiatives, as
articulated in theNational Small Business Act of 2004. Themain task of theforum
will beto develop and implement asystemof integrating support services, ensuring
seamless service from one institution to another, and eliminating duplication of
services. A joint programme for marketing and promotion of services rendered will
support this. Theproposed“newprogramme, product/serviceor delivery mechanism
concept note” will betabledby thesponsoringentity beforetheforumfor discussion
and input, prior to the conceptualisation and design of the new initiative. It is
proposedthat thefollowingentitiesbepart of theforum:
Small EnterpriseDevelopmentAgency(seda)
TheSA Micro-FinanceApexFund(Samaf)
KhulaEnterpriseFinanceLimited
UmsobomvuYouthFund(UYF)
National Empowerment Fund(NEF)
Industrial Development Corporation(IDC)
National ProductivityInstitute(NPI)
TshumisanoTrust
TourismEnterpriseProgramme(TEP)
SouthAfricanRevenueService
(SARSSMME Division)
Sector educationandtraining
authorities(Setas)
Small-scaleMiningBoard
ForestryEnterpriseDevelopment
(FED) Programme
Provincial Development FinanceInstitutions
Provincial Small Business
DevelopmentAgencies
At local level, steps will be taken to co-locate as many small enterprise support
agencies as possible, in order to create integrated access points for aspiring and
existing entrepreneurs. Special effort will be made to integrate local municipality
small business support initiatives into theseaccess points. Steps will also betakento
ensure that personnel at access points are fully briefed about the range of support
services available fromall providers, and havetheappropriatepromotional material
on all support services to enablethemto assist enquirers to access support provided
by those institutions not physically located at the integrated access points. Local
municipality infrastructure programmes should give focus to providing facilities for
thelocationof businesssupport service-accesspoints.
As amatter of urgency, all current programmes, products and services, and delivery
mechanismsacrossall spheresof governmentandpublic-sectorsmall businessagencies
aretobereviewedtodeterminehowtheyfit the“ThinkSynergyFirst” philosophyand
howtheyalignwiththedevelopment prioritiesoutlinedinthisstrategyasasupportive
policyframework.Wherenecessary, adjustmentswill bemadetobringaboutthedesired
fit. This may imply the redesign of certain programmes, products or services, and
deliverymechanisms; amalgamatingthemintosingleprogrammes, productsorservices
anddeliverymechanisms,orscrappingthemaltogether.
29
2. Encouraging increased private sector participation
The corporate sector, as a whole, can play a much larger role in promoting
entrepreneurship and small business, through sponsoring enterprise education and
financial-literacy programmes for learners andrunningin-housebusiness support and
induction programmes. Whilesome major corporations already haveprogrammes in
placetofoster entrepreneurshipandsmall business, effortswill bemadetoencourage
increased corporate-sector participation, particularly in the areas of promoting
entrepreneurship and business start-ups, procurement from small business, and
development and implementation of comprehensive enterprise-development
programmes.
2.1 Proposed actions
Government collaborativemeasures with organised business through Business Unity
SouthAfrica(BUSA), Chambersof Commerce& IndustrySouthAfrica(CHAMSA),
Corporate SMME Development Forum (CSDF), National Business Initiative and
various BEE charter councils will encourage the private sector to develop sector
initiatives focused on skills development, preferential procurement targeting small
business, enterprise development, and implementation assistance and monitoring of
thesecorporate-sector initiatives.
Government will also encourage more corporations to develop and implement in-
house entrepreneurship-development programmes along the lines of Anglo
American’s Zimele, SAB’s Ki ckStart and Shell’s LiveWire programmes, and will
facilitate partnerships at corporate level to replicate and roll out successful models
fromtheseprogrammes.
2.2 Proposed institutional arrangements
Theco-ordinationof theaboveinitiativescanbefullydelegatedtoorganisedbusiness
throughBUSA/CHAMSA andmonitoredbytheEnterpriseandIndustry
Development Division(EIDD) viaapartnershipagreement withthe dti andits
agencies. Thus, nonewinstitutional arrangement isenvisioned.
3. Ensuring action across the entire entrepreneurship continuum
3.1 Pre-start-up
Themaintask inthisareaistoincreasethesupply of potential entrepreneurswiththe
motivation and capacity to identify and pursue opportunities to start their own
businesses.
3.1.1 Proposed actions
Actions to be pursued include establishing a commission on entrepreneurship
education to produce a report within one year on measures to take to integrate
entrepreneurship education throughout the education system, including measures to
build capacity for teaching entrepreneurship and, within universities, broadening
entrepreneurshipbeyondMBA degrees to all academic programmes; andthecreation
of platforms to exchange approaches and experiences. It is proposed that the
30
following entities be part of the commission: the dti (Entrepreneurship Promotion
Directorate), Department of Education, University Entrepreneurship/Small Business
Centres, UmsobomvuYouthFund, entrepreneurship-educationNGOsandStudentsin
FreeEnterprise(SIFE).
Thestrategy callsfor theestablishment of anEntrepreneurshipPromotionDirectorate
within the dti to strengthen co-ordination, promotion and monitoring of thenational
entrepreneurshipstrategy. Thisstrategywill introducemeasurestoincreasetheprofile
of entrepreneurship within the education system – by introducing new
entrepreneurshipeducationprogrammesat universitiesand, inpartnershipwithNGOs
activeinthis areaandtheUmsobomvuYouthFund, extendingexistingschool-based
entrepreneurship-education programmes across the country. Where programme gaps
exist, newprogrammeswill bedevelopedandimplemented.
Theprivatesector will alsoplayacritical role, throughlaunchingwide-rangingmedia
campaigns to profile the role of entrepreneurship in society, and showcasing
successful entrepreneurs at local, provincial and national level. Innovativeradio and
TV initiativeswill beconceptualisedandimplemented.
For thispurpose, aninformal EntrepreneurshipAmbassadorsNetwork will becreated,
comprising previous entrepreneurship and small business award winners. Network
members will be asked to volunteer their time to give talks at schools and other
community forums on the importance of entrepreneurship and small business. This
will be supported by the introduction of provincial and national awards, which will
recognise both media efforts to promote entrepreneurship, and those who excel in
entrepreneurshipprogrammesinschools.
3.1.2 Proposed institutional arrangements
A dedicated unit, which will be called the Entrepreneurship Promotion Directorate,
will becreatedwithinthe dti (EIDD) todrivetheaboveactionprogrammes.
3.2 Start-ups
The main task here is to take the potential and capabilities of South Africans
interested in starting new businesses, and convert these into actual action plans and
accesstomeansleadingtonewbusinessstart-ups.
3.2.1 Proposed actions
Research will be conducted to examine the impact of the so-called “quiet
disincentives” (such as level of taxation, labour-market legislation, barriers to entry)
that discouragepeoplefromstartingtheir ownbusinesses. Basedontheresults of the
research, measures will be introduced to alter the risk-reward profile of
entrepreneurship and to increase the attractiveness of starting and continuing a
business.
As proposed inAsgiSA, ongoing efforts will be made to eliminate barriers to entry
arisingfrom, amongother factors, concentrationincertainsectorsof theeconomyand
regulation. Efforts will also be made to create appropriate start-up incentives,
31
including taxation measures (e.g. tax treatment of sole proprietors and private
investment bytheentrepreneur, family andfriendsinstart-upbusinesses).
The“ExploreEnterprise” campaigncommunicatingthepersonal andsocietal benefits
of starting up and running a business will showcase successful entrepreneurs and
availableenterprise-support programmes, in order to persuademorepeopleto set up
businesses.
A comprehensive strategy on utilising business incubators to foster start-ups, with
particular focusonspecial target groups, prioritysectorsandspecial geographicareas,
will be developed, proposing ways to utilise instruments such as the Support
Programme for Industrial Innovation (SPII) and others, for the benefit of incubator
clients.
Moreencouragement istobegiventonewstart-upsby thebusinesssupport network,
andproper guidanceprovidedtoensureaccesstoall possiblesourcesof support.
Support programmes will be introduced that address the following four basic key
factors in starting a business: (i) acquiring the necessary managerial, technical and
personal ability; (ii) acquiring motivation and commitment; (iii) developing the
business ideafromarawideato avalid idea; and (iv) identifying and acquiring the
necessaryphysical andfinancial resources.
Accesstofinancefor start-upswill beimprovedby encouragingexistingprovidersof
finance to introduce a greater quantum of products targeted at start-ups, by, for
example, developing and implementing meaningful risk mitigation and risk-sharing
measures.
Asoutlinedinthevariousstrategies, newor additional measuresaretobeformulated
and implemented to stimulate start-ups through franchising and co-operatives,
targeting youth and women, and focusing on priority sectors and special geographic
areas.
3.2.2 Proposed institutional arrangements
the dti will commission and manage the proposed research on entrepreneurship
disincentivesandincentives.
The “Explore Enterprise” campaign will be launched and managed by the
Entrepreneurship Promotion Directorate and conducted primarily by seda, Khula,
Samaf and UYF. Thecampaign could beconducted in partnership with chambers of
commerce; university entrepreneurship/small business centres (targeting university
students); and youth bodies such as the National Youth Commission and South
AfricanYouthCouncil andStudentsinFreeEnterprise(SIFE)
Theseda Technology Programme, inconjunctionwithSA Business Technology and
Incubation Association (Sabtia), will be tasked with developing the proposed new
business-incubationstrategy.
32
Theproposed Small EnterpriseAgencies Forumwill further engageon mechanisms
andinstitutional co-operationarrangementstoenrichthestart-upbusinesssupport.
3.3 Business survival, growth and expansion
Thekeytask istoincreasethenumber of businessesthat survivethefirst fewyearsof
establishment and progress to growth and expansion, thus contributing to higher
levelsof jobcreationandeconomicgrowth.
Critical to success in ensuring business survival, growth and expansion is a clear
understanding of the business’s needs at different stages, and developing and
delivering appropriateproducts and services to respond adequately and timeously to
thoseneeds. International literaturedocumentsthefollowingassomeof thebusiness-
management needs faced by small enterprises during their various growth phases.
3
Thus, thestrategywill focusontheseneeds.
Businesslife
stage
Businessneeds
Post-
establishment
survival
Remedial needsrelatingtothegapsor inadequaciesof theoriginal
businessplanandinthepreparationfor goingintobusiness.
Needsarisingfromunforeseencircumstances, suchaschangesinthe
environment, competition, customer needs, technologyand
government action.
Needsrelatingtothedevelopment of adequaterelationshipswiththe
support networkandtheenvironment, includingbanks, accountants,
thelegal profession, suppliers, customers, labour andtrade
associations.
Needsrelatingtothedevelopment of adequatebusinesssystemsand
meansof controllingcash, profit, productionandsales.
Runninga
successful
micro-
business
Theneedtokeepabreast of changesinthestatutoryenvironment that
maythreatenthebusiness.
Needsrelatingtothebroader non-legislativeenvironment – keeping
abreast of competitionor changesinrelevant trendsinlocal, regional
or national societythat arelikelytoaffect thedemandfor theproduct
or service.
Needsrelatingtotheacquisitionof basicmanagement knowledgeand
skills, for example, managingmarketing, production, peopleand
finance.
Needsrelatingtothedevelopment of personal capabilities, for
example, problemsolving, creativity, sellingandnegotiationskills,
leadershipandcommunication.
Managing
first-stage
growth
Identifyclearlythebusiness’spositioninthemarketplace, its
financial performance, andtheefficiencyandeffectivenessof its
physical andfinancial, productionor servicecapability.
Identifythepotential for growthintermsof theavailabilityand
adequacyof: physical andfinancial resources, experienceinnew
areastobedeveloped, thequalityandstrengthof new-product ideas,
3
Thislist isillustrative, not exhaustive.
33
leadershipandbasicmanagement organisation, andcontrol.
Identifyneedswithrespect toplanningfor thespecificnewmarket or
product developmentsenvisaged, coveringmarkets, resourceinputs,
negotiationsrequired, businessplanning, andsourcingof necessary
assistance.
Managing
second-stage
growth
Development of capableteamscoveringkeyfunctionsinthebusiness.
Delegation, leadershipandcontrol.
Managingdiversifiedproduct andmarket growth.
Introducingmoresophisticatedmethodsof functional management
control.
Dealingmoreeffectivelywiththeincreasinglysophisticated
environment of finance, technologyandmarketswithwhichthelarger
businesshastocontend.
Introducingandmanagingexporting, licensingand
internationalisation.
3.3.1 Proposed actions
Virtually all of theprogrammes, products and services of thecurrent small business
support institutionsalreadyfocusonenterprisesinthesevariousstagesof survival and
growth. Therefore, nonewmeasuresareintroduced. However, continuousassessment
of the relevance, adequacy, accessibility and efficacy of the support measures and
ongoinggapanalysisandinnovationwill beencouragedandmonitored, toensurethat
support remains flexible enough to meet any emerging needs. Current mandates,
geographical presenceandexpansionplans of institutions suchas Khulaandtheroll-
out of sedaandSamaf will bemonitoredtoensureincreasedaccess tosupport across
the country. Increased collaboration between agencies will be fostered to ensure
integrationof support at all levels, particularly at thepoint of delivery. Parallel tothe
increaseof supplyof development services, effortswill bedirectedtowardsincreasing
demand for small business products and services leveraging on public sector
procurement and private sector procurement. The BEE codes of good practice will
assist in this regard with specific referenceto theimplementation of thepreferential
procurement, skillsdevelopment andenterprisedevelopment elementsof thecodes.
3.3.2 Proposed institutional arrangements
the dti throughtheEnterpriseDevelopment Unit, together withtheSmall Enterprise
AgenciesForum, andtheInterdepartmental Committeefor Small BusinessPromotion
Within Government cluster, will monitor and continuously evaluate progress in this
area. These structures will interact with the National Small Business Advisory
Council for further analysis and independent reporting on impact made. Other than
that, nonewinstitutional arrangementsareproposed.
3.4 Business turnaround
Anoften-neglectedyet crucial businesssupport areaisassistingbusinessesindistress
toturnaroundandavoidfailure. Of course, not all strugglingbusinessescanbesaved
fromcollapsebut many can. Small business turnaround is adeveloped profession in
countriessuchastheUSA andtheUK andcanbesoinSouthAfricatoo.
34
3.4.1 Proposed actions
Training programmes and advisory services to be developed to assist businesses in
distress.
Content on detecting emerging signs of distress in the business and what corrective
actiontotaketobeincorporatedinall small business trainingprogrammes, including
thoseof Setas.
