NOTICE 213 OF 1995
PARLIAMENT OF THE REPUBLIC OF SOUTH AFRICA
WHITE PAPER ON NATIONAL STRATEGY FOR THE DEVELOPMENT AND PROMOTION OF SMALL
BUSINESS IN SOUTH AFRICA
CAPE TOWN, 20 MARCH 1995
WPA/1995
The White Paper on National Strategy for the Development and Promotion of
Small Business in South Africa is hereby published by the Department Trade
and Industry for general information. This White Paper was tabled in
Parliament on 20 March 1995, reference WPA/1995.
16317
28 MARCH 1995
-------------------------------------------------------------------------------
NATIONAL STRATEGY
FOR THE DEVELOPMENT AND PROMOTION OF
SMALL BUSINESS IN SOUTH AFRICA
White Paper of the
DEPARTMENT OF TRADE AND INDUSTRY
20 March 1995
Table of Contents
Abbreviations
Foreword
PART ONE
Process and vision
1.1 The process of strategy formation
1.2 After the White Paper
1.3 A broader vision
1.4 Structure of the document
PART TWO
The small-business sector in South Africa's economic development
2.1 Size and diversity of the sector
2.2 Role and contribution of the sector
2.3 Constraints facing the small-business sector
2.4 Past support policies
2.5 International input
2.6 Research on SMMEs
PART THREE
Objectives and principles
3.1 Objectives of the national small-business strategy
3.2 Stages of strategy formulation and implementation
3.3 Setting goals for the national strategy
3.4 Fundamental principles
3.5 Targeting support
PART FOUR
Elements of the support framework
4.1 Creating an enabling legal framework
4.2 Streamlining regulatory conditions
4.3 Access to information and advice
4.4 Access to marketing and procurement
4.5 Access to finance
4.6 The physical infrastructure
4.7 Training in entrepreneurship, skills and management
4.8 Industrial relations and the labour environment
4.9 Access to appropriate technology
4.10 Encouraging joint ventures
4.11 Capacity-building and institutional strengthening
4.12 Differential taxation and other financial incentives
PART FIVE
Institutional reform
5.1 The Department of Trade and Industry
5.2 The National Small Business Council
5.3 The Small Business Development Agency
5.4 Wholesale funding agencies
5.5 Restructuring the SBDC
5.6 Small-business support at provincial level
5.7 Local authorities
5.8 Local Service Centres
5.9 NGOs and small-business support
5.10 Organised business
PART SIX
Action programme
6.1 An integrated view
6.2 Short-term: Action since mid-1994
6.3 Short-term: Fiscal year 1995/96
6.4 Medium-term developments 1996/97 - 1997/98
6.5 Medium-term developments 1998/99 - 1999/2000
6.6 Longer-term action 2000 to 2005
PART SEVEN
Funding the national strategy
7.1 The challenge
7.2 Funding sources
7.3 Leveraging programme funding
7.4 Meeting the challenge
INDEX of policy issues and institutions
TABLES, DIAGRAM and LIST
Table 1 Key objectives of the National Small Business Strategy
Table 2 Ten key principles underlying the government's national
small-business strategy
Diagram The national SMME-support strategy in perspective
List of written submissions
Abbreviations
BNDC Bophuthatswana National Development Corporation (North-West)
CBO Community-based organisation
CSBC Ciskei Small Business Corporation
CSIR Council for Scientific and Industrial Research
DBSA Development Bank of Southern Africa
DTI Department of Trade and Industry
EMA Export Marketing Assistance
FRD Foundation for Research Development
GEIS General Export Incentive Scheme
IBEC Informal Business Enrichment Centre
IBTT Informal Business Training Trust
IDC Industrial Development Corporation
IDT Independent Development Trust
IESC International Executive Service Corps
KFC KwaZulu Finance Corporation
LSCs Local Service Centres
Nafcoc National African Federation of Chambers of Commerce
Nedlac National Economic Development and Labour Council
NGO Non-governmental organisation
NPI National Productivity Institute
NSBC National Small Business Council
ODA Overseas Development Administration
RDP Reconstruction and Development Programme
RIDP Regional Industrial Development Programme
RSC Regional Services Council
Sacob South African Chamber of Commerce
SADC Southern African Development Community
Safto South African Foreign Trade Organisation
SBDA Small Business Development Agency
SBDC Small Business Development Corporation
SMMEs Small, medium and micro-enterprises
SRIDP Small Enterprise Regional Industrial Development Programme
US-AID United States Agency for International Development
VAT Value-added tax
-------------------------------------------------------------------------------
FOREWORD
Since the elections of April 1994 the issues of economic empowerment and
growth have been placed high on the agenda of the Government of National
Unity of South Africa. 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 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,
This White Paper represents government's thinking about what it can
contribute to the process of stimulating small, medium and
micro-enterprises. We believe that the real engine of sustainable and
equitable growth in this country is the private sector. We are committed to
doing all that we can to help create an environment in which businesses can
get on with their job. We believe in the principle of working together with
our partners in the private sector - big and small businesses - in realising
our hopes and aspirations for this economy. We are under no illusion that
we have all the answers to the problems of growth and redistribution in this
country. Indeed, we are bound to make errors of judgement in the next few
years. But we hope that our commitment to ongoing and serious consultation
with all the major stakeholders will ensure that we are guided in the right
direction.
This document is the result of an intensive process of consultation with key
stakeholders in the SMME sector. Pressures to deliver dictated very tight
schedules for this communication process. The feedback which we received on
the issues raised in the Discussion Paper of October 1994 made an important
contribution to government's thinking on small, medium and micro-enterprises.
We believe that the programmes and policies outlined here reflect the
aspirations of many small-business people in our country. But we do not
intend to stop here. The White Paper will become a platform for even
further consultations with stakeholders involved in small-business
development. At the President's Conference on Small Business in March 1995,
we intend to present our programmes for public discussion and debate.
May I express my personal thanks to the many individuals and organisations
who have contributed to the development of this White Paper. Such tireless
activity on the part of small-business entrepreneurs, the corporate sector,
support institutions and all other players will prove to be invaluable for
the policies and strategies in this White Paper to be translated into real
progress in our economy and our nation.
Finally, I am honoured to have the opportunity to present the White Paper on
the National Strategy for the Development and Promotion of Small Business in
South Africa to the first democratically elected parliament in the history
of this country.
Trevor A. Manuel, MP
Minister of Trade and industry
-------------------------------------------------------------------------------
PART ONE
Process and vision
The Reconstruction and Development Programme of the Government of National
Unity addresses a wide range of social and economic development issues, each
of which deserves detailed attention and concerted action. The promotion of
the small-enterprise sector of our economy is one of these critical areas.
Not only is it of great importance for the rate of job creation and income
generation in our country, but it deserves particular attention since the
sector has been greatly neglected in the past - in particular black-owned
and -controlled small enterprises.
1.1 The process of strategy formation
During the past few years several discussion papers and reports have been
circulated among small-business support agencies in South Africa. Numerous
conferences and workshops have been held to air the concerns of
entrepreneurs and business associations, reflecting the full spectrum of
small, medium, micro- and survivalist enterprises (SMMEs). All along there
has been a search for consensus about support needs, feasible programmes and
a consistent national strategy.
In October 1994 the Ministry of Trade and Industry released a Discussion
Paper on Strategies for the Development of an Integrated Policy and Support
Programme for Small, Medium and Micro-Enterprises in South Africa. This
draft document outlined a strategy framework for discussion among all the
stakeholders in the small-enterprise sphere. It already reflected inputs by
many institutions active in this field, including government departments,
business organisations, foreign donor agencies and policy experts.
Between October and the end of 1994 about sixty workshops were held in both
rural and urban areas to explain the contents of the Discussion Paper and
encourage critical comments as well as practical proposals for adjustments
to the strategy. These sessions, which were well attended and which were
supplemented by numerous press comments on the document, gave rise to a
large number of written comments, including submissions from virtually all
the major business associations, the provincial small, medium and micro-
enterprise (SMME) coordinators and several central-government departments.
All of these comments have been taken into account in the revision of the
document, to become this White Paper. The focus is now more specifically on
the role and programmatic approach of government, with greater focus on the
expected unfolding of the national strategy and the mobilisation of the
necessary resources.
The publication of the Discussion Paper occurred at a time when many of the
SMME-support policies that evolved in the past were already in a process of
transition. The document itself and its widespread discussion further
accelerated the reform process and gave rise to new impulses and
initiatives. Feedback from these reform processes also influenced the final
shape of this White Paper. As such, it should be viewed as a further
significant milestone in a long-run transformation process, rather than a
rigid framework document.