Technical co-operationprogrammesbetweenSouthAfricaandoutsidecountriestobe
strengthened to draw experience and partnerships and to ensure capacity building
programmes for the development of business turnaround skills of business advisers
nationally. Linkedto this is thedevelopment and implementation of an accreditation
systemfor businessturnaroundprofessionals.
Thereviews of theincentives programmeto bedirectedtowards providingnecessary
interventionstorestoreactivitiesinthesebusinesses.
3.4.2 Proposed institutional arrangements
TheSmall EnterpriseDevelopment Agency (seda) to takethelead in implementing
themeasuresoutlinedhere.
Given that business turnaround support is important in risk mitigation for financing
institutions, partnershipsaretobesought withcommercial banksandother lendersto
developandintroducetheabovemechanisms.
J oint efforts with the Institute of Business Advisers to be leveraged to develop and
implement capacity building measures and an accreditation system for business
turnaroundprofessionals.
4. Focusing on special target groups, regions and priority sectors
4.1 Focusing on youth and women
UmsobomvuYouthFundis adedicatedinstitutionthat focuses onyouthandoffers a
widerangeof support measuresaimedat thistarget group. Together withtheNational
YouthCommissionandtheSouthAfrican YouthClub, Umsobomvuhas developeda
comprehensive national youth enterprise strategy, which identifies key interventions
necessarytoimprovethelevel of support toyoungentrepreneurs.
the dti has developed an elaborate strategy on gender and women’s economic
empowerment that outlines anumber of plannedinitiatives to meet thesupport needs
of thistarget group.
Inaddition, the dti’s co-operatives strategy andthe strategy onthedevelopment and
support of franchising also pay special attention to ensuring participation and
providingsupport toyouthandwomen.
35
Lastly, some of the measures proposed in this strategy, such as those in the area of
entrepreneurship education and fostering start-ups, will directly benefit these target
groups.
Based on the aforementioned, no new initiatives and institutional arrangements are
proposed in addition to thoseoutlined in thestrategies outlined above. Therelevant
dti units together with the Small Enterprise Agencies Forumwill closely monitor
progressinreachingyouthandwomenintheimplementationof thevariousstrategies
andensurethat correctiveactionistakenwherenecessary.
4.2 Focusing on special geographic areas
Thestrategy’sfocusonashift fromwholesaletoretail service-delivery approachesis
strengthened by Khula’s proposed retail and partnering strategy, as well as theseda
andSamaf retail andpartneringstrategy already inimplementation. Coupledwiththe
national roll-out, this service-delivery approach will ensure that services are easily
accessibleacross thecountry. the dti and theSmall EnterpriseAgencies Forumwill
closelyandcontinuouslymonitor theadequacyof serviceprovisioninkeygeographic
areas across the country, and ensure that measures are taken to close any identified
gaps.
In addition, a deliberate effort will be made to work as closely as possible with
government programmes targeting special geographical areas, such as theIntegrated
Sustainable Rural Development Programme (ISRDP), Urban Renewal Strategy and
theForestry EnterpriseDevelopment Programme, to ensureavailability of support in
target areas, and alignment with theProvincial Growth and Development Strategies
and local government integrated development plans (IDPs). This strategy gives
prioritytotheroleof provincial government inprovidinganenablingenvironment for
small business support through provincial economic development policies and
enabling regulatory framework. This will be supported by municipal infrastructure-
development plansandtheimplementationthereof.
The Small Enterprises Agencies Forumwill cascade to the provincial level through
co-ordination by seda provincial offices. The provincial department responsible for
economicdevelopment will alsoberesponsiblefor theco-ordinationof theProvincial
Inter-Departmental forums for small business promotion, integrating existing
interdepartmental structures and the contribution of the sector departments to the
strategygoals.
4.3 Focusing on priority sectors
Support programmes will be developed for small enterprises in the priority sectors
identifiedintheMicro-economic ReformStrategy. This will comeabout throughthe
designof newprogrammes, or throughtheadaptationof existingones. Theintention
is to reducegovernment interventions in generic programmes, products and services
that canbeeasilypackagedby stateagenciesfor retail by private-sector agencies, and
to strengthen the capacity of state agencies to introduce new sector-specific
programmes.
36
Over time, these will be co-ordinated between seda, Samaf, Khula and by specific
sector departments as their niche in the integrated small-enterprise development-
strategyframework.
As far as possible, programmes will bedevelopedafter thoroughresearchexamining
the support needs of small business in those sectors. Sector departments will play a
key role in leading the conceptualisation and design of sector-specific support
programmes.
Cutting across all the above is the positioning of donor organisation assistance
(DOA), for which initiatives will be guided through a country strategy for foreign-
development assistance on small business. This will link donor support to the
government priorities for small business development. Areas of focus will include
technical assistanceat institutional andenterpriselevel, as well as budgetary support
targetingtheroll-out of selectedinitiatives.
TheSmall BusinessAdvisory Council and the dti EnterpriseDevelopment Unit will
drive the establishment, implementation and monitoring of this focus strategy,
drawing fromthe success of, and lessons learned in, the implementation of sector-
specific initiatives like the TourismEnterprise Programme under DEAT, as well as
theConstruction Industry Development Board programmes under theDepartment of
PublicWorks.
37
CHAPTER VI
SUMMARYOF STRATEGIC PROGRAMMES
38
The implementation of the strategy will be monitored through targets set and
achievementsmadeonthefollowing;
1. Fostering entrepreneurship culture and increasing enterprise creation rate
This will be achieved through improved integration between social and economic
cluster strategies, more effective utilisation of existing initiatives, as well as the
creationandimplementationof newmeasuresoutlinedearlier inthisdocument.
2. Establish a dedicated network of SMME finance
As describedearlier, amoretargetedapproachwill befollowed. Samaf will focus on
survivalist and micro-enterprises partnering with social structures insideand outside
government for community-resource mobilisation into enterprising initiatives.
Khula’s wholesale approach will remain key in forging public-private partnerships
and addressing the collateral-security challenges for small businesses; however,
considerationwill begiventotheestablishment of adedicatedsmall businessfinance
institution. The small business bank approach will facilitate partnerships with the
private sector. The Government’s investment in this regard will be seed capital to
crowd in interested private-sector partners; the dti will continuously review the
appropriatenessof itsfinancial incentiveschemesfor thesmall enterprisesector.
3. Create demand for Small Enterprise products and services
Linking to the broader Industrial Strategy and trade promotion, the South African
Government has entered into bilateral trade agreements with a number of countries.
These agreements provide potential opportunities for small enterprises to penetrate
foreign markets through exports. These opportunities will be analysed in detail and
support programmesintroducedtoenablesmall enterprisestotakeadvantageof them.
Efforts in this area will be undertaken in collaboration with business organisations,
withthepossibility of fully delegatingresponsibility for thiswork totheseentities, as
part of apartnershiparrangement betweengovernment andprivate-sector bodies.
the dti and the National Treasury will also devise a mechanism to increase the
proportionof publicprocurement of goodsandservicesthat goestosmall enterprises.
This will lead to the establishment of a National Procurement Programme targeting
small business, including co-operative enterprises that cluster micro-enterprises into
viable supplier groups. The programme mechanisms will seek to establish an
integrated support framework linking preferential procurement with skills
development, enterprise development and certain elements of corporate social
investment (grant programmes). This initiative will also provide government with a
strategicresponseintheimplementationof specificelementsof theB-BBEE Codesof
GoodPractice.
VI. SUMMARYOF STRATEGIC PROGRAMMES
39
4. Strengthening local network for small business development support services
Working in collaboration with various providers of support at local level, including
municipalities, seda will design and co-ordinate a standardized national network of
service access points that integrate government-funded support measures across all
spheres of government. Special effort will bemadeto ensurethat support reaches all
regionsof thecountry.
Thiscallsfor clear rolesfor different organsof government, theeffectivealignment of
service provision through this network, as well as the necessary resource provision,
focusing on widening the range of programmes based on the needs of small
enterprisesandtheestablishment of requiredinfrastructurefor localisedsupport
5. Improving small enterprise competencies and delivery capacity
Inadditiontosatisfyingtheneedfor businesssupport servicescentres, focuswill be
giventotheprovisionof facilitiesfor usebysmall businessesinspecialised
manufacturingandserviceindustries, aswell asstrengtheningof cottageindustriesfor
rural enterprises.
This will be achieved through mobilising funding for minimum business
infrastructure facilities in local authority areas across the country, linking up with
municipal LEDeffortsandinitiativeslocatedinprivate-sector enterprisedevelopment
under theB-BBEE strategy.
6. Strengthening Enterprise Networks
Thecooperativesdevelopment policyandstrategy(currentlyadraft document) will
befinalized. Thiswill bealeadingfrontier instrengtheningthecooperatives
movement asaprimarybasetofoster essential linkagesat enterpriselevel and
realizingmoreeconomicbenefitsfromcommunityself-helpinitiativesthrough
appropriateandtargetedinterventionmeasures. Whilethedti will provide
coordinationandpromotionof cooperativesingeneral, government departmentsand
publicinstitutionsaswell astheprivatesector will berequiredtocontributesectoral
support topromotecooperativedevelopment.
7. Providing necessary support incentives
TEO will continuetoprovideleadershipinthedevelopment andadministrationof the
incentivesschemestosupport variousenterprises. Thiswill combinethedevelopment
of newincentiveschemesandreviewingexistingprogrammestoincreasethe
incentivesimpact andaccessibilitytosmall enterprises. Theincentiveswill alsoseek
toalignwiththeprioritysectors asguidedbythegovernment supportivepolicy
frameworkfor small enterprisedevelopment.
40
8. Improving regulatory environment
Inappropriate or unduly restrictive legislative and regulatory conditions are often
viewed as critical constraints on the access of small enterprises into the business
sector, and as obstacles to their growth. Cabinet has already taken decisions on
measures to improvetheregulatory environment for small enterprises. Amongthese,
the dti and the dplg have been tasked with the responsibility of preparing
recommendationsonhowtoimprovetheregulatoryenvironment for small enterprises
inmunicipalities. Ongoingresearchwill beconductedtodrawexperiencefromsmall
enterprise support agencies, business organisations and independent experts in the
areaof easingadministrativeandregulatory burdensonsmall businessandtheimpact
thereof. This will strengthen constant identification of additional regulatory review
areas.
the dti will also invoke Section 18 (1) of the National Small Business Amendment
Act (Act No. 26 of 2003), which empowers the Minister of Trade and Industry to
publishguidelinesfor organsof national, provincial andlocal government topromote
small business, including guidelines for regulatory impact monitoring. The
establishment of the Regulatory Impact Assessment Unit, currently championed by
thePresidency, will strengthentheseinitiatives.
9. Entrepreneurship and small business research
Research plays an important role in informing government policy and strategy on
entrepreneurship and small business promotion. With the increase in the number of
university-based centres of entrepreneurship and small business, research output is
also expectedto increase. However, additional measures arenecessary to ensurethat
policy-relevant research is undertaken on an ongoing basis. In particular, statistical
data on small enterprises, including business entry, exit, survival and failure rate, is
critical toinformingpoliciesandsupport programmes.
the dti will work withStatistics SA andacademiato undertakethis typeof research.
Thedepartment will ensureongoingresearchandthepublicationof theAnnual Small
Business Review.
the dti will also work with business organisations and academic institutions to
identify additional areas for research, and to mobilise resources to undertake such
research. Areas for ongoingresearch, which will receiveimmediateattention, arethe
identification of opportunities for small enterprise creation and growth within the
various sectors of the economy, as well as technology application that supports the
strengtheningof productivecapacitiesof small businesses. Resultsof theresearchwill
be widely publicized using existing institutions and other channels, to inform
prospectiveandexistingentrepreneursof theseopportunities.
41
CHAPTER VII
BUILDING PARTNERSHIPS AND CAPACITY
FOR PERFORMANCE
42
Building capacity throughout the public-sector enterprise support systemto deliver
support services professionally and efficiently is of critical importance to the
successful implementation of the strategy. This requires clear identification of the
focuspoint for thenational deliverysystem; aclear resourcechannel; andstreamlined
strategy implementation, co-ordination, and monitoring linked to the resource
channels.
Fragmentationof private-sector support andDevelopment Assistance, wheretheseopt
to partner with government, will beminimised through theidentification of selected
partnershipfocal points withingovernment. The dti will takesteps to forgemutually
beneficial partnership arrangements with national business organisations such as
BUSA, CHAMSA andthedonor community; whileindividual corporationswill forge
direct partnershipsat institutional level.
1. Proposed actions
Thecapacity-building needs of all personnel that interfacewith entrepreneurs across
all institutionswill beassessedandaddressed, toensurethedevelopment anddelivery
of appropriatetrainingandother capacity-buildingmeasures.
In particular, the capacity-building needs of LED and small business development
personnel inlocal municipalities andmunicipality-ownedenterprises will beassessed
and addressed to ensure the development and delivery of appropriate training and
other capacity-buildingmeasures.
A programmeto encouragemunicipalities to “Think Small First” with regard to the
impact of their actions onsmall business intheareas of regulation, procurement and
payment for goods and services, delivering business-related municipal services, and
soon, will bedeveloped.
the dti will consider delegating theimplementation of certain interventions outlined
inthis strategy to organisedbusiness formations, andwill monitor their performance.
To assist theseorganisations to performtheir tasks effectively, the dti will, together
with these organisations, develop and implement a programme to strengthen their
internal capacity.
2. Proposed institutional arrangements
Theabovemeasures areto becarried out by the dti, theSmall EnterpriseAgencies
Forumandparticipatingprivate-sector organisations.
VII. BUILDING PARTNERSHIPS ANDCAPACITYFORPERFORMANCE
43
CHAPTER VIII
MONITORING PERFORMANCE
44
Effectivemonitoringof theimplementationandperformanceof thisstrategy, inorder
to enable improvements in performance and the introduction of changes where
necessary, is of critical importance. Given that theformulation of this strategy takes
place in the context of existing and well-established institutions and support
programmes, the dti recognises that these entities have established their own
performance-monitoringmechanisms.
However, the importance of developing and implementing an over-arching
monitoring framework, which will enable government to gather feedback on the
performance of public, private and donor enterprise support, cannot be over-
emphasised. The responsibility for developing an effective national monitoring
frameworkfallsunder the dti, supportedbythefollowing:
• government departments through the Inter-Departmental Committee on
Entrepreneurship and Small Business Promotion as part of the government
clusters
• small enterprisesupport agenciesset upbyvariousgovernment departments
• theBEEAdvisoryCouncil
• theNational Small BusinessAdvisoryCouncil
• organisedbusinessbodies.
the dti, working with the National Small Business Advisory Council, will take the
initiative in consulting with these entities to jointly formulate a comprehensive,
system-wideperformance-monitoringframeworkfor thenational strategy.