1.2 After the White Paper
Once it is endorsed by cabinet and parliament, the White Paper has to be
carried across to the full spectrum of the small-enterprise community, which
includes close to a million enterprises. A first step in this process is
the National Small Business Conference, to be held at the end of March 1995
in Durban and to be opened by President Mandela. The 2,000 invited
delegates are to spearhead the further dissemination of this national
strategy into all the comers of the country. During the conference, which
will include a large number of guests from our major trading partners and
invited experts, working groups will look in more detail at the main
strategy elements and how these can be implemented.
The proceedings of the conference will be summarised in the first Handbook
or Annual Review of South Africa's SMME sector, which is to be released in
mid-1995.
Parallel to this propagation process the small-enterprise desk in the
Department of Trade and Industry (DTI) is to be expanded into a Chief
Directorate for Small Business, and the Small Business Development Agency
(SBDA) will be established as the main implementation instrument of the
national strategy. The restructuring of other institutions, like the Small
Business Development Corporation and the regional development corporations,
is also making good progress, and negotiations should start soon about the
sharing of responsibilities for SMME support between the DTI and the SBDA on
the national level and the Departments of Economic Affairs and other
regional agencies on the provincial level.
1.3 A broader vision
All of these efforts should be viewed within a broader vision of the South
African economy, which includes all the business sectors - big business,
multinationals, parastatals and also the small-enterprise sector - as part
of an integrated, interdependent process. The small enterprise sector is
neither a "junior partner" in that process, nor is it a separate sector that
has to be treated according to different rules or principles, even though it
has been neglected and disadvantaged in the past and therefore needs to be
helped to take its rightful place among all the sectors.
The Government of National Unity is committed towards a strategy of high and
sustainable economic development. To achieve this, the economy needs to
move on a growth path of increased investment, enhanced productivity and
expanding employment opportunities - and all of this within a mould of
increasing general competitiveness.
While the better organised large enterprise sector should be able to move
towards the envisaged growth path with relatively limited support and
prodding from government, the transformation of the small-enterprise sector
requires and justifies concerted policies of wider scope as well as the
deliberate creation of an enabling environment. Such initiatives need
effective inputs from all segments of the economy and close co-operation
between government and the private sector. The ultimate goal is to make
SMMEs equal partners in all the economic sectors, and to maximise the
sector's contribution to the Reconstruction and Development Programme.
In this transformation process government is a facilitator and not an
implementor. In fact, small-business support programmes are best
implemented by institutions that most closely reflect the entrepreneurship
and risk characteristics of small businesses themselves. Such institutions
are typically small localised non-governmental organisations (NGOs), private
consultancies, partnerships and companies.
Finally, while government's role at the outset of this process is
interventionist, it will be scaled down systematically after the first five
to ten years.
1.4 Structure of the document
This White Paper outlines a national strategy for SMME support, bearing in
mind that a short document can only present the framework, with details
having to be filled in by the implementing agencies.
To set the scene, Part Two of this document gives an overview of the
small-business sector, its diversity, role and contribution to the economy
and the main constraints facing the sector. It also reflects briefly on
past support policies and support agencies as well as the role of foreign
agencies and international experience in shaping a new strategy.
Against that background, Part Three presents key objectives and fundamental
principles that underpin the national strategy and its different strategy
elements. It also introduces the important aspect of targeted support which
will guide much of the government's future involvement in this sphere, viz.
that support should be focused on sectors or target groups that particularly
need it or justify it in terms of job creation, Reconstruction and
Development Programme (RDP) involvement or income generation.
Part Four of the White Paper covers all the elements considered necessary
for a balanced and integrated 'national strategy". As shown in the sections
of Part 4 the government's involvement differs in the various areas, with
great emphasis placed on the responsibility falling upon other support
agencies.
The different strategy elements have to be implemented through agencies at
central, provincial or local level, with the private sector, business
associations, NGOs and parastatals important implementation agencies,
parallel to the three tiers of government. Part Five outlines the
institutional reform process as it should evolve, with particular emphasis
placed on key institutions, viz. the Chief Directorate in the DTI, the
National Small Business Council (NSBC), the SBDA, provincial Departments of
Economic Affairs and Local Service Centres (LSCs).
Based on that institutional framework and the range of strategy elements,
Part Six outlines the possible evolution of this national strategy, as
pursued by government. A distinction is made between short-term steps,
dominating efforts over the next two years, and medium to long-term goals
and initiatives, which will gain their full momentum over the next three to
five years.
Finally, Part Seven highlights different financial sources which can be
mobilised to fund the national strategy, with the 1995/96 DTI budget merely
the point of departure.
The challenge with respect to this strategy now lies in finding a
co-operative approach to the massive implementation task, guided by the
framework outlined in this White Paper.
-------------------------------------------------------------------------------
PART TWO
The small-business sector in South Africa's economic development
2.1 Size and diversity of the sector
2.1.1 Although the statistical base of the SMMEs in South Africa is still
poor, there can be little doubt about their relative significance.
There are more than 800,000 small, medium and micro-enterprises in the
country, absorbing about a quarter of the labour force of 15 million
people. This is in addition to about 3,5 million people involved in
some or other type of survivalist enterprise activities.
2.1.2 The small business sector is highly diverse, with structures,
problems, growth potential and access to support differing widely
between segments. These differences relate as much to the economic
sectors - retailing, manufacturing, mining, etc. - as they relate to
the stages of growth of enterprises, viz. start-up, expanding or
stagnating.
From a broad strategy perspective the most important distinction is
between survivalist activities, micro-enterprises, small enterprises
and medium-sized enterprises, with the general term "small business"
and the abbreviation "SMMEs" widely used to contrast this sector with
big(ger) business. Due to the similarity of some of the obstacles
facing them, survivalist and micro-enterprises are often lumped
together, whereas many support agencies feel that medium- sized
enterprises need not be viewed as a category warranting particular
attention.
2.1.3 The following characteristics of the four categories should help to
justify particular policy stances outlined in this White Paper.
Survivalist enterprises are activities by people unable to find a paid
job or get into an economic sector of their choice. Income generated
from these activities usually falls far short of even a minimum income
standard, with little capital invested, virtually no skills training
in the particular field and only limited opportunities for growth into
a viable business. Poverty and the attempt to survive are the main
characteristics of this category of enterprises. Support strategies
should primarily help these people - a large percentage of whom are
women to get out of this sector. Given the large number of people
involved in survivalist activities, this constitutes a vast challenge,
which has to be tackled within the broader context of the RDP (see
section 3.5.7).
Micro-enterprises are very small businesses, often involving only the
owner, some family member(s) and at the most one or two paid
employees. They usually lack 'formality' in terms of business
licenses, value-added tax (VAT) registration, formal business
premises, operating permits and accounting procedures. Most of them
have a limited capital base and only rudimentary technical or business
skills among their operators. However, many micro-enterprises
advance into viable small businesses. Earning levels of
micro-enterprises differ widely, depending on the particular sector,
the growth phase of the business and access to relevant support.
Small enterprises constitute the bulk of the established businesses,
with employment ranging between five and about 50. The enterprises
will usually be owner-managed or directly controlled by the owner-
community. They are likely to operate from business or industrial
premises, be tax-registered and meet other formal registration
requirements. Classification in terms of assets and turnover is
difficult, given the wide differences in various business sectors like
retailing, manufacturing, professional services and construction.
Medium enterprises constitute a category difficult to demarcate
vis-g-vis the "small" and "big" business categories. It is still
viewed as basically owner/manager-controlled, though the shareholding
or community control base could be more complex. The employment of
200 and capital assets (excluding property) of about R5 million are
often seen as the upper limit. In terms of this White Paper we are
concerned with medium-sized enterprises which face obstacles and
constraints which cannot be solved through normal market forces and
private-sector action.
2.1.4 It follows from these distinctions and it is a fundamental principle
of the government's SMME support strategy that the problems of each of
these four categories need a somewhat different policy stance. Some
of these differences will be outlined in the White Paper, but the bulk
has to be reflected in the more specific implementation processes.
2.1.5 Equally important for the present phase of small business support in
South Africa is the recognition of the particular problems and needs
of enterprises initiated, owned or controlled by those who were
disenfranchised and/or otherwise discriminated against in the past.
Aside from the racial dimension, i.e. enterprises owned or controlled
by black South Africans, we also refer to women and all other
disadvantaged and marginalised groups, including those in remote rural
areas as well as the disabled, elderly people and the youth. Such
enterprises are found in all four of the above categories.
The government is committed, within given financial and organisational
constraints, to structure its SMME support in such a way that special
attention is given to the problems faced by these disadvantaged
enterprises.
2.1.6 Since publicly funded support for small enterprises should only be
granted to those really needing it, the objective definition and
classification of different types of small enterprises is essential.
The DTI, after consultation with the NSBC, will create the mechanism
to identify different types of enterprises based on sectoral, size and
developmental criteria.
2.2 Role and contribution of the sector
2.2.1 All over the world it has been recognised that the small business
sector plays an important if not critical role in the economic and
social development of a country. This also applies to South Africa,
where the small business sector has been neglected during much of the
century following the discovery of diamonds and gold, and the
establishment of a modem, capitalist economy with almost exclusive
white control.
2.2.2 While the importance of large industrial, mining and other enterprises
for the growth of the economy cannot be denied, there is ample
evidence that the labour absorptive capacity of the small business
sector is high, the average capital cost per job created is usually
lower than in big business and its role in technical and other
innovation is vital for many of the challenges facing South Africa's
economy.
2.2.3 Given South Africa's legacy of big business domination, constrained
competition and unequal distribution of income and wealth, the small
business sector is seen as an important force to generate employment
and more equitable income distribution, to activate competition,
exploit niche markets (both internally and internationally), enhance
productivity and technical change, and through all of this stimulate
economic development.
2.2.4 Taking into account the very large micro-enterprise segment of the
small business sector, as well as those struggling in survivalist
activities it should be clear that the small business sector plays a
crucial role in peoples' efforts to meet basic needs and help
marginalised groups - like female heads of households, disabled people
and rural families - to survive during the current phase of
fundamental structural changes where the formal economy is unable to
absorb the increasing labour supply, and social support systems are
grossly inadequate.
2.2.5 Experience has shown that in the past black people have been able to
make far greater progress in the micro- and small-enterprise segments
of the economy than in medium-sized and larger enterprises. Thus, the
SMME sector has - all its impediments notwithstanding - proven to be a
highly significant vehicle for black economic empowerment.
2.3 Constraints facing the small-business sector
2.3.1 There can be no doubt that, compared to big business in South Africa
and in other countries, small businesses face a wider range of
constraints and problems and are less able to address the problems on
their own, even in effectively functioning market economies. The
constraints relate, among others, to the legal and regulatory
environment confronting SMMEs, the access to markets, finance and
business premises (at affordable rentals), the acquisition of skills
and managerial expertise, access to appropriate technology, the
quality of the business infrastructure in poverty areas and, in some
cases, the tax burden. In the South African context the constraints
have been particularly hard on entrepreneurs in rural areas and on
women.
2.3.2 Much has been written about these issues over the past few years and
debated at public forums internationally as well as in South Africa.
This White Paper is based on an understanding of these problems and
their legitimacy, without restating the facts here. At the same time
it has to be recognised that problems and constraints differ widely
between the various segments of SMMEs and also the sectors as well as
owner categories. Generally speaking, the micro- and survivalist
enterprises are far less able to face constraints linked to finance,
market access and the acquisition of skills. On the other hand, some
sectors like agriculture, construction and manufacturing confront
small enterprises with a particularly wide range of problems, thus
preventing easy access to these sectors by new enterprises or
increasing the risk of those already in the sectors. Even among
medium-sized enterprises, problems like international competition,
technology transfer and skills training can constitute major growth
obstacles.
These differences are of critical importance for the national support
strategy. They not only stress the need for some degree of public
sector involvement, but also emphasise the need for explicit
differentiation in the support framework.
2.3.3 In addition to sector-specific differences of constraints, the legacy
of apartheid constitutes an important factor in the inability of
black owned or controlled small enterprises to face business
development constraints. For decades, if not centuries, the majority
of South Africans were deprived of viable business opportunities in
the following ways:
a) Bantu Education restricted opportunities for the acquisition of
technical and professional skills by black people;
b) there was total absence of entrepreneurial education or sensitising
for young people in a way that could encourage them to enter business
and acquire a culture of entrepreneurship;
c) apartheid confined the majority of the African people to homeland
areas which were not only the poorest in terms of living standards and
business opportunities, but also lacked a dynamic business
environment;
d) even outside the homelands the system of apartheid made it
impossible for black would-be-entrepreneurs to participate in business
apprenticeships and partnerships with more established
(non-black-owned/controlled) enterprises;
e) racially segregated residential areas, enforced through the Group
Areas Act, not only uprooted millions from the places of residence and
business, but also led to large capital losses and virtually destroyed
the fabric of black small enterprises;
f) segregation increased the distance between black residential and
working areas, thereby increasing the cost and risk of conducting
business;
g) the drastic curtailment of property ownership rights of blacks made
it impossible for them to acquire assets that could serve as
collateral for loan financing; it also excluded blacks from the
long-run process of capital accrual and growth through rising property
values and share prices;
h) apartheid left no real space for the business involvement of black
women; marriage laws reduced women to unions with no contractual
capacity at all; even though marriage laws have changed, customary law
remains intact and there are cultural, behavioural and attitudinal
constraints which affect women's participation in business,
particularly in rural areas. There are also restrictions in terms of
access to land.
Due to these processes, small business-support policies will for a
considerable time also have to focus on the particular needs of black
enterprises and ways to overcome the remaining consequences of that
legacy. This does not imply that policies should only focus on
black-owned or -controlled enterprises or business-infrastructure
facilities in formerly black-reserved towns, but that policy
differentiation will have to include affirmative elements.
2.3.4 All over the world small business-support policies have become targets
of active vested interest lobbying. All too often government is
pressurised to help overcome constraints, even though enterprises -
either individually or through joint action - could also resolve the
problems. This applies in particular to segments of the small
business community which are well-organised, well-articulated and
skilful in the channelling of their request, thereby laying claim to a
disproportionate part of the limited resources available for small
business support.
This government will not allow the channelling of disproportionate
shares of limited state resources - at both national and provincial
levels - in directions that cannot be reconciled with national
priorities as outlined in the RDP. This will be done through
negotiation and by appropriate legal safeguards and guidelines.
2.4 Past support policies
2.4.1 A number of institutions have over decades developed a limited, often
fragmented range of small business-support policies and programmes,
some operating in competition with each other, and virtually all of
them racially and gender-biased. The parastatal institutions included
the homeland-based development corporations and some specialised
SMME-support agencies (like Transido); furthermore the Development
Bank of Southern Africa (DBSA), the Small Business Development
Corporation (SBDC) and the Industrial Development Corporation (IDC)
as financiers, and some of the commercial banks.
At the level of central government there was little co-operation
extended directly to the black business sector. For example,
government procurement was largely channelled to white businesses.
Most of the university-based small business units, while receiving
financial support from the state, have until recently not succeeded
in effectively addressing the needs of the black small business sector.
In the private and NGO sectors a wide range of small business support
bodies have evolved over the last decade, often operating in
competition with each other. While largely ineffective in their
overall impact, this trend reflects the rise of attention to and
support for small businesses among local stakeholders and donors, and
it is also indicative of a growing stream of foreign aid earmarked for
small business support.
2.4.2 It is mainly due to the diversity and uncoordinated nature of all
these support agencies and efforts - which in themselves need not be
undesirable - that the call for co-ordination, co-operation and a
clear national strategy framework has increased over the past few
years. Lack of legitimacy made it impossible for the previous
government to fulfil such a role, whereas the new government is now
in a position and committed to do so through this White Paper.
2.4.3 In the evolution of these different support agencies, both inside and
outside the former homelands, many different policies and programmes
have been designed and implemented. Some have proved successful,
others have failed and most went through lengthy phases of
experimentation and adaptation. In the context of this White Paper we
have to note the existence of such programmes - including those
related to micro-enterprise lending, interest-subsidised loans,
industrial hives, small business training, mentoring and the
subsidisation of consultants, and for many other problem areas -
without assessing their merits or suggesting their (dis)continuation.
It is only natural that in our forward planning we take into account
experience gained and lessons learned in the past. At the same time
future strategies cannot be based on the assumption that organisations
active in certain fields in the past should necessarily continue with
all their past programmes. A realignment of institutions and their
responsibilities is inevitable within the context of the evolving
national support strategy (see Part Five).
2.5 International input
2.5.1 Throughout the world the small-business sector has been gaining in
significance, also with respect to government support. As far as
specific policies are concerned most of those tried in other developed
or semi-developed countries are also known in South Africa. On the
whole, however, we have not yet effectively absorbed the rich
experience and best practices built up elsewhere with respect to the
operational details and refinements of specific policies and
programmes. In particular, we have largely ignored areas like state
procurement and subcontracting, specialised credit-guarantee schemes
and sector-specific training programmes. The same applies to the
facilitation of co-operative efforts by small enterprises in
particular sectors or niches to strengthen their bargaining positions
or to overcome constraints. We also have to focus far more on
countries with an economic structure more in line with ours, like our
African neighbours as well as Asian, Latin American and Eastern
European countries, rather than those reflecting North American or
Western European structures.