It isimpossibletoanticipateall thesocio-economic andinstitutional changeslikely to
emerge over the next ten years, just as it is impractical to stipulate detailed support
programmes for all the different problem areas, sectors or target groups. The
integrated strategy, therefore, sets the framework and outlines the principles
underlying futuregovernment support and public-sector programmedevelopment. It
will beuptothevariousplayers(includingcurrent aswell asevolvinginstitutions) to
apply those principles and to plan, negotiate and practically implement appropriate
support programmes within the fundamental guidelines provided in this strategy
document.
VIII. MONITORINGPERFORMANCE
IX. CONCLUSION
minit print hatfield ? (012) 362 2807
Integrated Strategy on the Promotion of
Entrepreneurship and Small Enterprises
The Department of Trade and Industry (the dti)
the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria
Private Bag X84 Pretoria 0001, Republic of South Africa
the dti Customer Centre: 0861 843 384 (South Africa)
+27 12 394 9500 (International)
www.thedti.gov.za
2005 Cabinet approval
doc_306656317.pdf
Integrated Strategy on the Promotion of Entrepreneurship and Small Enterprises
Integrated Strategy on the
Promotion of Entrepreneurship
and Small Enterprises
Unlocking the
Potential of
South African
Entrepreneurs
AsgiSA Accel erated & Shared Growth Ini ti ati ve ? South Afri ca
BEE Bl ack economi c empowerment
B-BBEE Broad-based bl ack economi c empowerment
BUSA Busi ness Uni ty South Afri ca
CHAMSA Chambers of Commerce & Industry South Afri ca
CSDF Corporate Smal l Busi ness Devel opment Forum
DEAT Department of Envi ronmental Affai rs and Touri sm
dplg Department of Provi nci al and Local Government
DST Department of Sci ence and Technol ogy
EIDD Enterpri se and Industry Devel opment Di vi si on
EPWP Expanded Publ i c Works Programme
FED Forestry Enterpri se Devel opment
GDP Gross domesti c product
GEM Gl obal Entrepreneurshi p Moni tor
GEP Gauteng Enterpri se Propel l er
ICT Informati on and communi cati ons technol ogy
IDC Industri al Devel opment Corporati on
IDP Integrated Devel opment Pl an
ISRDP Integrated Sustai nabl e Rural Devel opment Programme
LED Local economi c devel opment
Libsa Li mpopo Busi ness Support Agency
Mafisa Mi cro-Agri cul tural Fi nanci al Insti tute of South Afri ca
NEF Nati onal Empowerment Fund
NGO Non-governmental organi sati on
NPI Nati onal Producti vi ty Insti tute
RIA Regul atory i mpact assessment
RIDS Regi onal Industri al Devel opment Strategy
Sabtia South Afri can Busi ness and Technol ogy Incubati on Associ ati on
Salga South Afri can Local Government Associ ati on
Samaf South Afri can Mi crofi nance Apex Fund
SARS South Afri can Revenue Servi ce
Sawen South Afri can Women Entrepreneurs Network
Sawic South Afri ca Women i n Constructi on
Sawima South Afri can Women In Mi ni ng Associ ati on
seda Smal l Enterpri se Devel opment Agency
Seta Sector Educati on and Trai ni ng Authori ty
SEZ Speci al Economi c Zones
SIFE Students i n Free Enterpri se
SME Smal l and medi um-si zed enterpri se
SMME Smal l , medi um and mi cro-enterpri se
SOE State-owned enterpri se
SPII Support Programme for Industri al Innovati on
TEP Touri sm Enterpri se Programme
the dti The Department of Trade and Industry
TWIB Technol ogy for Women i n Busi ness
UYF Umsobomvu Youth Fund
VAT Val ue added tax
Woesa Women i n Oi l and Energy i n South Afri ca
L I S T O F A C R O N Y MS L I S T O F A C R O N Y MS
Minister’s Foreword
Thepromotion of entrepreneurship and small business remains an important priority
of thegovernment of SouthAfrica. Our commitment istoensurethat small businesses
progressively increase their contribution growth and performance of the South
African economy in critical areas such as jobcreation, equity andaccess to markets.
Since1994, withtheadvent of anewdemocratic era, government hastakenmeasures
toensurethat small businessdevelopment becomesakeypolicyfocus. InMarch1995
an important milestonewas achieved when government released its White Paper on
national strategy for the development and promotion of small business in South
Africa, the first time a comprehensive policy and strategy on small business
development wasformulatedinthecountry.
Since then, government owned institutions and programmes have evolved all three
spheres with the aimof providing comprehensive support to small business. These
institutionshavemadeprogressindeliveringawiderangekeysupport services. These
services continuetobenefit anincreasingnumber of small businesses year after year.
Weare, however, mindful that important gaps still remain. As an ongoing challenge
that requires us to improvethescopeand quality of our offerings to small business.
Keyamongtheseistheneedtorapidlyimprovetheintegrationof support providedby
thevariousgovernmental departmentsandinstitutions.
Government will continue to lead efforts to increase the level of entrepreneurship
through supporting small business creation, but we are mindful that this important
task cannot be successfully undertaken by one player alone. Partnerships between
government and various stakeholders and role players remains a critical success
factor. Thus, wehavebeenencouragedby theincreasinginvolvement of thecorporate
sector, organised business, private financing institutions, non-governmental
organisations, universities as well as media efforts in fostering entrepreneurship and
small business. Government appreciatestheseeffortsandcallsfor evenmoreof these
collaborations.
Thisdocument shouldbeviewedasastrategic framework rather thanablueprint or a
detailed implementation plan. This is important, given thecloseinteraction between
this field of policy and all the other spheres of public-sector support for economic
development and growth, and the rapid changes in the global, national and local
businessenvironments, whichoftencall for flexiblepolicyandprogrammeresponses.
Finally, theongoingreviewof theimpact of thisstrategy remainscritical toenableus
to make the necessary support and services improvements on a continual basis, in
keeping with the dynamic nature of entrepreneurship and small business and the
environment we operate in. Yearly reviews of the state of small business in South
Africa will provide us timely feedback while the five-yearly impact reviews will
reveal what progresswearemakingover timeandwhat adjustmentsarenecessary.
Mandisi Mpahlwa, MP
Minister of Trade and Industry
Preface: Deputy Minister: Trade and Industry
Thecrucial barometer for thesuccess of theIntegratedStrategy onthePromotionof
Entrepreneurship and Small Enterprises is the continued creation of new start-up
firms by all segments of society and in all corners of our country resulting in the
improvement of economic and social well being of the poor communities. I have
always believed that the Small business sector has both the potential as well as the
historic task of bringingmillions of peoplefromthesurvivalist/lower level including
theinformal economy tothemainstreameconomy. Constraintstonewentrantsinthe
SMME sector must beunblockedthroughtheprovisionof adequatesupport toensure
that SMMEs survivetheharshintroductionto thestiff competitionof bigbusiness in
themainstreameconomy.
Success and failureis a normal part of business processes but effectivenetworking,
adequateskilling, mentoring, developinggoodbusiness acumenandsoundprinciples
and practices coupled with a high degree of business integrity will ensure that the
prevalent environment does not perpetuate a culture of failure but rather a winning
culture. That is why wearepublishing theIntegrated Strategy on thePromotion of
Entrepreneurship and Small Enterprises aimed at identifying factors that directly
contributetothesuccessof thesmall businesssector.
We need to ask to what extent our own SMME sector has geared up to meet the
opportunities presentedby theacceleratedeconomic growth, newexport markets and
to what extent they have been able to enhance their prospects by drawing on new
technology. This document responds to this challenge by maximizing the
opportunitiescreatedbyafavourablelegislativeenvironment andbyeffectivesupport
institutionsandmechanisms.
The strategy provides a framework that can be used by all role players that seek to
make a contribution in assisting the entry of new players into the formal economy,
strengtheninggrowthandsustainability of existingenterprises andcreatingnecessary
linkages in the continuum of enterprises graduation from local micro to globally
competitivebusinesses.
It is the intention of this strategy to deepen and strengthen government’s effort to
transform the economy. Acceleration of the entry of new players is critical to
addressing the historically skewed patterns of socio - economic quality of life,
especiallyblacksingeneral, women, youthincludingpeoplelivingwithdisabilities.
ELIZABETH THABETHE, MP
DEPUTY MINISTER: TRADEAND INDUSTRY
1
TABLE OF CONTENTS
I. SUMMARY OF STRATEGICAPPROACH.........................................................................................3
Thisstrategyisbasedonthreestrategicactions......................................................................................4
Corethrustforthisstrategyframework..................................................................................................5
II. BACKGROUND AND CONTEXT.....................................................................................................6
1. Rationalefor small business promotion........................................................................................7
2. Small businesssupport sincethe1995..........................................................................................7
2.1 Publicsector support initiatives.............................................................................................8
2.2 Privatesector support initiatives.........................................................................................12
2.3 NGOanduniversityprogrammes........................................................................................13
2.4 The media............................................................................................................................14
2.5 Entrepreneurshipandsmall business awards......................................................................14
III. SUPPORTIVE NATIONAL POLICIES.............................................................................................15
3.1 Themicro-economic reformstrategy..........................................................................................16
3.2 AcceleratedandSharedGrowthInitiativeSouthAfrica(AsgiSA)............................................16
3.3 Draft Regional Industrial Development Strategy (RIDS)...........................................................17
3.4 Broad-basedblack economic empowerment strategy.................................................................18
3.5 National strategy for thedevelopment andpromotionof franchisinginSA..............................19
3.6 Strategic framework ongender andwomen’s economic empowerment....................................20
3.7 National youthenterprisestrategy...............................................................................................20
3.8 Co-operativespolicy anddevelopment draft strategy.................................................................21
3.9 Draft strategyframework for forestryenterprisedevelopment...................................................21
4. Remaining challenges.................................................................................................................22
IV. POSITIONINGTHE INTEGRATEDSTRATEGY ONTHE PROMOTIONOF
ENTEPRENEURSHIPANDSMALL ENTERPRISES......................................................................23
1. Theaimof theStrategy...............................................................................................................24
2. Key guiding principles................................................................................................................24
2.1 Entrepreneurshipandsmall businesspromotionisasharedcompetency...........................24
2.2 Integration is key.................................................................................................................25
2.3 Thestrategymust cover theentireentrepreneurshipcontinuum.........................................25
2.4 Thestrategy attends to special foci.....................................................................................25
V. STRATEGIC ACTIONS AND INSTITUTIONAL ARRANGEMENTS..........................................26
1. Ensuringintegrationandimprovedco-ordination......................................................................27
1.1 Proposed actions..................................................................................................................27
1.2 Proposedinstitutional arrangements....................................................................................28
2. Encouragingincreasedprivate-sector participation....................................................................29
2.1 Proposed actions..................................................................................................................29
2.2 Proposedinstitutional arrangements....................................................................................29
3. Ensuringactionacrosstheentireentrepeneurshipcontinuum....................................................29
3.1 Pre-start-up..........................................................................................................................29
3.2 Start-ups...............................................................................................................................30
3.3 Businesssurvival, growthandexpansion............................................................................32
3.4 Business turnaround............................................................................................................33
4. Focusingonspecial target groups, regions andpriority sectors.................................................34
4.1 Focusingonyouthandwomen............................................................................................34
4.2 Focusingonspecial geographic areas.................................................................................35
4.3 Focusingonpriority sectors................................................................................................35
VI. SUMMARY OF STRATEGIC PROGRAMMES..............................................................................37
1. Fosteringentrepreneurshipcultureandincreasingtheenterprisecreationrate.............................38
2. Establishadedicatednetwork of SMME finance.......................................................................38
3. Createdemandfor Small Enterpriseproductsandservices........................................................38
4. Strengtheninglocal network for small businessdevelopment support services.........................39
5. Improvingsmall enterprisecompetenciesanddelivery capacity................................................39
6. Strengthening Enterprise Networks............................................................................................39
7. Providing necessary support incentives......................................................................................39
8. Improving regulatory environment.............................................................................................40
9. Entrepreneurshipandsmall business research............................................................................40
VII. BUILDING PARTNERSHIPSAND CAPACITY FOR PERFORMANCE......................................41
1. Prosposed actions........................................................................................................................42
2. Proposed institutional arrangements...........................................................................................42
VIII. MONITORING PERFORMANCE..................................................................................................43
IX. CONCLUSION..................................................................................................................................44
2
CHAPTER I
SUMMARYOF STRATEGICAPPROACH
3
Since 1994 the South African government has recognised its important role in
fosteringanenablingenvironment for thecreationandgrowthof small enterprises. In
March 1995 the government articulated a number of measures to foster an enabling
environment in the White Paper on national strategy on the development and
promotion of small business in South Africa. Theseincluded:
Creatinganenablinglegal framework
• Streamliningregulatoryconditions
• Facilitatingaccesstoinformationandadvice
• Facilitatingaccesstomarketingandprocurement
• Facilitatingaccesstofinance
• Facilitatingaccesstoaffordablephysical infrastructure
• Providingtraininginentrepreneurship, skillsandmanagement
• Improvingindustrial relationsandthelabour environment
• Facilitatingaccesstoappropriatetechnology
• Encouragingjoint ventures
• Capacitybuildingandinstitutional strengthening
• Introducingdifferential taxationandother financial incentives
Sincethepublishingin1995of thisWhitePaper, anumber of support institutionsand
measures have been put in place. While these have assisted in the pursuit of the
objectives outlined above, some critical challenges remain. The Government
recognises that it has to continue addressing these challenges and finding ways to
improvetheoperatingconditionsfor small enterprises.
Thisincludeseffortstoaddressmarket failures, particularly wherethey impact onthe
Government’sspecial development goals. Therefore, theGovernment will continueto
developandimplement measures focusedon targetedbeneficiaries, includingmicro-
enterprises; informal enterprises; enterprises owned by black people, women and
youth; growth-orientated enterprises; as well as enterprises in priority sectors like
tourism, construction, agriculture, cultural industries and information and
communications technology (ICT). This document, which is the outcome of a
thorough process of review, consultation, research and refinement undertaken from
2003to 2005, sets out astrategic framework for thenational Government’s efforts in
fostering entrepreneurship and promoting small enterprise in South Africa over the
next tenyears. It shouldnot beviewedinisolationandisreleasedaspart of apackage
of reports, including the Review of Ten Years of Small Business Support in South
Africa, 1994 to 2004, as well as the Reviews of Small Business in South Africa,
releasedannuallysince1995.