2.5.2 During the past few years some foreign agencies - in particular the
World Bank, the United States Agency for International Development
(US-AID), the European Union, Overseas Development Administration
(ODA) and the Friedrich Ebert Foundation - have given close attention
to the needs of South Africa's black businesses and the design of an
appropriate support strategy. These contributions have also made us
more aware of the diversity of support policies implemented elsewhere
and lessons to be learned.
In response to the Discussion Paper we have once again received
valuable and constructive advice and technical as well as financial
assistance from several agencies and international bodies, i.a. to
facilitate strategy discussions and to help us set up some of the
programmes. These include, in addition to the above, agencies from
the Netherlands, Den-mark, Australia, Singapore, Great Britain,
Ireland, Germany and several other countries.
2.5.3 The government is committed to continue learning from best practices
developed in other countries and suitable to be adapted to our South
African strategy. This will be endeavoured through desk research,
fact-finding missions, joint pilot projects and bilateral as well as
multilateral support from foreign SMME support institutions. The
effective integration of these inputs into the national strategy will
be one of the vital concerns of the Chief Directorate for SMMEs. In
this context, valuable contacts have already been established with the
Southern African Development Community (SADC) commission responsible
for small-business support in southern Africa.
On a more specific level it is noted that semi-developed (Asian)
countries that have over the past decade attained high, sustainable
and egalitarian growth share the following characteristics:
- high priority for the development of reliable statistics on the SMME
sector
- high levels of human capital development
- a strong and broad-based small-scale manufacturing sector
- ready access to information technology
- consistent investment in research and development
- particular emphasis on women's enterprises, which have a strong
orientation towards food security, health and children's education.
All of these aspects also have a high priority in our national SMME
support strategy.
2.6 Research on SMMEs
2.6.1 During recent years research on the trends, problems and needs of
small enterprises among South African universities, technikons and
other research centres has increased significantly. Yet, the volume
of research with a practical orientation and/or policy relevance is
still limited, compared to the needs of this country and our overall
research capacity. This relates in particular to the systematic
development of base data and trend indicators on the SMME sector with
all its complexities. Such reliable data is critical for the
assessment of policy efforts and the planning of policy reforms.
2.6.2 The government hopes that existing research agencies and local as well
as foreign funders will adjust their priorities in order to generate
more of such relevant research. In addition the Chief Directorate and
the other institutions to be established for the implementation of the
national strategy (in particular the SBDA) will actively support such
research efforts. Particular emphasis will be placed on joint
projects between local and foreign research bodies or teams and on
co-operative research projects between different local institutions.
There will also be need for comparative research on the needs for SMME
support in the different provinces and in the different regions of
southern Africa.
-------------------------------------------------------------------------------
PART THREE
Objectives and principles
The need for a coherent national small-business strategy follows
logically from the background problems and challenges outlined in Part
Two. Most of all, there is urgent need for a systematic national
framework, within which the different policies and programmes at
national, regional and local level can be coordinated. Such a
macro-framework is also a precondition for the setting of priorities
and the appropriate allocation of scarce public funds. Furthermore,
it should facilitate the delegation of tasks and responsibilities with
respect to SMME support, the channelling of public as well as
international donor funds to different institutions and the
determination of accountability Finally, a transparent framework
should encourage greater rationalisation of resources and
institutions.
This section summarises the broad objectives, goals and principles
underlying the government's involvement in the support and promotion
of small, medium, micro- and survivalist enterprises. Together they
indicate how the central government intends to approach SMME-related
policy issues and requests for financial and other support from the
small business community. It also reveals how government would hope
to interact with provincial governments, local authorities,
parastatals and, most important of all, the private sector, in order
to achieve coordinated and effective support all over the country
3.1 Objectives of the national small-business strategy
3.1.1 The primary objective of the national policy framework is to create an
enabling environment for small enterprises. Given such an enabling
environment it is expected that the hundreds of thousands of SMMEs
will themselves accept responsibility for the operation, growth and
progress of their enterprise.
Such a national framework will need to be complemented with programmes
developed and implemented at regional and local level. Besides, small
enterprises do not in themselves constitute an economic sector all on
its own. Therefore, policies need to be in tune with national and
regional as well as sectoral developments, taking into account
differences between sectors like manufacturing, tourism or
construction as well as differences between categories of SMMEs.
3.1.2 In addition to this basic objective of the national small business-
policy framework five more specific objectives underlying the support
framework can be mentioned here:
- Facilitating greater equalisation of income, wealth and economic
opportunities
This relates to a strengthening of the labour-absorptive process in
the micro-enterprise and survivalist segments, the redressing of
discrimination with respect to blacks' as well as women's access to
economic opportunities and power, and the facilitation of growth in
black and small enterprises in rural areas.
- Creating long-term jobs
While micro-enterprises and survivalist activities have absorbed large
numbers of unemployed people, they are in themselves not always able
to generate reasonably remunerated long-term jobs. Support for small
businesses has to include steps to upgrade the skill level of SMME
operators, strengthen the use of appropriate, modern technologies and
boost the capacity to create long-term jobs.
- Stimulating economic growth
While small enterprises have the potential to generate economic
growth, this does not always happen spontaneously. It is the task of
a differentiated, sector-focused and growth-orientated small
business-support strategy to address obstacles that prevent small
enterprises from contributing to overall growth.
- Strengthening the cohesion between small enterprises
Public- as well as private-sector support for small enterprises has
clear limitations, given resource constraints. Yet, individually
SMMEs often lack the skills and resources to improve their own
capabilities. It is thus essential that fragmented small enterprises
within sectors, industries, sub-regions or other localities be helped
to network more effectively in order to jointly address development
obstacles, take up opportunities and to build collective efficiency.
Successful examples of strategies based on collective efficiency exist
world-wide, for example in the Emilia Romagna in Italy,
Baden-Wurttemberg in Germany and in some regions in Denmark. Through
these interventions local governments have created conditions whereby
small firms can - through co-operation networks, the provision of
supportive services and infrastructure improvements - compete with the
best of large international firms.
- Level the playing fields between bigger and small business
Market opportunities, regulations and competitive structures have in
the past distinctly favoured larger enterprises and enterprises in
urban areas; the support strategy will help to rectify the imbalance.
At the same time it aims at the greatest possible co-operation and
interaction of these segments of the economy.
3.1.3 Over and above these objectives, the national strategy also aims to
enhance the capacity of small business to comply with the demands
facing South Africa's modernising economy and the challenges of
increasing international competition.
_____________________________________________________________________________
| Table |
| |
| Key objectives of the national small-business strategy |
| |
| - Create an enabling environment for small enterprises |
| |
| - Facilitate greater education of income, wealth and earning opportunities |
| |
| - Address the legacy of apartheid-based disempowerment of black business |
| |
| - Support the advancement of women in all business sectors |
| |
| - Create long-term jobs |
| |
| - Stimulate sector-focused economic growth |
| |
| - Strengthen cohesion between small enterprises |
| |
| - Level the playing fields between bigger and small playing fields between |
| bigger and small business as well as between rural and urban businesses |
| |
| - Prepare small businesses to comply with the challenges of an inter- |
| nationally competitive economy |
|_____________________________________________________________________________|
3.2 Stages of strategy formulation and implementation
Experience from other countries reveals a logical sequence in the
establishment of a support framework. This applies in particular to the
early part of the process, where the following distinct stages can be
distinguished.
3.2.1 Awareness building
The process of awareness building and commitment to goals should include
politicians, labour leaders and public-sector officials at central,
provincial and local government level, private and NGO sector decision
makers, organised business, heads of research and training bodies and all
small business support agencies. The purpose is to reinforce understanding
for SMME support and its importance for the overall development of the
country and to get acceptance of and commitment to the policy framework and
the underlying goals. In this context the President's Conference on Small
Business, planned for March 1995 in Durban, is an event of critical
importance for awareness-building in South Africa.
3.2.2 Needs identification and implementation planning
Once the goals and broad strategy have been accepted, it is necessary to
evaluate and prioritise specific needs within the overall framework and
resource constraints. This should also include the linking of needs, action
plans and efficient delivery systems, the establishment of monitoring and
feedback systems, the commitment of key actors to specific support areas and
the strengthening of co-ordination and networking systems.
3.2.3 Resource identification
This phase can start concurrently with the former and is likely to extend
over a lengthy period. It includes surveys of resources available for SMME
support in each of the nine provinces, the establishment of a national data
bank for SMME-related statistics, an evaluation of the physical
infrastructure presently available for SMMEs and an assessment of the
capacity of existing SMME support agencies.
3.2.4 Strengthening the business and entrepreneurial culture
While progress has already been made in this sphere over the past years,
concerted efforts will greatly facilitate the implementation of the national
strategy. This should include country-wide educational and sensitising
efforts, increased co-operation between business and tertiary education
institutions, and the further expansion of ownership participation of
formerly disempowered people.
3.2.5 Training of support agency staff
This capacity-building process is critical for the success of the entire
implementation process. To be effective it has to be pursued concurrently
with the stages mentioned above, and it has to include all support agencies.
3.3 Setting goals for the national strategy
To become operationally significant, the objectives outlined in section 3.1
would have to be put into quantifiable, specific goals or targets. This is
not possible within the framework of this White Paper, where provincial and
local strategies still have to be worked out and all stakeholders are to be
included in a goal-setting process. Such a task may, in fact, be tackled by
the NSBC and facilitated by the DTI Directorate and the SBDA.
In Part Six of this White Paper some indication is given of the difference
between short-, medium and longer-run goals and what the government regards
as relevant under each.
3.4 Fundamental principles
This section brings us closer to the wide range of issues that need to be
addressed by a partnership of government, NGOs, parastatals and the private
sector in order to promote and support SMMEs. Before we review different
elements of such a framework in Part Four, we have to state a number of
general principles which underlie all these strategy elements and which
will, in general, guide government involvement in this sphere. These
principles should also help orientate the private sector, parastatals, NGOs
and other stakeholders as to the role of government vis-g-vis those other
players.
3.4.1 As indicated in Part One of this White Paper, the framework is based
on a coherent, integrated vision of South Africa's economic development
process. This vision sees the different segments of the SMME sector -
medium and small enterprises, micro-enterprises and survivalist
activities - as closely interconnected parts of the larger economy,
which also includes big(ger) businesses, multinationals, parastatals,
NGOs and other non-business activities. Relative to the other
segments the small business sector has been neglected in the past, and
this should now be redressed, where possible, in line with current
political goals and the guidelines of the RDP This vision of a
dynamic, expanding small business sector has different dimensions;
they encompass sector and industry perspectives, regional growth
perspectives and local development perspectives. Most important, the
vision is based on the acceptance of the market economic system,
private entrepreneurship and a constructive partnership between the
public and the private sector.
3.4.2 Government believes that it is necessary to break away from the
traditional and static approach to small business development based
narrowly on the provision of financial support. We instead are
committed towards a dynamic, demand-driven and creative approach which
in the first instance recognises the multiplicity of needs of SMMEs.
The notion of "real services" is critical to this approach, i.e. that
a wide range of services can be instrumental in enhancing the
performance of small firms.
3.4.3 The need to instill a "fee for service culture" also applies to the
small-business sector; wherever possible services received by
enterprises should be paid for.
3.4.4 The government also feels strongly that small business support has to
be linked to compliance with generally accepted standards of business
behaviour. This relates as much to labour and managerial standards as
it should apply to taxation, sector registration and reasonable social
standards as well as financial and costing disciplines of firms, both
small and medium-sized. The strategy should enable SMMEs to comply
with negotiated and broadly accepted, flexible standards, but it is
also the objective of the strategy to encourage such compliance. This
is felt to be the only way in which SMME support can, in the final
instance, be linked to South Africa's quest for international
competitiveness.
3.4.5 The government believes that small firms can become dynamic and highly
competitive, while striving for socially acceptable labour standards,
adopting new and more efficient technologies and effective work
organisation techniques, and the government is committed to promote
development on this basis. This can be achieved through a range of
organisational practices which include increased co-operation,
co-ordination and networking amongst smaller firms in specific sectors
so that services such as marketing, research and development, skills
acquisition and even production can be shared. Through such
co-operation small firms can achieve, if not surpass
economies-of-scale benefits enjoyed by large firms without having to
become large in size.
3.4.6 It is accepted that the demand side of the small business sector can
be an important factor in SMME growth and development. Thus, the
national framework will include steps to improve access of small
enterprises to state procurement, big business purchases and export
markets.
3.4.7 Another important principle of the new national strategy is the
emphasis placed on black advancement in the enterprise sphere,
including in this context all the groups disempowered through the
apartheid era. This is, however, not an exclusive goal, leaving
considerable scope for other objectives as outlined earlier. Besides,
it is realised from the experience in other countries and lessons from
our own past that there are more effective and less effective ways to
stimulate black business advancement. Thus, pursuing the fundamental
goal of black advancement does not free us from the obligation of
weighing up the merits and risks of alternative support policies.
3.4.8 The scarcity of public resources available for SMME support
constitutes a fundamental constraint upon all support policies. It
also forces us to constantly weigh up the public-sector cost of
specific policies against the expected results of the support
programmes. It is in this sphere where the need is greatest to learn
from practices in other countries, to compare the experience gained by
different institutions in these countries and to look for more
efficient programmes.
3.4.9 Acceptance of the market orientation of our economic system and of the
government's fundamental budget constraints also forces us to look at
alternative funding, the leveraging of public funds, the effective use
of foreign donor funds and technical assistance, the introduction of
tax and other incentives to change private-sector attitudes, and
self-help or local community efforts to support small enterprises.
3.4.10 While the inevitability of budget constraints is stressed here, it is
also accepted as a fundamental principle that the overall share of
budget support available for small enterprises - at central,
provincial and local government level - is currently too low compared
to the important role of this sector in the economy
3.4.11 Given the wide range of constraints or problems experienced by small
enterprises and given their diversity, it follows logically that a
national small business-support strategy will consist of a whole
range of policy areas and even more programmes. Internationally one
also finds a steady increase of specialised support policies, in
particular in the wealthy industrial countries. Such proliferation
of policies also has dangers, like the high cost to the fiscus and
the overlapping of programmes.
In the light of our limited public-sector resources it will thus be
necessary - at least in the initial years - to curtail the range of
support programmes. In fact, to counter the proliferation of
programmes which might result from inter-provincial competition, the
central government may have to set national guidelines for key policy
areas. Preference will be given to policies which strengthen access
to resources and steps to level the playing fields between established
and emergent enterprises. In addition, sunset clauses will have to be
built into programmes in order to prevent an escalation of cost over
the years.
3.4.12 While there can be little doubt about the need to restructure the
have to be gradual. This is necessary since implementation capacity
cannot be created easily, but can be destroyed instantly if
institutions are dissolved. With the implementation of small business
support spread over many different bodies, and with the restructuring
of support agencies coinciding with a restructuring of all the
provincial development agencies, this process is likely to extend over
at least the next two years. In this context the (re-)training of the
staff of different small business-support bodies is quite critical, as
is the evolving composition of staff at managerial level.
3.4.13 As far as the range of development support agencies is concerned, the
government accepts the diversity, both at national and at
regional/local levels. The following institutions are seen as vital
for the promotion of the SMME sector, with some indication of current
and expected reform processes given in Part Five of this White Paper.
- The private sector has to play the most important role, through the
supply of commercialised services for small enterprises, co-operation
and subcontracting between small and bigger enterprises, partnerships,
joint ventures and franchises as well as social responsibility
commitments of the corporate sector related to small business
development.
- The government recognises the diversity of legal and organisational
forms in which small enterprises can be structured. Co-operatives are
one of these forms, distinct from single proprietorships, partnerships
and closed corporations. The government is committed to facilitate
co-operative ventures within the strategy framework outlined in this
White Paper. If necessary, this will include legislative changes to
fully recognise co-operatives as legal entities.
- At central government level the Department of Trade and Industry is
the department primarily responsible for the formulation,
co-ordination and monitoring of national policies related to small
enterprise. In the provinces appropriate government departments as
well as local agencies still have to evolve, in co-operation with the
private and parastatal sectors.
- Parallel to the private, profit-orientated sector, non-governmental
support organisations (NGOs) and business chambers as well as industry
or sector associations are expected to play an increasingly important
role in the implementation of support programmes and the shaping of
policies.
- Foreign donors and multilateral aid as well as technical assistance
agencies already play an influential role in the policy planning and
pilot programme phase. In future it will be important that their
programme support fits into the national strategy and is effectively
integrated with local efforts. Duplication of programmes or the
mushrooming of new agencies, just to suit donor preferences, will be
discouraged, in particular where the discontinuation of foreign
support is likely to create new demands on the public sector.
3.4.14 It is taken as undisputed that an overall economic policy stance that
facilitates high economic growth and fiscal as well as price
stability, constitutes the most significant macro-economic "support
policy" for an expanding small business sector.