A key strategic shift since the adoption of the White Paper is the integration of a
wider group of institutions into the realmof small-enterprise development, and the
inculcation of a more co-operative approach among a growing number of partners
bothwithinandoutsidegovernment. Inthiscontext, themaininstitutional reformsset
out inthestrategyincludetherecent establishment of theSmall Enterprise
I. SUMMARYOF STRATEGICAPPROACH
•
4
Development Agency (seda), which will, in collaboration with other role players,
localisenon-financial support tosmall businesses. It will dothisthrough:
• anational networkof accesspoints
• theestablishment of theSouthAfricanMicro-FinanceApex Fund(Samaf) to
localiseaccesstomicro-finance
• therepositioningof Khulatogiveamorefocusedretail approachtosmall and
medium-sized enterprise (SME) finance, primarily focusing on black-owned
businesses, start-ups needing small loans with limited security, as well as
SMEsinunderservedprovinces.
Asexplainedlater inthedocument, theprincipleof “integration”, whichisat thecore
of thisnewstrategy, relatestoat least threedifferent dimensions, namely:
• integrationof different socio-economicpolicyareas
• integration of programmes within the public sector (cutting across national,
provincial andlocal government), andbetweenthepublicandprivatesectors
• integration of theactivities of different entrepreneurship and small enterprise
promotioninstitutions.
The strategy covers the entire continuum of needed support from pre-startup and
startupassistancemeasurestogrowingenterprisesandenterprisesindistress.
This strategy is based on three strategic actions:
Thesestrategic actions will beunderpinned by efforts to improvetheavailability of
quality business information and knowledge through expanded research and
communicationoutreach.
Strategic Pillar 3:
Reduce small enterprise
regulatory constraints
Strategic Actions
Increase supply for
financial and
non-financial support
services
Strategic Pillar 2: Strategic Pillar 1:
Creating demand for
small enterprise
products and services
Collaborative Approaches
Streamline resources from
the public sector and crowd-
in private sector resources
New Policy Directives
Public sector procurement
strategy and BEE codes of
good practice as
a lever for increased demand
Enabling Environment
Establish a regulatory impact
assessment framework and
Business Environment
monitoring mechanism
5
Core thrust for this strategy framework
The strategy acknowledges the need for focused support to designated target
special institutional arrangements. Central to strategic actions and institutional
arrangements, and to the shift fromunco-ordinated to integrated service delivery, is
the broadening of support programmes and the streamlining of support institutions.
This is the fundamental guiding principle of the new “integrated strategy.
Encapsulated in this fundamental guiding principle is the resourcing of support and
themonitoringandevaluationof progressintheimplementationof thestrategy.
measuresoutlinedinthe1995WhitePaper.
Cutting across all of the above, is the ongoing profiling of the small business
sector, improving access to small business support and information,
strengthening small business advocacy, delivering effective service and
monitoring impact.
Finally, reference in this strategy to “small enterprises”, “small businesses” or
SMMEs (small, medium and micro-enterprises), unless specifically demarcated,
covers the full spectrum of business enterprises other than “large enterprises” or
corporations and publicly owned enterprises. This includes categories known as
micro-enterprises, survivalist enterprises, informal sector enterprises, and formal
small and medium-sized enterprises. It also covers businesses in all stages of
evolution, frompre-establishment to start-up, emerging, stableor expanding, as well
asenterprisesindistress. Furthermore, it includesenterprisesthat canbecharacterised
as family-owned, black-owned, women-ownedor co-operatively owned. Thestrategy
refers to all sectors of the economy, even though the need for sector- or industry-
focused support programmes is duly recognised as one of the key principles
underlyingtherevisedstrategy.
Thereviewof theimpact of thestrategy will beconductedevery fiveyears, whilethe
yearly reviews of thestateof thesmall business sector in SouthAfricawill provide
constant feedbackandmonitoringof theimplementationof thestrategy.
The core thrust for this strategy framework makes no significant shift from the
groups and priority geographical areas and sectors, as well as support for fostering
enterprise organisation forms (such as co-operatives), and the inculcation of
6
CHAPTER II
BACKGROUNDAND CONTEXT
7
Thepromotion of entrepreneurship and small business remains an important priority
of theSouthAfrican Government. In March 1995, theGovernment released aWhite
Paper on National Strategy for the Development and Promotion of Small business in
South Africa, inwhichanelaboratepolicy andstrategy framework onsmall business
development was delineated. TheWhitePaper articulatedtheGovernment’s rationale
for small businesspromotionasfollows:
With millions of South Africans unemployed and underemployed,
the Government has no option but to give its full attention to the
fundamental task of job creation, and to generating sustainable and
equitable growth. Small, medium and micro-enterprises (SMMEs)
represent an important vehicle to address the challenges of job
creation, economic growth and equity in our country. Throughout
the world, one finds that SMMEs are playing a critical role in
absorbing labour, penetrating new markets and generally
expanding economies in creative and innovative ways. We are of the
view that – with the appropriate enabling environment – SMMEs in
this country can follow these examples and make an indelible mark
on this economy. The stimulation of SMMEs must be seen as part of
an integrated strategy to take this economy onto a higher road – one
in which our economy is diversified, productivity is enhanced,
investment is stimulated and entrepreneurship flourishes.
createanenablingenvironment for small enterprises.
2. Small business support since the 1995
The 1995 White Paper identified a number of constraints facing small enterprises.
These relate to the legal and regulatory environment, access to markets, access to
finance and affordable business premises, the acquisition of skills and managerial
expertise, access to appropriate technology, the tax burden, and access to quality
businessinfrastructureinpoor areasor povertynodes.
Various key players intheSouthAfrican economy sharetheimportanceof investing
in stimulatingsmall business. Thegrowing andwidespreadcommitment to fostering
entrepreneurship and promoting small enterprises goes beyond the Government and
its institutions. It extends to other actors in theeconomy, such as largecorporations,
the media, non-governmental organisations (NGOs), chambers of commerce and
commercial banks. This is evidenced by the growing number and range of support
programmes, productsandservicesinitiatedby thevariousplayersthat haveemerged
bothinsideandoutsidethepublicsector, asdiscussedinmoredetail below.
II BACKGROUNDAND CONTEXT
1. Rationale for small business promotion
Government statedthat theprimary objectiveof thenational policy framework wasto
8
2.1 Public sector support initiatives
2.1.1 Easing the regulatory and compliance burden on small enterprises
The 1995 White Paper identifies the regulatory constraints imposed on small
enterprisesasfollows:
Inappropriate or unduly restrictive legislative and regulatory conditions are
often viewed as critical constraints on the access of small enterprises into the
business sector and as obstacles to their growth.
Therehas been growing focus in this area. Within the dti, business registration has
been significantly simplified and improved. Under the auspices of the then Ntsika
Enterprise Promotion Agency, a national small business regulatory review and an
impact assessment of theBasicConditionsof EmploymentAct werecarriedout.
In 2004, commissioned astudy on administrativeburdens imposed on small the dti
enterprises by value-added tax (VAT) and Regional Services Council Levies
legislation. More recently, a process has been initiated to establish a system of
regulatory impact assessment (RIA). This will introducewell-designedprocedures to
reduceor eliminatetheunintended consequences of laws and regulations, especially
onjobcreation.
Onthetaxationandtaxcompliancefront, theSouthAfricanRevenueService(SARS)
established aworking group on tax compliance to adviseon measures to reducethe
compliance burden for small enterprises. This resulted in measures introduced
recently by the National Treasury and SARS to reduce the administrative and cost
burdenonsmall enterprises.
2.1.2 Access to finance
the dti offers awiderangeof products and services comprising loans, and incentive
grants that play an important rolein enabling access to financefor small enterprises
throughthefollowinginstitutions:
The South African Micro-Finance Apex Fund ( Samaf) has been established to
provideaccess to micro-loans and support to thesocial capital mobilisation. It has a
national footprint.
Khula Enterprise Finance Limited, tasked with facilitating access to finance, has
developed a variety of financing products including credit guarantee schemes in
whichit has partneredwiththecountry’s major commercial banks to unlock lending
to small enterprises. The Thuso Mentorship Scheme provides business plan
development and other advisory assistance to small enterprises seeking to access
financeunder theCredit GuaranteeScheme.
9
Khulacontinues to seek newways to improveaccess to financial support across the
country. This includes partnering with sector departments to develop new sector-
specific financingprogrammes for small business, andstudyingdifferent approaches
tostrengthentherealisationof government goalsfor small businessfinance.
The National Empowerment Fund ( NEF) offers a range of start-up, business
growth, and rural- and community-upliftment financing products with a focus on
blackeconomicempowerment (BEE) transactions.
Through its various business units, the Industrial Development Corporation (IDC)
provides sector-focused financing products ranging fromR1 million upwards, with
designated finance products focused on small business development and black
economicempowerment.
An important development is the collaboration in product design among the
development finance institutions to close the critical financing gaps for small
businesses. Provincial development corporationsareorgansof statethatfurther provide
small ngproductsandother support measures. enterpriseswitharangeof financi
Inadditiontotheabove, thereisarangeof sector-focusedaccesstocredit instruments
created by other departments and their institutions, example, theLand Bank and the
Micro-Agricultural Financial Instituteof SouthAfrica(Mafisa), under theDepartment
of Agriculture.
2.1.3 Business development services
In line with its mandate for the retail rather than the wholesale model of service
provision, theSmall EnterpriseDevelopment Agency (seda) isspreadingits presence
countrywide through branch offices and a network of independent partners, with a
viewtoincreasingaccesstobusiness-development services.
Provincial government agencies such as the Gauteng Enterprise Propeller (GEP) in
Gauteng, Limpopo Business Support Agency (Libsa) in Limpopo, and the Western
Cape’s Red Door continue to provide a range of business-development services to
small enterprisesat provincial level strengtheningpartnershipswithseda.
Many municipalities also offer small business support under their local economic
development agencies, or dedicated small business and co-operative programmes
within their LED divisions and public-private partnership-based business-incubation
centres.
2.1.4 Youth enterprise development
Since 2001, the Umsobomvu Youth Fund (UYF), an agency dedicated to youth
development, has been providing various financial and business-development
products to this target market, some in partnership with private-sector financing
institutions. A linkage programme li nks youth-owned small enterprises to
10
procurement opportunitiesinthecorporatesector, state-ownedenterprises(SOEs) and
government. UYF has established a number of funds – the SME Fund, the UYF-
Business Partners Franchise Fund and the UYF-FNB Progress Fund – which offer
financeto young entrepreneurs and include micro-loans as well as funds to expand,
buy into or buy out existing businesses, or start new businesses. Partnerships
establishedwiththeprivatesector areleadingtotheestablishment of dedicatedfunds
for target groups.
The UYF is also implementing the country’s first business-development services
voucher programme to assist young entrepreneurs to access quality business-
development services. Thefundalsooffers entrepreneurshiptrainingfor scholars and
out-of-school youth. The aimis to introduce entrepreneurship education in schools
countrywide.
2.1.5 Support for women-owned enterprises
TheGovernment has initiated various measures to increasewomen entrepreneurship
andtosupport womeninbusiness. Theseinclude:
Sawen (South African Women Entrepreneurs’ Network), a dti-initiated national
networking forumfor individuals and organisations committed to thepromotion and
advancement of womenentrepreneurs.
Sawen represents and articulates the aspirations of women entrepreneurs, and holds
organisededucational andtrademissionsfor members. BusinesslinkagesbetweenSA
womenentrepreneursandtheir counterpartsinother partsof theworldhavealsobeen
facilitated. Sawen continues to be an advocacy network for women in business,
ensuringthat policiesandstrategiesaresensitivetogender issues.
TWIB (Technology for Women in Business) is a dti initiative that supports the
advancement of womeninbusinessthroughtheapplicationof scienceandtechnology
intheir ventures. Thisisaimedat overcomingconstraintstoenterpriseinnovationand
growth, aswell asfosteringlocal andglobal competitiveness.
The sector departments have also developed initiatives to give targeted support to
women in business. These have led to a grid of sector-specific women in business
networks, including Sawic (construction sector), Woesa(oil and energy sector), and
Sawima(miningsector).
2.1.6 Incubation and technology acquisition and transfer services
Theseda TechnologyProgrammeisagrowingnetwork of incubatorsandtechnology-
support centres with a current footprint across all provinces. Linked to this is a
dedicated fund that enables SMMEs to access funding for technology and technical
services.
With the programme’s assistance, the South African Business and Technology
Incubation Association (Sabtia) has been established to, among other objectives,
foster best practicein SouthAfrican incubation through links with similar bodies in
other partsof theworld.
11
Tshumisano Trust, asmall business support agency of theDepartment of Science&
Technology (DST), has established technology stations across the country. The
sector-focused stations, located at universities of technology, facilitate technology
transfer between these educational institutions and small enterprises. One of the
technology station programme’s critical contributions is to expose students at the
stations’ home institutions to small enterprises, thus helping to foster a culture of
entrepreneurship.
1
Tshumisano Trust’s initiative also involves placing engineering
graduates in internship programmes with small enterprises. The increasing rate of
client referrals between seda Technology Programmeand thetechnology stations is
playing an important rolein bridging support initiatives between sector departments
andmainstreamenterprise-development support agencies.
2.1.7 Productivity enhancement measures
The National Productivity Institute (NPI), a Ministry of Labour agency, supports
small enterprisestoenhancetheir productivecapacitythroughitsProductiveCapacity
Building Programme. The NPI also works in partnership with seda to train small
enterprises and service providers in productivity concepts such as entrepreneurship,
life skills, economics and productivity improvement. It works in partnership with
certainprovincial small businesssupport agencies, suchasGEP(inGauteng) andRed
Door (intheWesternCape).
2.1.8 Sector-focused support measures
The Tourism Enterprise Programme (TEP) is an initiative of the Department of
Environmental AffairsandTourism(DEAT) in partnershipwiththeBusinessTrust. It
focuses on small business development in the tourism sector. This public-private
initiative successfully demonstrates the efficacy of a sector-focused small business
support programme. Anemerginginnovation istheuseof peer learningmethodology
to transfer critical business skills through a programme that uses successful small
enterprisestomentor other small enterprises.