3.4.15 South Africa's evolving small business-support strategy and its
general approach towards small business promotion cannot be isolated
from the broader southern African (SADC) scene. Most of our
neighbouring countries currently also grapple with the shaping of a
coherent, effective and feasible small business-support strategy.
The government will actively communicate with neighbouring countries
and/or the SADC about the basic structure of our small
business-support framework and the needs, merits and challenges of
joint support programmes.
3.4.16 Finally, the principles underlying this strategy are not static, nor
is it possible to pursue each one fully right from the start.
Gradualism is inevitable, being a consequence of financial and human
resource capacity constraints. It furthermore follows from the need
to design and negotiate effective, people-centred implementation
processes and systems, which always takes time.
3.5 Targeting support
3.5.1 The vastness and complexity of the small business sector combined with
serious financial and human resource constraints with respect to
support programmes and policies make it essential to focus or target
SMME support. This not only implies that publicly-funded support
cannot be made available to every category of SMME that experiences
problems or faces obstacles, but also that support policies should be
sectorally and otherwise differentiated and packaged to suit the
particular needs and circumstances. Such packages can consist of
specific combinations of support policies of the types outlined in
Part Four of this document.
3.5.2 All over the world it has become customary to develop differentiated,
targeted support packages. The support can be financial in nature or
related to controls, training, export facilitation, etc. In South
Africa there has been a tendency during the 1980s to move away from
complex support packages, on the grounds that they are difficult to
design in a way acceptable to diverse pressure groups, and that their
implementation demands effective organisation and good control
systems, which may be difficult to establish. Yet, the government
believes that on balance they help save scarce public funds and will
be more effective in the targeted areas.
This approach implies not only different sets of support policies to
address problems of medium, small and micro-enterprises as well as
survivalists, but also adjustments for different industrial, services
and primary subsectors. The same applies to the differentiation of
support for women, rural enterprises, school leavers, physically
handicapped people and other special target groups.
3.5.3 Such targeted support packages cannot be designed by the DTI or other
government departments in isolation; they have to evolve out of
preparatory research, close interaction between all the stakeholders
in the target areas, and negotiations between the public sector and
implementation agencies about priorities and funding resources.
Within its financial means the government is willing to consider
motivated requests to assist subsectors or target groups, with the
funding coming from existing support programmes and, if necessary and
acceptable to government, additional direct financial support from
government. Such differentiation places additional demands on the
implementation agencies, yet it is necessary to save public funds,
prevent the distribution of subsidies to those not in need and it can
help to make policies more effective.
3.5.4 It would be futile to draw up a final List of sectors or target groups
warranting support packages, since circumstances may change over time,
funding constraints will influence the range that can be considered
and needs vary between the different regions. The following areas
and/or target groups seem particularly relevant, with emphasis
furthermore on enterprises owned or controlled by entrepreneurs from
formerly disadvantaged communities:
- agro-businesses and small-scale farming and fishing
- small-manufacturers - with focus on clothing, furniture/carpentry,
metal works, arts and crafts, etc.
- small-builders/contractors
- transport-sector operators (taxis, freight carriers, tour operators)
- start-up and expanding enterprises owned by women and, in
particular, women with children
- small-exporters revealing comparative advantages
- small-scale tourism-industry operators
- youth self-employment (with the focus on school leavers and
unemployed youth)
- self-employment start-up efforts by retrenched people and those in
resettlement areas
- rural business start-ups and expanding firms including the retail
sector
- physically disabled people involved in self-employment
- small-scale mining
- small enterprises in disaster areas
- SMMEs in ecologically sensitive activities - small-scale hi-tech
ventures with a strong catalytic role
3.5.5 Depending on the response to these support possibilities the
government might allocate an increasing share of the resources made
available for SMME support towards such integrated programmes. In all
cases the government will, however, only contribute part of the
required programme funds and in doing this will also consider the
compliance of recipients with other principles embodied in this
strategy framework. Detailed attention will also be given to the
development of effective implementation machinery for such sector
support programmes, and for strict controls in the use of funds.
3.5.6 Since the preparation of specific new programmes of targeted support
may take considerable time the government will consider financially
supporting preparatory research and/or part of the cost of pilot
projects in relevant areas. Where possible such applied research and
project planning work should be integrated with programmes undertaken
by foreign donors and other support agencies in the SMME sphere.
3.5.7 Within the context of support targeting the category survival
enterprises deserves particular attention, given its vast size and the
inability of most of the 'self-employed" people to improve their
position. Support can come from basically three directions, viz.
- RDP-related health, education, housing and other social-development
programmes
- efforts by formal (small as well as larger) businesses to draw these
survival operators into the mainstream of business
- targeted SMME support packages related to one of the above
categories
Since many of the survivalists would rather be in employment than
self-employment, improvements in their literacy and skill levels will
get priority in the government's support.
______________________________________________________________________________
| Table 2 |
| |
| Ten key principles underlying the government's national small-business |
| strategy |
| |
| 1 The strategy is based on a joint vision for big, medium and small business|
| in South Africa. |
| |
| 2 All the segments of the small business sector - survivalist, micro-, small|
| and medium enterprises - need attention. |
| |
| 3 The business efficiency and competitiveness of the whole small enterprise |
| sector has to be developed, with due recognition of social, financial and |
| other compliance standards relevant to an internationally competitive |
| economy. |
| |
| 4 An integrated support strategy has to give attention to both the supply |
| and demand side of small business activities. |
| |
| 5 Black advancement in the enterprise sector is a key factor in all spheres |
| of the strategy; special emphasis also falls on other marginalised or |
| disadvantaged groups. |
| |
| 6 The scarcity of public funds demands careful prioritisation of support |
| programmes and the skilful matching of different resources. |
| |
| 7 Support policies will be sector-focused and targeted with application of |
| public funds and full recognition of the market orientation of our |
| economy. |
| |
| 8 The institutional framework for small business support has to be |
| restructured in order to reflect the evolving institutional diversity, |
| the provincial thrust of policy implementation and effective bottom-up |
| and top-down co-operation and co-ordination. |
| |
| 9 Ultimate responsibility for the national strategy rests with the |
| Department of Trade and Industry |
| |
| 10 The private enterprise sector, co-operatives, NGOs. business |
| associations and foreign assistance programmes all have a critical role |
| to play in an integrated small business strategy. |
|_____________________________________________________________________________|
-------------------------------------------------------------------------------
PART FOUR
Elements of the support framework
The active promotion of SMMEs depends on the interaction of a wide range of
actors in an equally wide range of support areas. It ranges from self-help
activities of groups of small enterprises and the abolition of regulatory
obstacles to the better co-operation between small and bigger enterprises
with respect to subcontracting and the granting of direct financial or tax
concessions by central or provincial governments.
In this section of the White Paper the focus is on support areas with a
greater or lesser degree of government involvement. It largely excludes a
more detailed discussion of the many steps that are - or could be - taken by
the private sector, by NGOs or local authorities. This focus on the role of
government can easily create the mistaken impression that government is
determined to follow a top-down, interventionist strategy of SMME support,
which would go against the principles outlined earlier. To prevent such
impression, some reference will also be made to the role of non-
governmental sectors or agencies in specific support areas, without thereby
prescribing the nature of their support action.
The sequence in which the support areas are presented here does not imply a
ranking of their significance. As explained earlier, effective support will
often require a support package consisting of different policies,
tailor-made for specific SMME target groups. Research and more detailed
planning about such support packages and programmes will be the
responsibility of the DTI, together with the SBDA, provincial governments
and the support agencies; with the NSBC likely to comment on the outcome.
4.1 Creating an enabling legal framework
In order to formally recognise the importance given to the small-enterprise
sector in the process of economic reconstruction and development, and to
facilitate policy implementation in different areas, the government is
committed to pass a number of enabling acts. The experience from other
(semi)developed countries in Europe, Asia and Latin America shows that
properly designed acts can play a positive role, as long as the purpose and
principles are clear and phasing-out dates are set for affirmative changes.
It is too early at this stage to detail the number of key acts needed to
create an enabling legal framework. Besides, in some cases changing market
behaviour in anticipation of legal steps may obviate formal legislation.
The following areas, however, warrant serious attention.
4.1.1 A national Small Business Act
This should give formal recognition to the government's involvement in
small business support. It could constitute the statutory base for
the SBDA and other statutory bodies in this sphere. In order to
facilitate the differentiation of support, such an act should also
define the main categories of SMMEs and it could introduce the
principle of automatic phasing out of developmental support (also
known as sunset clauses). The act will also have to address the
principle of SMME membership of some (self-chosen) business
association as precondition for their eligibility of state support.