Vuk’uphile, a learnership initiative of the Department of Public Works’ Extended
Public Works Programme (EPWP), builds the capacity of emerging contractors to
executelabour-intensivework emanatingfromtheEPWP. As part of thelearnership,
participatinglearner contractorsreceiveformal institutional trainingaswell ason-the-
job training in the formof ring-fenced contracts issued by an implementing agency
(provinceand municipality). A banking partner for theprogrammeprovides learners
with finance, enabling themto develop a financial track record. Learners also have
access to a qualified and experienced mentor during the implementation of the
projects. Theaimof theinitiativeis to ensurethat learners exit theprogrammewith
the necessary capacity to tender for and execute labour-intensive projects under the
EPWP.
1
International literature shows that exposing individuals in society to small enterprises plays an
important roleinfosteringacultureof entrepreneurship.
12
The Small-Scale Mining Board of the Small-Scale Mining Directorate in the
Department of Minerals and Energy facilitates delivery of various support services
requiredby thesmall-scaleminingsector. Theboardco-ordinatesexpert capacity and
experience, and specialises in planning and developing a viable mining project
through the pre-feasibility stages. Aspiring small-scale miners receive a range of
support services, including (i) the establishment of a legal entity; (ii) guidance
towards the identification of mineral deposits; (iii) an environmental impact
assessment (EIA); (iv) legal and contractual arrangements, mineral rights, etc.; (v)
reserve estimation of the selected deposits; (vi) a mining feasibility study; and (vii)
market studies.
2.1.9 Skills development measures
As part of their sectoral skills-development mandates, various sector education and
training authorities (Setas) have developed and are implementing small business
skills-development programmes. Some of the Setas are also implementing the New
Venture Creation Learnership, with the aim of enabling the participating learners to
learn the skills and receive the support necessary to start and successfully manage
their ownbusinesses.
2.2 Private sector support initiatives
Several SouthAfricancompanieshaveheededthecall for private-sector participation
in small business development, and have responded by implementing a variety of
initiatives. While reference is made below to specific programmes, these are only
examples; thelist isbynomeansexhaustive
2.2.1 Access to finance
Over a period, certain major banks have partnered with Khula Enterprise Finance
Limitedtoprovidesmall businessfinanceunder theKhulaCredit GuaranteeScheme.
Other players, such as business partners and various venturecapital firms, also play
animportant roleinprovidingsmall businessfinanceproducts.
2.2.2 Business development services
Through collaborative action, banks created Sizanani to offer advisory services to
their small business clients. Individually, the various major banks offer support
instruments that range from small business start-up and management seminars to
networking forums. They have also set up internal divisions for small business
support, giving advice on business planning and management. Business Partners
Mentorsofferssmall businessmentorshipcountrywide
13
2.2.3 Fostering business start-up
Certainlargecorporationshavedevelopedandimplementedtheir ownin-house
programmes, suchastheyouthenterprisesupport programmesof SouthAfrican
Breweries(SAB Kickstart), Anglo-Zimele, andShell Petroleum(Shell LiveWire),
whichprovidetrainingandsupport andrunyouth-entrepreneurshipawards
2.2.4 Facilitating linkages between small and large enteprises
Several large corporations have designed programmes to increase their procurement
from small enterprises. Sponsoring corporations run their programmes either
individually or in collaboration with other corporations under the Corporate Small
Business Development Forum (CSDF). Efforts are being made by business-
membership organisations, such as the National Business Initiative, to increase the
number of largecorporationsinvolvedinlinkageprogrammeswithsmall enterprises.
2.3 NGO and university programmes
2.3.1 Entrepreneurship education and financial literacy programmes
Several NGOs have been implementing curricular and non-curricular enterprise
educationprogrammesover manyyears, invariouspartsof thecountry. Theseinclude
theSouthAfricanInstituteof Entrepreneurship, J unior Achievement SouthernAfrica,
the Foundation for Enterprise & Business Development, Education with Enterprise
Trust, Entrepreneurs on the Move, and, most recently, Mindset. Some major banks
sponsor financial-literacyprogrammes, mostlytargetinghigh-school learners.
Students in FreeEnterprise, an international organisation that is operational in some
South African universities, organises, trains and motivates teams of university
students to teach others the principles and value of free enterprise, incorporating
entrepreneurship, personal and financial skills, business ethics and free-market
economics. The SIFE World Cup, an international competition, exposes winning
national teamsandtheir projectstotheir international counterparts.
An increasing number of universities across the country are establishing centres of
entrepreneurship or small business, and entrepreneurship constitutes part of the
Master of BusinessAdministration(MBA) curriculumincertainuniversities.
2.3.2 Entrepreneurship and small business research
Entrepreneurshipresearchis also anareaof focus for someuniversities. Anexample
is theUniversity of CapeTownCentrefor InnovationandEntrepreneurship, withan
entrepreneurshipresearchprogrammethat comprisesthefollowing:
14
• conducting the South African component of the annual Global
EntrepreneurshipMonitor (GEM) project
• participating in an international comparativestudy on theinternationalisation
strategiesof youngfast-growingfirmsbasedinemergingmarkets
• conducting research aimed at developing a better understanding of the
capacities of entrepreneurs in South Africa, so that advisory services and
financecanbemorepreciselytargeted.
The SME survey is an annual small business research programme conducted by a
private company and backed by corporate sponsorship. FinMark Trust, an
international donor-funded entity, also conducts various small business research
surveys, focusingmainlyonissuesof accesstofinance.
2.3.3 Start-up and small business support
In addition to research and teaching, most university-based Centres of
Entrepreneurship or small business promotion provide assistance to aspiring and
existing entrepreneurs. For instance, the UCT Centre for Innovation and
Entrepreneurship:
• advisesacademicsonthecommercialisationof their intellectual property
• has assembled a group of entrepreneurs in the Western Cape in order to
financeandassist high-growthbusinessventures
• offerscoachingandmentoringservicestoentrepreneurs.
Endeavor South Africa, part of the international non-profit organisation Endeavor,
provides selected entrepreneurs with demand-driven services including mentorship,
training, resourcesandaccesstoanetworkof businessadvisers.
2.4 The media
The media increasingly plays an important role in fostering a culture of
entrepreneurship and enterprisein South Africa. A number of i ndependent and large
company-owned entrepreneurship and small business magazines and newspapers or
newspaper inserts have emerged over the years. The South African Broadcasting
Corporation (SABC) has also commisioned various enterprise programmes, such as
Enterprise Zone andVuk’Uzenzele.
2.5 Entrepreneurship and small business awards
Various organisations in the public and private sectors, and certain publications run
annual award programmes to recognise successful entrepreneurs and small
enterprises. Most of theseawards arewell publicised, helping to increasetheprofile
of successful entrepreneursandentrepreneurshipingeneral.
15
CHAPTER III
SUPPORTIVE NATIONALPOLICIES
16
Recently, a number of new government policies with a bearing on aspects of
entrepreneurship and small business development have emerged. These policies, by
their nature, affect this integrated entrepreneurship and small business development
strategy. Key to these policies is the National Industrial Policy Framework. The
National Industrial Policy Framework is not a new policy direction but a logical
evolutionof government economicpolicy.
The following policies and strategies note advances already made in support of this
strategy;
3.1 The micro-economic reform strategy
Themicro-economic reformstrategy places small business development, theneed to
ensure equity (through broad-based black economic empowerment [B-BBEE] and
gender initiatives), prioritising of growth sectors, special geographical focus
(particularly inareasof highpoverty andunemployment), andtheneedfor strongco-
ordinationof support measures, at theheart of micro-economicreform.
Asfar assmall businessdevelopment isconcerned, thestrategycallsfor thefollowing
measures:
• specificsectoral initiativestopromotesmall businessdevelopment
2
• theintroductionof newproductstosupport small enterprises
• greater co-ordinationacrossgovernment
• theconsolidationof all mentorshipprogrammes
• improvedaccesstofinance
• increasedaccesstomarketsthroughcompetitionpolicyandexport promotion
• thepromotionof entrepreneurship
• theexpansionof business support infrastructureandtheprovisionof localised
support infrastructure.
3.2 Accelerated and Shared Growth Initiative South Africa (AsgiSA)
AsgiSA outlines a number of focus areas that need to be closely monitored and
supported through relevant policies, strategies and programmes. These are areas of
importanceintheaccelerationof small businesspromotionandenterprisegrowth, and
include:
2
Thestrategy identifiesfivepriority sectorsbasedontheir potential for increasedoutputs, exportsand
employment creation. The five sectors are (i) exports – clothing and textiles; auto, auto components
andtransport; agro-processing; mining, metalsandmineral beneficiation, chemicalsandbiotech, crafts,
andinformationandcommunicationtechnology; (ii) tourism; (iii) agriculture; (iv) ICT and(v) cultural
industries.
III. SUPPORTIVE NATIONALPOLICIES
17
Focusarea:
Small businesspromotion
Current or proposedactioncontemplatedinAsgiSA
Accesstoprocurement
opportunitiesfor small
enterprises
The State-Owned Enterprise Procurement Forum is
codifying and spreading best practices for affirmative
procurement.
the dti is developing a public procurement procedure
through which ten products will be targeted for
procurement throughsmall enterprises.
Efforts will be made to link small enterprises to
opportunitiesderivingfromthe2010FIFA WorldCup.
Private companies will be persuaded to engage in
affirmativeprocurement.
Theimplementationof therelevant provisionsof theB-
BBEE Codes of Good Practice and the relevant sector
empowerment charterswill becloselymonitored.
Easingtheregulatory
burdenonsmall enterprises
The Minister of Labour is to lead a review of labour
laws, includingtheir impact onsmall enterprises.
SARS is to continue reforms in tax administration
affectingsmall business.
the dti andthedplgaretopreparerecommendationson
how to improve the regulatory environment for small
enterprisesinmunicipalities.
Sector departments are to review the impact of their
lawsandregulationsonsmall enterprises.
A systemof regulatory impact analysis (RIA) is to be
introduced, whichwill addwell-designedprocedures to
reduce or eliminate the negative unintended
consequencesof lawsandregulations, especially onjob
creation.
Accesstofinance,
particularlyventure
capital
For the next stage of business development, venture
funding is key. Government is supporting efforts to
establish new venture funds for small, medium and
micro-enterprises.
Easingthecash-flow
problemsexperiencedby
small enterprisesdoing
businesswithgovernment
Timely payment by government for procuredgoodsand
serviceswill bemonitored.
3.3 Draft Regional Industrial Development Strategy (RIDS)
The Draft Regional Industrial Development Strategy proposes the establishment of
special economiczones(SEZ) – industrial parks, logisticsparks, industrial estatesand
innovation hubs – and other measures such as promoting regional growth coalitions
andsupport for industrial clusteringamongfirms, inorder tofoster regional industrial
development. The strategy also proposes the establishment of a Systemic
Competitiveness Support Facility or “Thematic Fund” to support innovativeregional
development initiatives. A component of the fund will be a support facility for
innovativestart-ups. Efforts will bemadeto ensurethat thesemeasures benefit small
enterprisesasmuchaspossible.
18
3.4 Broad-based black economic empowerment strategy
Several objectives of the B-BBEE strategy bear relevance to small business
development andthereforetothisstrategy. Theseare:
• achieving a substantial increase in the number of black people who have
ownershipandcontrol of existingandnewenterprises
• achieving a substantial increase in the number of black people who have
ownershipandcontrol of existingandnewenterprisesintheprioritysectorsof
theeconomy, which government has identifiedin its macro-economic reform
strategy
• achievingasignificant increaseinthenumber of newblackenterprises
• increasing the proportion of ownership and management of economic
activitiesvestedincommunityenterprisesandco-operatives.
Besidesincreasingenterpriseownershipby blacks, theB-BBEE strategy alsooutlines
measures to increase procurement fromblack-owned enterprises, and to strengthen
thesupplycapacityof black-ownedfirms.
Aspect relevant to
small business
development
Current or proposedB-BBEE strategyaction
Preferential
procurement
measures
Reviewof government procurement policy inorder toenhance
itsimpact onBEE.
Setting clear targets to increase the levels of preference to
black-ownedenterprises.
Enabling legislation on BEE, requiring all government
departments, state-owned enterprises and public agencies to
take into account code of practice issues emanating from
the legislation in determining and implementing their
preferential procurement policies
Strengtheningsmall
businesscapacityto
benefit from
procurement
initiatives
Government is to expand its supplier development
programmes to ensurethat moreblack enterprises arecreated
and enabled to meet the requirements of purchasers in the
publicsector.
Financing
mechanisms
the dti is to lead better co-ordination of incentive grants that
target SMME initiatives, and establish an administration
systemthat links the incentive grants to other financial and
non-financial support mechanisms in order to maximise
SMME access andBEE impact. Newincentivegrant schemes
and amendments to existing ones are also being considered –
the focus of these schemes is on those targeting
entrepreneurship, supplier development, and enterprise
development, including self-help schemes and co-operatives,
skills development, and the acquisition and development of
newtechnology.
19
State-facilitatedlendingistobedrivenbyKhulaandSamaf.
Project financingistobedrivenbytheIDC.
Empowerment transactionfinancingistobedrivenbyNEF.
Government will facilitate specific venture-capital projects in
particular sectors.
3.5 National strategy for the development and promotion of franchising in SA
This strategy seeks to: (i) promote the contribution of franchising to, among other
things, the economic empowerment of historically disadvantaged entrepreneurs
through increasing their participation in franchising; (ii) create an entrepreneurial
culturethrough franchising; (iii) createan environment conducivefor thegrowth of
franchising; and (iv) promotelinkages between big and small enterprises in order to
stimulate the creation of new franchise enterprises. To achieve its objectives, the
strategy proposes a number of actions that are relevant to this entrepreneurship and
small businessdevelopment strategy. Someof theproposedactionsfollowinthetable
below.
Focusarea Proposedaction
Promotingaccessto
finance
Facilitate joint ventures between government, franchisors and
investment companies to stimulate greater availability of capital
for investment infranchise-basedbusinessventures.
Createfranchise-specificfinanceproducts.
Stimulate the creation of venture-capital funds dedicated to
franchising.
Incorporate a franchise focus within the dti incentives
programmes.
Establish the Franchise Development Fund to provide financial
assistance for prospective franchisors and franchisees to develop
or acquirefranchiseventures/systems.
Communicationand
education
Developandimplement acommunicationandeducationcampaign
to stimulate awareness about franchising, and to educate and
informpotential entrantstotheindustry.
Profilingof
franchise
opportunities
Establish and maintain a comprehensive database of franchise
opportunities, with special focus on affordable opportunities that
will attract entrantsfrompreviouslydisadvantagedcommunities.
Providesupport to
prospectiveentrants
intofranchising
Establish franchise support desks to provide quality information
on franchising; assist potential entrants to secure finance from
various sources; and, where necessary, provide a basic legal
serviceandprovidereferral support.
Providetraining Develop and deliver accredited training for potential franchisors,
franchisees, training providers and professional advisers in the
industry.
Entrepreneurship
promotion
Undertake various measures to stimulate a culture of
entrepreneurshipthroughfranchising.
20
3.6 Strategic framework on gender and women’s economic empowerment
This strategy proposes alargenumber of initiatives aimedat providingvarious kinds
of support towomen-ownedbusinesses, asfollows:
Focusarea Proposedinitiatives
Provisionof business
information
InformationBusinessForumfor Womenprogramme
Annual businesssymposiumfor women
The“Your government telli ngyoulikeit is” project
Entrepreneurial educationand
training
Self-employedDevelopment-support programme
YoungWomeninEntrepreneurshipprogramme
WomenEnterpriseProgramme
SouthAfricanWomeninBusinessprogramme
ExpertAdvisersfor Businesswomenprogramme
WomeninManufacturingprogramme
Financing Gender budget analysis
Financequotasystem
Improvingaccesstofinancefor womeninbusiness
Businessdevelopment fundfor women
International trade
Femalequotainforeigntradedelegations
International linkagesfor womenprogramme
International tradefor womenprogramme
Womeninexport programme
Researchandstatistics SouthAfricannational researchproject onenterprising
women
Scienceandtechnology
Technologyfundfor womeninbusiness
WomenandTechnologyBusiness-awarenessprogramme
InnovationsByandFor WomeninBusinessprogramme
Rural women
EconomicLiteracyDevelopment Programmefor Women
EconomicCapacityDevelopment for Womenprogramme
BusinessOrganisational Leadershipprogramme
Co-operativeCapacity-buildingTrainingprogramme
3.7 National youth enterprise strategy
Theyouthenterprisestrategy outlines threekey objectives to beattainedthroughthe
implementationof thestrategy. Theseare:
• to ensurethat entrepreneurial skills, talent andexperiencearenurturedamong
youngwomenandmentoenhancetheir capacitytoparticipateinall aspectsof
SouthAfricansocial, economicandcommunitylife
• to ensurethat youngwomenandmenarerecognisedas akey target groupof
need, and aresourcein thedevelopment of small enterprises within national,
provincial andlocal economies
• tomaximiseaccess tofinancial andnon-financial resources for youngwomen
andmenwhoareinbusinessor planningtoenter business.
21
The strategy proposes a number of recommended actions to provide adequate and
effective assistance to young entrepreneurs. These cover the areas of, among other
things, creation of a culture of enterprise; strengthening and expanding successful
youth enterprise-support schemes; addressing the financing needs of young
entrepreneurs; provision of training, specifically within SMMEs; expansion and co-
ordination of programmes such as the New Venture Creation Learnership; ensuring
adequate participation of youth-owned enterprises in procurement programmes and
other market access initiatives; integration of youth-enterprise development into
national and provincial policies and strategies; and monitoring youth-enterprise
development efforts.
3.8 Co-operatives policy and development draft strategy
The co-operatives strategy seeks to ensure that all policies, strategies and support
programmes developed to support SMMEs are aligned and available to support co-
operativeentrepreneurship, andstimulatetheparticipationof co-operativeenterprises
in the economy. Support programmes, providing access to finance, technical skills
and markets, will be designed across government and its agencies to grow the co-
operatives sector. Thestrategy does not envisionthecreationof any newinstitutions
to implement it. Existing dti and other small business support institutions will carry
out implementation.
3.9 Draft strategy framework for forestry enterprise development
TheDepartment of Water Affairs andForestry’s draft foresty enterprisedevelopment
(FED) strategy proposes aForestry EnterpriseDevelopment Programmethat seeks to
develop “market-driven, profitable business ventures involving previously
disadvantaged communities and individuals, based on the sustainable use of forests
and forest-based resources”. Four categories of enterprises are targeted, namely: (i)
timber-production enterprises; (ii) contracting enterprises; (iii) timber processing,
value adding and marketing enterprises; and, (iv) non-timber forest-product
enterprises. Theprogrammeenvisions the provision of, among other things, training
andextensionservices, andfinancial andbusinessservicestoforestryenterprises.
22
• Greater balance is required between the cost, reach and impact of support
interventions, inparticular, wherepublicfundsareconcerned
• Many support programmes only tackle the symptoms of deeper-lying
problems, thereby preventing a more systematic approach to those structural
issues(e.g. accesstofinancefor blackentrepreneurs)
• Lack of clarity about the roles and responsibilities of different levels of the
publicsector makestheir effortsunco-ordinatedandlesseffective
• Inadequate representation of particular small-enterprise interest groups in
existingor evolvingbusinessassociationsweakensfeedbackonspecificneeds
• Substantive differences still exist in the capacity to absorb small-enterprise
support programmes inthedifferent provinces andregions of thecountry and
indifferent sectors
• Thereis insufficient interactionbetweensmall enterprisesupport programmes
andother thrustsof theGovernment’s socio-economicdevelopment support
• TheCentrefor thePromotionof Small Business(the dti chief directorate) has
beenunabletoco-ordinateall thesupport programmes developedby different
national government departments
• Thorough and regular monitoring and evaluation of the evolving support
processeshasbeeninadequate.
4. Remaining challenges
While a great deal of progress has been made in government’s efforts to promote
small enterprises, someimportant challengesarestill toberesolved.
The Review of Ten Years of Small Busine ss Support in South Africa 1994 to 2004
identifiesthefollowingissuesthat needattention:
• The great diversity of small enterprises and their needs requires greater
recognition
• Far more knowledge and understanding is required across the full range of
support suppliers and thesupport each oneprovides, as well as to whomand
under what conditions
• Access to support services must be comparable in urban/metropolitan and
rural areas
23
CHAPTER IV
POSITIONING THE INTEGRATED STRATEGYON
THE PROMOTION OF ENTREPRENEURSHIPAND
SMALLENTERPRISES
24
The detailed reference to existing initiatives outlined under Section II-IV above,
showsclearly that great effort hasbeeninvestedby variousplayersintheeconomy in
responding to various aspects of entrepreneurship and small business development.
This also shows that in the recent past, a number of government policies and
strategies have emerged, which focus on various aspects of entrepreneurship and
small businessdevelopment. However, someimportant challengesremain.
Thesechallenges havean impact on theprimary objectiveof theIntegrated Strategy
on thePromotion of Entrepreneurship and Small Enterprises. Theprimary objective
of this strategy is to ensure that the overall task of fostering entrepreneurship and
promoting small enterprises, as articulated in various government policies and
strategies, is carried out adequately and effectively, and that a high level of
performanceandsuccessisachievedacrossall policyandactionareas.
Theimplementation of thestrategy will beguided by thefollowing threeprinciples,
whichalsoformthebasisfor thestrategy:
2.1 Entrepreneurship and small business promotion is a shared competency
Asisshownby therangeof thecountry’scurrent participantsinentrepreneurshipand
small business promotion in terms of policies, institutions and programmes, thetask
of promotingentrepreneurshipandsmall business:
• cuts across a wide range of policy areas; therefore, by nature, it cuts across
departmental boundariesandinvolvesseveral departmentsat national level
• cuts across the three spheres of government, with strategies, institutions and
programmesat national, provincial andmunicipal government levels
• goes beyond the public sector and its agencies, and encompasses the private
sector and its organisations, educational institutions and non-governmental
organisations.
Recognising this inclusive participation is critical to seeking ways and means to
ensurethat thetask of entrepreneurship and small business promotion is carried out
adequately, effectively and in a decentral ised manner. The need for a clear co-
ordination point is inherent in the success of any systemwith different role players
and decentralised service approaches. The co-ordination point is identified in this
strategy as theDepartment of TradeandIndustry (the dti) supportedby its agencies
tasked with the implementation of the small-enterprise development strategy. These
agencies areidentified in this document as seda (for non-financial support services),
Samaf (for micro-finance), andKhula(for small andmediumenterprisefinance).
IV. POSITIONING THE INTEGRATED STRATEGYON THE PROMOTION OF
ENTREPRENEURSHIPAND SMALLENTEPRISES
2. Key guiding principles
1. The aim of the Strategy
25
2.2 Integration is key
Following fromthe above, and to ensure that such a “decentralised” arrangement
producesthedesiredoutcomes, integrationiscritical. All roleplayers(institutionsand
programmes), particularly thosecreatedandresourcedby thestate, shouldbeguided
bythemantra: “Think SynergyFirst.” This meansthat nonewsupport programme, no
newproducts andservices, andnonewdelivery mechanismshouldbedevelopedand
implementedwithout first assessingthefollowing:
• Howthenewinitiativeadds to existing support or delivery mechanisms, and
howitsintroductionwill closegapsthat cannot beclosedbyexistingofferings
(insideandoutsidetheinitiative’ssponsoringinstitution)
• How the new initiative ensures that duplication of existing support and
delivery mechanisms – across thespectrumof roleplayers – is avoidedat all
costs
• Howthenewinitiativecomplements/reinforces/adds valueto existingsupport
anddelivery mechanisms inamanner that ensures “seamless” delivery across
all roleplayersandofferings
• How the resources deployed to the initiative will be accounted for in the
national small enterpriseservice-deliveryreport.
2.3 The strategy must cover the entire entrepreneurship continuum
Asanintegrator of policies, institutionsandprogrammes, thestrategy seekstoensure
that adequate support and delivery mechanisms exist across the entire
entrepreneurship continuumfrompre-start-up to start-up, business survival, growth
andexpansion, andturnaroundof ailingbusinesses.
2.4 The strategy attends to special foci
Special foci identifiedinthevariousstrategiesinclude:
• special target groups(youth, womenandthedisabled)
• special geographicareas(poor areasandareaswithhighunemployment)
• special sectors (growth sectors as identified in the Micro-economic Reform
Strategy)
• newenterpriseorganisational forms(suchasco-operatives)
This strategy does not promotethecreationof newinstitutions for implementationof
initiatives directed to thesespecial foci, but rather outlines themeasures that should
bein placeto ensurethat thereareadequateprovisions within thesupport systemto
addresstherequirementsof thesespecial focal categories.
26
CHAPTER V
STRATEGICACTIONS AND INSTITUTIONAL
ARRANGEMENTS
27
1. Ensuring integration and improved co-ordination
1.1 Proposed actions
1.1.1 Improving co-ordination within government
Improving co-ordination of entrepreneurship and small business promotion efforts
withingovernment remains animportant priority. TheInter-Departmental Committee
on Entrepreneurship and Small Business Promotion will be strengthened through
government cluster arrangements, drawing in all the relevant national departments.
This committee will ensure integration and effective co-ordination of policies and
measures to promote entrepreneurship and small business across government. The
committeewill also provideagovernment-widelink to theNational Small Business
Advisory Council, thus strengtheningthereviewof gaps inthesupport environment,
andwill takethenecessarystepstoclosesuchgaps.
Lastly, the committee will monitor the overall performance of government’s
entrepreneurship and small business promotion agencies, and will take corrective
actionwheredeficient performanceisobserved.
the dti, assistedby thePresidency, will bethe joint co-ordinationpoint for theInter-
Departmental CommitteeonEntrepreneurshipandSmall BusinessPromotion.
The B-BBEE Act 2003, the Co-operatives Act, 2005 and the Small Business Act,
2003all providefor theestablishment of advisory councils. the dti will developclear
terms of reference for each council and areas of possible collaboration between the
advisorybodiesidentified.
V. STRATEGICACTIONS AND INSTITUTIONALARRANGEMENTS
1.1.2 Improving co-ordinationamong support agencies
Guidelines for the design and implementation of support programmes and delivery
mechanisms will be developed based on the “Think Synergy First” philosophy. The
guidelines will requirethat thepublic-sector small business agency proposing anew
programme, product or service, or delivery mechanismdevelops a“newprogramme,
product/service or delivery mechanismconcept note” outlining key elements of the
proposed initiative prior to the conceptualisation and design of the initiative. These
government-funded “Programmes Identification Notes” will beused to register each
fundedprogrammeinthegovernmentservicesinformationportal.
All government departments and public-sector small business agencies at all three
spheresof governmentwill berequiredtocommitthemselvesto“ThinkSynergyFirst”
intheirconceptualisationanddesignof programmes,productsandservices,anddelivery
mechanismsbyadoptingandimplementingtheproposedguidelines.
28
1.2 Proposed institutional arrangements
the dti, in consultation with relevant government departments and various public-
sector small business agencies, will developthe“newprogramme, product/serviceor
delivery mechanismconcept note” guidelines, and circulatethemfor discussion and
adoptionbyall roleplayersconcerned, throughtheGovernment’scluster system.
An agencies network – the Small EnterpriseAgencies Forum– will be established.
Thiswill beledbyseda asanintegrator of public-fundedsmall businessinitiatives, as
articulated in theNational Small Business Act of 2004. Themain task of theforum
will beto develop and implement asystemof integrating support services, ensuring
seamless service from one institution to another, and eliminating duplication of
services. A joint programme for marketing and promotion of services rendered will
support this. Theproposed“newprogramme, product/serviceor delivery mechanism
concept note” will betabledby thesponsoringentity beforetheforumfor discussion
and input, prior to the conceptualisation and design of the new initiative. It is
proposedthat thefollowingentitiesbepart of theforum:
Small EnterpriseDevelopmentAgency(seda)
TheSA Micro-FinanceApexFund(Samaf)
KhulaEnterpriseFinanceLimited
UmsobomvuYouthFund(UYF)
National Empowerment Fund(NEF)
Industrial Development Corporation(IDC)
National ProductivityInstitute(NPI)
TshumisanoTrust
TourismEnterpriseProgramme(TEP)
SouthAfricanRevenueService
(SARSSMME Division)
Sector educationandtraining
authorities(Setas)
Small-scaleMiningBoard
ForestryEnterpriseDevelopment
(FED) Programme
Provincial Development FinanceInstitutions
Provincial Small Business
DevelopmentAgencies
At local level, steps will be taken to co-locate as many small enterprise support
agencies as possible, in order to create integrated access points for aspiring and
existing entrepreneurs. Special effort will be made to integrate local municipality
small business support initiatives into theseaccess points. Steps will also betakento
ensure that personnel at access points are fully briefed about the range of support
services available fromall providers, and havetheappropriatepromotional material
on all support services to enablethemto assist enquirers to access support provided
by those institutions not physically located at the integrated access points. Local
municipality infrastructure programmes should give focus to providing facilities for
thelocationof businesssupport service-accesspoints.