This act could also incorporate an appropriate legal framework for
those co-operatively organised small enterprises which currently fall
outside existing legislation on co-operatives.
4.1.2 A Transaction and Procurement Act
Market access for small enterprises is a major issue in South Africa
as elsewhere in the world. Voluntary action by large enterprises,
parastatals and government departments can go a far way towards better
market access. Yet, progress may still be rather slow. Legislation
laying down certain conditions and principles - about set-asides for
small enterprises, producers, non-discriminatory public-sector
procurement rules and incentives for big business subcontracting to
small enterprises - could accelerate progress and lead to
participation among all firms rather than only a few progressive ones.
It could also highlight commitment needed from small enterprises and
the supply of support services.
4.1.3 A Small Business Finance Act
A new act, or the addition of relevant clauses to existing
legislation, could address a number of fundamental issues regarding
the access to finance by SMMEs. This could include steps to encourage
existing financial institutions to become more active in the
SMME-market segments, the facilitation of deposit-taking by
lender-NGOs, the recognition of certain non-conventional collateral
types and the widening of scope for more specialised lending and
investment institutions focusing primarily on SMME needs.
These are possible steps in three important areas. The unfolding of
support programmes may necessitate further enabling legislation, for
example in areas related to LSCS, training, taxation and labour
relations. At the same time the government is committed to keep the
small-business environment as market-orientated and unfettered by
burdensome legislation as it is practically possible.
4.2 Streamlining regulatory conditions
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. Since government - at central, provincial, sub-regional and
local level - is responsible for the legislative and regulatory
framework and its ongoing adjustment, it is also its role to assure
the appropriateness of these rules and regulations for the
small-business sector.
All over the world, and certainly also in South Africa, there is
discussion and frequently disagreement about the proper degree of
regulation and deregulation in the business scene. Unduly strict
regulations often harm small and, in particular, emergent enterprises
and benefit the larger, established ones, whereas less regulation may
lead to aggressive competition between market entrants, to the neglect
of worker interests, or to health hazards and environmental
destruction.
4.2.1 Government is committed towards appropriate regulations, which are the
result of transparent, consultative processes, with all the interest
groups having a chance to state their interests and concerns, and with
national economic growth and job creation within the RDP framework the
overriding objective.
4.2.2 Based on this approach the DTI, in co-operation with the Competition
Board, will closely monitor and, where possible or necessary, co-
ordinate and assist the regulatory reform process, with particular
emphasis on the following spheres:
- investigations by different central government departments and
consultations with relevant stakeholders about the appropriateness of
existing and proposed legislation and regulations in the fields of
taxation, labour (including Industrial Council agreements), zoning and
building controls, tendering procedures, training requirements, health
and occupational conditions, etc., and how they can be made more
suitable for small enterprises;
- investigations by the Competition Board about possible small business
constraints inherent in our present competitive structure and how
these could be overcome, either through legislative changes or a more
proactive enforcement of the board's recommendations; in addition to
the matters raised in section 4.1, attention will be given to the
possible need for legislation to strengthen small enterprises in their
access to raw materials and other inputs controlled by monopolistic
suppliers;
- steps taken by provincial and local governments to reduce restrictive
legislative and regulatory conditions.
Through its support for Local Service Centres, the government will
also assure that attention is given to these important issues at
grassroots level and that close interaction is maintained between
central government and grassroots needs. Furthermore, the DTI, in
consultation with the SBDA and the Competition Board, will regularly
review progress in this important sphere and its assessment by key
players in the small business sector.
4.2.3 It is generally known that small enterprises often find it difficult,
financially or for other reasons, to avail themselves of the due
process of law in order to defend their interests. The government is
committed to facilitate feasible avenues of legal assistance that
could help level the legal playing fields for small enterprises, with
particular attention to those disempowered in the past on the basis of
race or gender.
4.2.4 The government will also support steps to reform the current small-
claims-court system, with particular attention to
- increasing the number of court outlet points,
- raising the level of claims falling within its jurisdiction (to
about R30,000),
- integrating it more closely with the legal framework, thereby (i.a.)
providing access to interdict procedures,
- enabling members of closed corporations to utilise the services of
the small claims court,
- strengthening co-operation with the Department of Justice.
4.2.5 Establishing a user-friendly environment also calls for the
simplification and standardisation of documents. This includes:
- business registration and licensing;
- financial and loan applications;
- purchasing and sub-contracting (tender) document;
- export documentation and other commercial documents;
- registration of contracts at fair-trading boards;
- simplified tax return forms for small businesses;
- the collection of industrial data and other statistics.
A task group is to be appointed from among relevant government
departments and concerned parties to study and make recommendations
about the simplification of existing systems and to suggest
improvements. Progress in this area will also be documented in the
annual SMME review.
4.3 Access to information and advice
Lack of access to appropriate, relevant and understandable information and
advice is one of the most important problems of small enterprises, in
particular micro-enterprises, survivalists and small start-up enterprises.
Due to past discrimination and lack of opportunities this problem is most
severe among black entrepreneurs.
The significance of this constraint is recognised all over the world. In
many of the more developed countries the bulk of government-funded
assistance to the small business sector centres almost exclusively around
these needs. In South Africa some progress has been made with the
preparation of information material relevant for small enterprises and the
dissemination of information and advice. Yet, to date the number of
enterprises effectively reached remains small, compared to the vast number
of people involved in self-employment in both urban and rural areas.
4.3.1 As an operational principle, information and advice should be as
focused and sector-orientated as possible and it should be supplied at
grassroots level wherever this can be done. Responsibility for the
preparation and dissemination of relevant material falls on all the
agencies active in the SMME support sector, i.e. public, parastatal,
private and NGO, operating at the national, provincial and in
particular local as well as sectoral levels.
4.3.2 With the help of the national small business strategy, government
wants to get business information and advice within reasonable
distance to all enterprises and to those interested in
self-employment.
The involvement of government will be guided by the following
principles:
- The DTI accepts responsibility for the dissemination of both data
and information related to the national small-business scene, the
strategy framework and the availability of support services all over
the country. This will be done through an Annual Small Business
Report or Handbook, which is to be produced in co-operation with the
SBDA.
- In order to facilitate the systematic spread of business-related
information and advice, the establishment of a decentralised,
country-wide network of Local Service Centres (LSCs) is envisaged.
These will supply more than just information and advice, but that
particular function will be included in virtually all of them (see 5.8
for more details).
- As a rule the government will not be directly involved in the
preparation or dissemination of information and advice. The bulk of
this should be undertaken by private institutions, NGOs and self-help
or group initiatives, with financial support as far as possible within
the constraints of the budget - largely limited to information seekers
unable to meet the cost of such services. Such support will primarily
be channelled via the LSCs.
4.3.3 In many cases the passive availability of information and advice is
not sufficient for the effective transfer of experience. Individuals
operating as mentors and interacting regularly with advice seekers can
be very effective, especially if the advice is focused, the mentor has
extensive experience and is able to communicate effectively with
entrepreneurs. Several mentor advisory schemes are already in
operation. Some are working on a voluntary basis, some are funded
through parastatals, NGOs or local authorities while others are
provided as part of corporate social responsibility. An increasing
number are directly or indirectly linked to normal business relations,
i.e. they are supplier-driven, consultancy-driven or bank-linked, to
mention a few. It is expected and hoped that these mentoring
relationships, which often evolve into more comprehensive
partnerships, will further expand, without the need for substantial
financial support by the state. Where assistance is still necessary
to help emergent enterprises or the survivalist segment, it will also
be channelled through LSCs.
4.3.4 Reliable statistical information is important for the small business
sector, for small-enterprise support agencies and for the central as
well as provincial governments to monitor policy effectiveness and
facilitate forward planning. At present the statistical base is
extremely poor with respect to most aspects of small-enterprise
development in South Africa. The task to upgrade and regularly update
relevant trends cannot be the responsibility of government alone. The
most effective approach will need the co-operation of the following
parties:
- The Department of Trade and Industry (Chief Directorate: Small
Business), which - after consultation with all relevant parties - will
determine the range of statistics to be prepared or monitored by
central government;
- Central Statistical Services, who should collect as much of the
relevant data as is possible within the framework of its resources and
techniques;
- the SBDA, which should focus in particular on support programmes and
related trends;
- provincial governments, development agencies and in particular the
university-based small-business units, who will be encouraged to
closely monitor regional and local trends, within the broad national
framework set by the DTI;
- the Council for Scientific and Industrial Research (CSIR), which is
to be actively involved in the development of the LSC network;
- the private sector, responding to market needs for data or supplying
statistics on a contractual basis to public-sector organisations.