As amatter of urgency, all current programmes, products and services, and delivery
mechanismsacrossall spheresof governmentandpublic-sectorsmall businessagencies
aretobereviewedtodeterminehowtheyfit the“ThinkSynergyFirst” philosophyand
howtheyalignwiththedevelopment prioritiesoutlinedinthisstrategyasasupportive
policyframework.Wherenecessary, adjustmentswill bemadetobringaboutthedesired
fit. This may imply the redesign of certain programmes, products or services, and
deliverymechanisms; amalgamatingthemintosingleprogrammes, productsorservices
anddeliverymechanisms,orscrappingthemaltogether.
29
2. Encouraging increased private sector participation
The corporate sector, as a whole, can play a much larger role in promoting
entrepreneurship and small business, through sponsoring enterprise education and
financial-literacy programmes for learners andrunningin-housebusiness support and
induction programmes. Whilesome major corporations already haveprogrammes in
placetofoster entrepreneurshipandsmall business, effortswill bemadetoencourage
increased corporate-sector participation, particularly in the areas of promoting
entrepreneurship and business start-ups, procurement from small business, and
development and implementation of comprehensive enterprise-development
programmes.
2.1 Proposed actions
Government collaborativemeasures with organised business through Business Unity
SouthAfrica(BUSA), Chambersof Commerce& IndustrySouthAfrica(CHAMSA),
Corporate SMME Development Forum (CSDF), National Business Initiative and
various BEE charter councils will encourage the private sector to develop sector
initiatives focused on skills development, preferential procurement targeting small
business, enterprise development, and implementation assistance and monitoring of
thesecorporate-sector initiatives.
Government will also encourage more corporations to develop and implement in-
house entrepreneurship-development programmes along the lines of Anglo
American’s Zimele, SAB’s Ki ckStart and Shell’s LiveWire programmes, and will
facilitate partnerships at corporate level to replicate and roll out successful models
fromtheseprogrammes.
2.2 Proposed institutional arrangements
Theco-ordinationof theaboveinitiativescanbefullydelegatedtoorganisedbusiness
throughBUSA/CHAMSA andmonitoredbytheEnterpriseandIndustry
Development Division(EIDD) viaapartnershipagreement withthe dti andits
agencies. Thus, nonewinstitutional arrangement isenvisioned.
3. Ensuring action across the entire entrepreneurship continuum
3.1 Pre-start-up
Themaintask inthisareaistoincreasethesupply of potential entrepreneurswiththe
motivation and capacity to identify and pursue opportunities to start their own
businesses.
3.1.1 Proposed actions
Actions to be pursued include establishing a commission on entrepreneurship
education to produce a report within one year on measures to take to integrate
entrepreneurship education throughout the education system, including measures to
build capacity for teaching entrepreneurship and, within universities, broadening
entrepreneurshipbeyondMBA degrees to all academic programmes; andthecreation
of platforms to exchange approaches and experiences. It is proposed that the
30
following entities be part of the commission: the dti (Entrepreneurship Promotion
Directorate), Department of Education, University Entrepreneurship/Small Business
Centres, UmsobomvuYouthFund, entrepreneurship-educationNGOsandStudentsin
FreeEnterprise(SIFE).
Thestrategy callsfor theestablishment of anEntrepreneurshipPromotionDirectorate
within the dti to strengthen co-ordination, promotion and monitoring of thenational
entrepreneurshipstrategy. Thisstrategywill introducemeasurestoincreasetheprofile
of entrepreneurship within the education system – by introducing new
entrepreneurshipeducationprogrammesat universitiesand, inpartnershipwithNGOs
activeinthis areaandtheUmsobomvuYouthFund, extendingexistingschool-based
entrepreneurship-education programmes across the country. Where programme gaps
exist, newprogrammeswill bedevelopedandimplemented.
Theprivatesector will alsoplayacritical role, throughlaunchingwide-rangingmedia
campaigns to profile the role of entrepreneurship in society, and showcasing
successful entrepreneurs at local, provincial and national level. Innovativeradio and
TV initiativeswill beconceptualisedandimplemented.
For thispurpose, aninformal EntrepreneurshipAmbassadorsNetwork will becreated,
comprising previous entrepreneurship and small business award winners. Network
members will be asked to volunteer their time to give talks at schools and other
community forums on the importance of entrepreneurship and small business. This
will be supported by the introduction of provincial and national awards, which will
recognise both media efforts to promote entrepreneurship, and those who excel in
entrepreneurshipprogrammesinschools.
3.1.2 Proposed institutional arrangements
A dedicated unit, which will be called the Entrepreneurship Promotion Directorate,
will becreatedwithinthe dti (EIDD) todrivetheaboveactionprogrammes.
3.2 Start-ups
The main task here is to take the potential and capabilities of South Africans
interested in starting new businesses, and convert these into actual action plans and
accesstomeansleadingtonewbusinessstart-ups.
3.2.1 Proposed actions
Research will be conducted to examine the impact of the so-called “quiet
disincentives” (such as level of taxation, labour-market legislation, barriers to entry)
that discouragepeoplefromstartingtheir ownbusinesses. Basedontheresults of the
research, measures will be introduced to alter the risk-reward profile of
entrepreneurship and to increase the attractiveness of starting and continuing a
business.
As proposed inAsgiSA, ongoing efforts will be made to eliminate barriers to entry
arisingfrom, amongother factors, concentrationincertainsectorsof theeconomyand
regulation. Efforts will also be made to create appropriate start-up incentives,
31
including taxation measures (e.g. tax treatment of sole proprietors and private
investment bytheentrepreneur, family andfriendsinstart-upbusinesses).
The“ExploreEnterprise” campaigncommunicatingthepersonal andsocietal benefits
of starting up and running a business will showcase successful entrepreneurs and
availableenterprise-support programmes, in order to persuademorepeopleto set up
businesses.
A comprehensive strategy on utilising business incubators to foster start-ups, with
particular focusonspecial target groups, prioritysectorsandspecial geographicareas,
will be developed, proposing ways to utilise instruments such as the Support
Programme for Industrial Innovation (SPII) and others, for the benefit of incubator
clients.
Moreencouragement istobegiventonewstart-upsby thebusinesssupport network,
andproper guidanceprovidedtoensureaccesstoall possiblesourcesof support.
Support programmes will be introduced that address the following four basic key
factors in starting a business: (i) acquiring the necessary managerial, technical and
personal ability; (ii) acquiring motivation and commitment; (iii) developing the
business ideafromarawideato avalid idea; and (iv) identifying and acquiring the
necessaryphysical andfinancial resources.
Accesstofinancefor start-upswill beimprovedby encouragingexistingprovidersof
finance to introduce a greater quantum of products targeted at start-ups, by, for
example, developing and implementing meaningful risk mitigation and risk-sharing
measures.
Asoutlinedinthevariousstrategies, newor additional measuresaretobeformulated
and implemented to stimulate start-ups through franchising and co-operatives,
targeting youth and women, and focusing on priority sectors and special geographic
areas.
3.2.2 Proposed institutional arrangements
the dti will commission and manage the proposed research on entrepreneurship
disincentivesandincentives.
The “Explore Enterprise” campaign will be launched and managed by the
Entrepreneurship Promotion Directorate and conducted primarily by seda, Khula,
Samaf and UYF. Thecampaign could beconducted in partnership with chambers of
commerce; university entrepreneurship/small business centres (targeting university
students); and youth bodies such as the National Youth Commission and South
AfricanYouthCouncil andStudentsinFreeEnterprise(SIFE)
Theseda Technology Programme, inconjunctionwithSA Business Technology and
Incubation Association (Sabtia), will be tasked with developing the proposed new
business-incubationstrategy.
32
Theproposed Small EnterpriseAgencies Forumwill further engageon mechanisms
andinstitutional co-operationarrangementstoenrichthestart-upbusinesssupport.
3.3 Business survival, growth and expansion
Thekeytask istoincreasethenumber of businessesthat survivethefirst fewyearsof
establishment and progress to growth and expansion, thus contributing to higher
levelsof jobcreationandeconomicgrowth.
Critical to success in ensuring business survival, growth and expansion is a clear
understanding of the business’s needs at different stages, and developing and
delivering appropriateproducts and services to respond adequately and timeously to
thoseneeds. International literaturedocumentsthefollowingassomeof thebusiness-
management needs faced by small enterprises during their various growth phases.
3
Thus, thestrategywill focusontheseneeds.
Businesslife
stage
Businessneeds
Post-
establishment
survival
Remedial needsrelatingtothegapsor inadequaciesof theoriginal
businessplanandinthepreparationfor goingintobusiness.
Needsarisingfromunforeseencircumstances, suchaschangesinthe
environment, competition, customer needs, technologyand
government action.
Needsrelatingtothedevelopment of adequaterelationshipswiththe
support networkandtheenvironment, includingbanks, accountants,
thelegal profession, suppliers, customers, labour andtrade
associations.
Needsrelatingtothedevelopment of adequatebusinesssystemsand
meansof controllingcash, profit, productionandsales.
Runninga
successful
micro-
business
Theneedtokeepabreast of changesinthestatutoryenvironment that
maythreatenthebusiness.
Needsrelatingtothebroader non-legislativeenvironment – keeping
abreast of competitionor changesinrelevant trendsinlocal, regional
or national societythat arelikelytoaffect thedemandfor theproduct
or service.
Needsrelatingtotheacquisitionof basicmanagement knowledgeand
skills, for example, managingmarketing, production, peopleand
finance.
Needsrelatingtothedevelopment of personal capabilities, for
example, problemsolving, creativity, sellingandnegotiationskills,
leadershipandcommunication.
Managing
first-stage
growth
Identifyclearlythebusiness’spositioninthemarketplace, its
financial performance, andtheefficiencyandeffectivenessof its
physical andfinancial, productionor servicecapability.
Identifythepotential for growthintermsof theavailabilityand
adequacyof: physical andfinancial resources, experienceinnew
areastobedeveloped, thequalityandstrengthof new-product ideas,
3
Thislist isillustrative, not exhaustive.
33
leadershipandbasicmanagement organisation, andcontrol.
Identifyneedswithrespect toplanningfor thespecificnewmarket or
product developmentsenvisaged, coveringmarkets, resourceinputs,
negotiationsrequired, businessplanning, andsourcingof necessary
assistance.
Managing
second-stage
growth
Development of capableteamscoveringkeyfunctionsinthebusiness.
Delegation, leadershipandcontrol.
Managingdiversifiedproduct andmarket growth.
Introducingmoresophisticatedmethodsof functional management
control.
Dealingmoreeffectivelywiththeincreasinglysophisticated
environment of finance, technologyandmarketswithwhichthelarger
businesshastocontend.
Introducingandmanagingexporting, licensingand
internationalisation.
3.3.1 Proposed actions
Virtually all of theprogrammes, products and services of thecurrent small business
support institutionsalreadyfocusonenterprisesinthesevariousstagesof survival and
growth. Therefore, nonewmeasuresareintroduced. However, continuousassessment
of the relevance, adequacy, accessibility and efficacy of the support measures and
ongoinggapanalysisandinnovationwill beencouragedandmonitored, toensurethat
support remains flexible enough to meet any emerging needs. Current mandates,
geographical presenceandexpansionplans of institutions suchas Khulaandtheroll-
out of sedaandSamaf will bemonitoredtoensureincreasedaccess tosupport across
the country. Increased collaboration between agencies will be fostered to ensure
integrationof support at all levels, particularly at thepoint of delivery. Parallel tothe
increaseof supplyof development services, effortswill bedirectedtowardsincreasing
demand for small business products and services leveraging on public sector
procurement and private sector procurement. The BEE codes of good practice will
assist in this regard with specific referenceto theimplementation of thepreferential
procurement, skillsdevelopment andenterprisedevelopment elementsof thecodes.
3.3.2 Proposed institutional arrangements
the dti throughtheEnterpriseDevelopment Unit, together withtheSmall Enterprise
AgenciesForum, andtheInterdepartmental Committeefor Small BusinessPromotion
Within Government cluster, will monitor and continuously evaluate progress in this
area. These structures will interact with the National Small Business Advisory
Council for further analysis and independent reporting on impact made. Other than
that, nonewinstitutional arrangementsareproposed.
3.4 Business turnaround
Anoften-neglectedyet crucial businesssupport areaisassistingbusinessesindistress
toturnaroundandavoidfailure. Of course, not all strugglingbusinessescanbesaved
fromcollapsebut many can. Small business turnaround is adeveloped profession in
countriessuchastheUSA andtheUK andcanbesoinSouthAfricatoo.
34
3.4.1 Proposed actions
Training programmes and advisory services to be developed to assist businesses in
distress.
Content on detecting emerging signs of distress in the business and what corrective
actiontotaketobeincorporatedinall small business trainingprogrammes, including
thoseof Setas.
Technical co-operationprogrammesbetweenSouthAfricaandoutsidecountriestobe
strengthened to draw experience and partnerships and to ensure capacity building
programmes for the development of business turnaround skills of business advisers
nationally. Linkedto this is thedevelopment and implementation of an accreditation
systemfor businessturnaroundprofessionals.
Thereviews of theincentives programmeto bedirectedtowards providingnecessary
interventionstorestoreactivitiesinthesebusinesses.
3.4.2 Proposed institutional arrangements
TheSmall EnterpriseDevelopment Agency (seda) to takethelead in implementing
themeasuresoutlinedhere.
Given that business turnaround support is important in risk mitigation for financing
institutions, partnershipsaretobesought withcommercial banksandother lendersto
developandintroducetheabovemechanisms.
J oint efforts with the Institute of Business Advisers to be leveraged to develop and
implement capacity building measures and an accreditation system for business
turnaroundprofessionals.
4. Focusing on special target groups, regions and priority sectors
4.1 Focusing on youth and women
UmsobomvuYouthFundis adedicatedinstitutionthat focuses onyouthandoffers a
widerangeof support measuresaimedat thistarget group. Together withtheNational
YouthCommissionandtheSouthAfrican YouthClub, Umsobomvuhas developeda
comprehensive national youth enterprise strategy, which identifies key interventions
necessarytoimprovethelevel of support toyoungentrepreneurs.
the dti has developed an elaborate strategy on gender and women’s economic
empowerment that outlines anumber of plannedinitiatives to meet thesupport needs
of thistarget group.
Inaddition, the dti’s co-operatives strategy andthe strategy onthedevelopment and
support of franchising also pay special attention to ensuring participation and
providingsupport toyouthandwomen.
35
Lastly, some of the measures proposed in this strategy, such as those in the area of
entrepreneurship education and fostering start-ups, will directly benefit these target
groups.
Based on the aforementioned, no new initiatives and institutional arrangements are
proposed in addition to thoseoutlined in thestrategies outlined above. Therelevant
dti units together with the Small Enterprise Agencies Forumwill closely monitor
progressinreachingyouthandwomenintheimplementationof thevariousstrategies
andensurethat correctiveactionistakenwherenecessary.
4.2 Focusing on special geographic areas
Thestrategy’sfocusonashift fromwholesaletoretail service-delivery approachesis
strengthened by Khula’s proposed retail and partnering strategy, as well as theseda
andSamaf retail andpartneringstrategy already inimplementation. Coupledwiththe
national roll-out, this service-delivery approach will ensure that services are easily
accessibleacross thecountry. the dti and theSmall EnterpriseAgencies Forumwill
closelyandcontinuouslymonitor theadequacyof serviceprovisioninkeygeographic
areas across the country, and ensure that measures are taken to close any identified
gaps.
In addition, a deliberate effort will be made to work as closely as possible with
government programmes targeting special geographical areas, such as theIntegrated
Sustainable Rural Development Programme (ISRDP), Urban Renewal Strategy and
theForestry EnterpriseDevelopment Programme, to ensureavailability of support in
target areas, and alignment with theProvincial Growth and Development Strategies
and local government integrated development plans (IDPs). This strategy gives
prioritytotheroleof provincial government inprovidinganenablingenvironment for
small business support through provincial economic development policies and
enabling regulatory framework. This will be supported by municipal infrastructure-
development plansandtheimplementationthereof.
The Small Enterprises Agencies Forumwill cascade to the provincial level through
co-ordination by seda provincial offices. The provincial department responsible for
economicdevelopment will alsoberesponsiblefor theco-ordinationof theProvincial
Inter-Departmental forums for small business promotion, integrating existing
interdepartmental structures and the contribution of the sector departments to the
strategygoals.
4.3 Focusing on priority sectors
Support programmes will be developed for small enterprises in the priority sectors
identifiedintheMicro-economic ReformStrategy. This will comeabout throughthe
designof newprogrammes, or throughtheadaptationof existingones. Theintention
is to reducegovernment interventions in generic programmes, products and services
that canbeeasilypackagedby stateagenciesfor retail by private-sector agencies, and
to strengthen the capacity of state agencies to introduce new sector-specific
programmes.
36
Over time, these will be co-ordinated between seda, Samaf, Khula and by specific
sector departments as their niche in the integrated small-enterprise development-
strategyframework.
As far as possible, programmes will bedevelopedafter thoroughresearchexamining
the support needs of small business in those sectors. Sector departments will play a
key role in leading the conceptualisation and design of sector-specific support
programmes.
Cutting across all the above is the positioning of donor organisation assistance
(DOA), for which initiatives will be guided through a country strategy for foreign-
development assistance on small business. This will link donor support to the
government priorities for small business development. Areas of focus will include
technical assistanceat institutional andenterpriselevel, as well as budgetary support
targetingtheroll-out of selectedinitiatives.
TheSmall BusinessAdvisory Council and the dti EnterpriseDevelopment Unit will
drive the establishment, implementation and monitoring of this focus strategy,
drawing fromthe success of, and lessons learned in, the implementation of sector-
specific initiatives like the TourismEnterprise Programme under DEAT, as well as
theConstruction Industry Development Board programmes under theDepartment of
PublicWorks.
37
CHAPTER VI
SUMMARYOF STRATEGIC PROGRAMMES
38
The implementation of the strategy will be monitored through targets set and
achievementsmadeonthefollowing;
1. Fostering entrepreneurship culture and increasing enterprise creation rate
This will be achieved through improved integration between social and economic
cluster strategies, more effective utilisation of existing initiatives, as well as the
creationandimplementationof newmeasuresoutlinedearlier inthisdocument.
2. Establish a dedicated network of SMME finance
As describedearlier, amoretargetedapproachwill befollowed. Samaf will focus on
survivalist and micro-enterprises partnering with social structures insideand outside
government for community-resource mobilisation into enterprising initiatives.
Khula’s wholesale approach will remain key in forging public-private partnerships
and addressing the collateral-security challenges for small businesses; however,
considerationwill begiventotheestablishment of adedicatedsmall businessfinance
institution. The small business bank approach will facilitate partnerships with the
private sector. The Government’s investment in this regard will be seed capital to
crowd in interested private-sector partners; the dti will continuously review the
appropriatenessof itsfinancial incentiveschemesfor thesmall enterprisesector.
3. Create demand for Small Enterprise products and services
Linking to the broader Industrial Strategy and trade promotion, the South African
Government has entered into bilateral trade agreements with a number of countries.
These agreements provide potential opportunities for small enterprises to penetrate
foreign markets through exports. These opportunities will be analysed in detail and
support programmesintroducedtoenablesmall enterprisestotakeadvantageof them.
Efforts in this area will be undertaken in collaboration with business organisations,
withthepossibility of fully delegatingresponsibility for thiswork totheseentities, as
part of apartnershiparrangement betweengovernment andprivate-sector bodies.
the dti and the National Treasury will also devise a mechanism to increase the
proportionof publicprocurement of goodsandservicesthat goestosmall enterprises.
This will lead to the establishment of a National Procurement Programme targeting
small business, including co-operative enterprises that cluster micro-enterprises into
viable supplier groups. The programme mechanisms will seek to establish an
integrated support framework linking preferential procurement with skills
development, enterprise development and certain elements of corporate social
investment (grant programmes). This initiative will also provide government with a
strategicresponseintheimplementationof specificelementsof theB-BBEE Codesof
GoodPractice.
VI. SUMMARYOF STRATEGIC PROGRAMMES
39
4. Strengthening local network for small business development support services
Working in collaboration with various providers of support at local level, including
municipalities, seda will design and co-ordinate a standardized national network of
service access points that integrate government-funded support measures across all
spheres of government. Special effort will bemadeto ensurethat support reaches all
regionsof thecountry.
Thiscallsfor clear rolesfor different organsof government, theeffectivealignment of
service provision through this network, as well as the necessary resource provision,
focusing on widening the range of programmes based on the needs of small
enterprisesandtheestablishment of requiredinfrastructurefor localisedsupport
5. Improving small enterprise competencies and delivery capacity
Inadditiontosatisfyingtheneedfor businesssupport servicescentres, focuswill be
giventotheprovisionof facilitiesfor usebysmall businessesinspecialised
manufacturingandserviceindustries, aswell asstrengtheningof cottageindustriesfor
rural enterprises.
This will be achieved through mobilising funding for minimum business
infrastructure facilities in local authority areas across the country, linking up with
municipal LEDeffortsandinitiativeslocatedinprivate-sector enterprisedevelopment
under theB-BBEE strategy.
6. Strengthening Enterprise Networks
Thecooperativesdevelopment policyandstrategy(currentlyadraft document) will
befinalized. Thiswill bealeadingfrontier instrengtheningthecooperatives
movement asaprimarybasetofoster essential linkagesat enterpriselevel and
realizingmoreeconomicbenefitsfromcommunityself-helpinitiativesthrough
appropriateandtargetedinterventionmeasures. Whilethedti will provide
coordinationandpromotionof cooperativesingeneral, government departmentsand
publicinstitutionsaswell astheprivatesector will berequiredtocontributesectoral
support topromotecooperativedevelopment.
7. Providing necessary support incentives
TEO will continuetoprovideleadershipinthedevelopment andadministrationof the
incentivesschemestosupport variousenterprises. Thiswill combinethedevelopment
of newincentiveschemesandreviewingexistingprogrammestoincreasethe
incentivesimpact andaccessibilitytosmall enterprises. Theincentiveswill alsoseek
toalignwiththeprioritysectors asguidedbythegovernment supportivepolicy
frameworkfor small enterprisedevelopment.
40
8. Improving regulatory environment
Inappropriate or unduly restrictive legislative and regulatory conditions are often
viewed as critical constraints on the access of small enterprises into the business
sector, and as obstacles to their growth. Cabinet has already taken decisions on
measures to improvetheregulatory environment for small enterprises. Amongthese,
the dti and the dplg have been tasked with the responsibility of preparing
recommendationsonhowtoimprovetheregulatoryenvironment for small enterprises
inmunicipalities. Ongoingresearchwill beconductedtodrawexperiencefromsmall
enterprise support agencies, business organisations and independent experts in the
areaof easingadministrativeandregulatory burdensonsmall businessandtheimpact
thereof. This will strengthen constant identification of additional regulatory review
areas.
the dti will also invoke Section 18 (1) of the National Small Business Amendment
Act (Act No. 26 of 2003), which empowers the Minister of Trade and Industry to
publishguidelinesfor organsof national, provincial andlocal government topromote
small business, including guidelines for regulatory impact monitoring. The
establishment of the Regulatory Impact Assessment Unit, currently championed by
thePresidency, will strengthentheseinitiatives.
9. Entrepreneurship and small business research
Research plays an important role in informing government policy and strategy on
entrepreneurship and small business promotion. With the increase in the number of
university-based centres of entrepreneurship and small business, research output is
also expectedto increase. However, additional measures arenecessary to ensurethat
policy-relevant research is undertaken on an ongoing basis. In particular, statistical
data on small enterprises, including business entry, exit, survival and failure rate, is
critical toinformingpoliciesandsupport programmes.
the dti will work withStatistics SA andacademiato undertakethis typeof research.
Thedepartment will ensureongoingresearchandthepublicationof theAnnual Small
Business Review.
the dti will also work with business organisations and academic institutions to
identify additional areas for research, and to mobilise resources to undertake such
research. Areas for ongoingresearch, which will receiveimmediateattention, arethe
identification of opportunities for small enterprise creation and growth within the
various sectors of the economy, as well as technology application that supports the
strengtheningof productivecapacitiesof small businesses. Resultsof theresearchwill
be widely publicized using existing institutions and other channels, to inform
prospectiveandexistingentrepreneursof theseopportunities.
41
CHAPTER VII
BUILDING PARTNERSHIPS AND CAPACITY
FOR PERFORMANCE
42
Building capacity throughout the public-sector enterprise support systemto deliver
support services professionally and efficiently is of critical importance to the
successful implementation of the strategy. This requires clear identification of the
focuspoint for thenational deliverysystem; aclear resourcechannel; andstreamlined
strategy implementation, co-ordination, and monitoring linked to the resource
channels.
Fragmentationof private-sector support andDevelopment Assistance, wheretheseopt
to partner with government, will beminimised through theidentification of selected
partnershipfocal points withingovernment. The dti will takesteps to forgemutually
beneficial partnership arrangements with national business organisations such as
BUSA, CHAMSA andthedonor community; whileindividual corporationswill forge
direct partnershipsat institutional level.
1. Proposed actions
Thecapacity-building needs of all personnel that interfacewith entrepreneurs across
all institutionswill beassessedandaddressed, toensurethedevelopment anddelivery
of appropriatetrainingandother capacity-buildingmeasures.
In particular, the capacity-building needs of LED and small business development
personnel inlocal municipalities andmunicipality-ownedenterprises will beassessed
and addressed to ensure the development and delivery of appropriate training and
other capacity-buildingmeasures.
A programmeto encouragemunicipalities to “Think Small First” with regard to the
impact of their actions onsmall business intheareas of regulation, procurement and
payment for goods and services, delivering business-related municipal services, and
soon, will bedeveloped.
the dti will consider delegating theimplementation of certain interventions outlined
inthis strategy to organisedbusiness formations, andwill monitor their performance.
To assist theseorganisations to performtheir tasks effectively, the dti will, together
with these organisations, develop and implement a programme to strengthen their
internal capacity.
2. Proposed institutional arrangements
Theabovemeasures areto becarried out by the dti, theSmall EnterpriseAgencies
Forumandparticipatingprivate-sector organisations.
VII. BUILDING PARTNERSHIPS ANDCAPACITYFORPERFORMANCE
43
CHAPTER VIII
MONITORING PERFORMANCE
44
Effectivemonitoringof theimplementationandperformanceof thisstrategy, inorder
to enable improvements in performance and the introduction of changes where
necessary, is of critical importance. Given that theformulation of this strategy takes
place in the context of existing and well-established institutions and support
programmes, the dti recognises that these entities have established their own
performance-monitoringmechanisms.
However, the importance of developing and implementing an over-arching
monitoring framework, which will enable government to gather feedback on the
performance of public, private and donor enterprise support, cannot be over-
emphasised. The responsibility for developing an effective national monitoring
frameworkfallsunder the dti, supportedbythefollowing:
• government departments through the Inter-Departmental Committee on
Entrepreneurship and Small Business Promotion as part of the government
clusters
• small enterprisesupport agenciesset upbyvariousgovernment departments
• theBEEAdvisoryCouncil
• theNational Small BusinessAdvisoryCouncil
• organisedbusinessbodies.
the dti, working with the National Small Business Advisory Council, will take the
initiative in consulting with these entities to jointly formulate a comprehensive,
system-wideperformance-monitoringframeworkfor thenational strategy.
It isimpossibletoanticipateall thesocio-economic andinstitutional changeslikely to
emerge over the next ten years, just as it is impractical to stipulate detailed support
programmes for all the different problem areas, sectors or target groups. The
integrated strategy, therefore, sets the framework and outlines the principles
underlying futuregovernment support and public-sector programmedevelopment. It
will beuptothevariousplayers(includingcurrent aswell asevolvinginstitutions) to
apply those principles and to plan, negotiate and practically implement appropriate
support programmes within the fundamental guidelines provided in this strategy
document.
VIII. MONITORINGPERFORMANCE
IX. CONCLUSION
minit print hatfield ? (012) 362 2807
Integrated Strategy on the Promotion of
Entrepreneurship and Small Enterprises
The Department of Trade and Industry (the dti)
the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria
Private Bag X84 Pretoria 0001, Republic of South Africa
the dti Customer Centre: 0861 843 384 (South Africa)
+27 12 394 9500 (International)
www.thedti.gov.za
2005 Cabinet approval
doc_306656317.pdf