The envisaged Annual Report on Small Business will also contain a
summary and analysis of current trend data.
4.4 Access to marketing and procurement
Small-enterprises usually regard market constraints and the inability to
sell their products and services as one of the most serious obstacles to the
starting of businesses and growth beyond mere subsistence level. This
perception is parallelled by many studies - in South Africa and
internationally - which view market access as a critical factor in business
growth, in particular in the case of entrepreneurs from disadvantaged
communities.
Responsibility for steps to overcome this constraint falls upon many
different groups: individual entrepreneurs and groups of small businesses,
which have to compete with others for the same clients, local government and
business associations, who should reconsider regulations hindering market
access of newcomers, the established business community, who should practise
what they preach by. opening up competition rather than controlling
markets, and public-sector departments as well as big enterprises, who
should re-orientate procurement towards small-enterprise suppliers and
subcontractors. The government is committed to facilitate this complex
process in a number of ways:
4.4.1 Encourage the Competition Board to take the necessary reform steps to
prevent restrictive practices vis-a-vis small enterprises and to make
the Competition Board more accessible to SMMEs;
4.4.2 consider steps which could include tax incentives, procurement quotas,
voluntary commitments, etc., to motivate the big-business sector to
systematically expand its links with small enterprises. In this
respect sector-specific and localised efforts are likely to bear
better results and minimise confrontation, compared to national rules
or guidelines;
4.4.3 propagate and encourage the simplification of tender procedures among
all public-sector and parastatal tender authorities, in order to make
it easier for small enterprises to compete and eliminate gender bias;
several steps in this direction have recently been implemented;
4.4.4 further adjust public procurement practices at central, provincial and
local government levels, and by parastatals, in order to facilitate
the granting of some proportion of contracts to black-owned or -
controlled enterprises, and encourage small-business tendering for
such contracts. In this context the efforts undertaken by the Public
Works Ministry and other government and/or provincial departments
within the RDP framework, to address the unemployment problem through
labour-intensive construction, are also of direct relevance to the
small-enterprise sector. As outlined in the RDP, attention will be
given, wherever practically possible, to the involvement of small
and/or emergent (subcontractors. The DTI will encourage co-operation
between relevant departments as well as private-sector institutions
and NGOs to reach SMMEs and to mobilise training and mentoring support
for small contractors, so that they are able to tender successfully;
4.4.5 facilitate, where necessary the ability of small enterprises to meet
the conditions of such contracts. This will be done primarily through
the support of Local Service Centres and, in particular, business
linkage programmes;
4.4.6 encourage the development of more appropriate small-enterprise export-
support programmes, to either adapt, supplement or replace existing
programmes which are largely tailored towards the needs of the bigger
exporters. Such programmes could cover special finance schemes,
exhibition facilities, new types of export trading houses, adjusted
export credit-guarantee schemes, an expansion of the export marketing
assistance scheme and special training efforts. They should be
sector-specific and locally focused, wherever this is feasible.
4.4.7 All of the above steps will only be effective if small enterprises at
the same time work hard to increase the quality of their goods and
services, diversify their product range in response to changing market
opportunities and commit themselves to the development principles
embodied in this White Paper. Neither government nor bigger
businesses can be expected to purchase products of poor quality or
inferior to other locally produced or imported products. To overcome
these problems it is necessary to integrate supply and demand side
efforts in the small-enterprise sector, i.e. link the above steps
with policy proposals related to training, finance, technological
assistance and sector-support programmes.
4.4.8 Closely linked to marketing and supply problems of SMMEs are issues
related to reasonable access to raw materials and quality services at
affordable prices. There are many ways of addressing these problems,
including bulk purchases by clusters of firms or through sector
associations, assistance to individual firms via extension networks
and the discouragement of supplier monopolies. Government favours a
diversity of approaches, adapted to sector as well as regional needs.
Its support, if necessary, will be channelled through LSCs, business
opportunity centres and other linkage agencies focusing on particular
categories of enterprises.
4.5 Access to finance
In surveys among small enterprises all over the world, access to finance
comes out as one of the most urgently felt needs. This remains true even
though other problem areas (like marketing, technical skills, poor product
quality, weak management, etc.) often aggravate the financial position of
small enterprises and hamper their access to funds.
The financial needs of different types of SMMEs vary widely, with access
problems particularly severe in rural areas, among start-up
micro-enterprises and among those owned or controlled by women as well as
other formerly disempowered groups, and in certain higher-risk business
categories.
The government is committed to strengthen the link between small enterprises
and existing as well as evolving financial institutions, so that available
funds are channelled to areas where they are most urgently needed. Areas
for direct or indirect government and parastatal involvement in the
financial sphere include the following.
4.5.1 Commercial banks
Not unlike other developed countries, South Africa's commercial banks have
in the past been reluctant to provide comprehensive services for the
fragmented, risk-prone and geographically dispersed small-enterprise sector.
This applies in particular to black emergent enterprises, where apartheid
restrictions, forced removals, influx control, migrant labour and job
reservation all militated against the gradual development of bank-client
relations in both the urban and rural areas. It is only logical, therefore,
that commercial banks have for long been reluctant to risk their clients'
funds through loans to and investments in black-owned or -controlled
enterprises.
During recent years there are welcome signs that commercial banks are giving
increasing attention to the needs of SMMEs, with many innovative financing
schemes having been introduced to assist particular types of SMME clients.
Through the DTI and the SBDA proactive contact will be established with
commercial banks to become aware of their longer-run strategy within the RDP
framework of making banking services more accessible to township people and
black enterprises. These contacts should reveal areas where government
might consider more specific catalytic support or greater urge towards
affirmative action, with a Small Business Finance Act one of the options.
4.5.2 SMME-focused financing institutions
About a dozen former homeland development corporations (or their small
business subsidiaries), the SBDC and a few other specialised lending
institutions like Get Ahead, the Informal Business Enrichment Centre (IBEC),
the Informal Business Training Trust (IBTT) and others, have over the years
tried to fill part of the vacuum in SMME funding, with traditional schemes
like gooi-goois and stokvels also playing a significant role. These
institutions are essential for the type of loans where the risk and
transactional costs are still too high for conventional commercial banking
practice.
While government firmly believes that the primary source of finance and
related financial services for the small-enterprise sector should be the
established and newly evolving banking and financial-services sector, and
that taxpayers' funds cannot be used to fill any major gap in the supply of
funds required by the small-business sector, some assistance seems necessary
to fill certain of the funding gaps that still exist.
Support is envisaged along the following lines, with details still to be
worked out in consultation with local institutions and foreign technical
advisors:
- initial start-up equity and overhead cost of these specialised agencies
has to come from local or foreign donors or through a government
(marketing) grant
- concessionary (lower-interest) loan capital for on-lending has to be
provided by local or international wholesale financing agencies (like the
DBSA, the IDC or an evolving small-enterprise finance trust)
- commercial funding to supplement the other two sources, but at
market-related interest rates
- ongoing subsidisation or matching grant finance for aftercare and other
support services necessary to safeguard the portfolios and fulfil a
developmental role.
It is the long-run vision of government that over the years the grant and
concessionary funding share will decline and commercial funding of
SMME-focused financing institutions will increase. In the meantime the
scarcity of government resources demands careful targeting of such
concessionary and grant funding.
4.5.3 Micro-enterprise finance
In addition to the above institutions NGOs have over the past decade become
increasingly involved in the supply of micro-loans and related services to
micro- and survivalist enterprises. In the short run such schemes, which
are highly significant for certain segments of the SMME sector (e.g. the
rural and informal sector) are only sustainable with some grant funding
and/or if the micro-loans are combined with other partially sponsored
support services.
Within its own funding constraints and with due recognition of the goals and
priorities stipulated in this White Paper, the government will continue to
supplement other donor agencies' efforts to help micro-enterprise funding
agencies. Much of this support is likely to be channelled along parastatal,
provincial and local government levels and in interaction with the private
sector. Major emphasis will also have to fall on capacity-building efforts
and the supply of seed capital.
4.5.4 Venture finance
The creation of equity funds to address the equity needs of SMMEs should be
private-sector-driven. The public sector will, however, assist in
capitalising some of the funds targeted at disempowered entrepreneurs with
viable business propositions. This could best happen via SMME-focused
financing institutions.
4.5.5 Credit guarantees
In order to strengthen the commercialised funding of SMMEs, the government
and relevant private institutions are developing an expanded and
differentiated credit-guarantee system, which will be commercially run and
jointly funded. Such a system also offers scope for targeted additional
support to the disempowered, women and other categories of entrepreneurs.
4.5.6 Deposit-taking by lending NGOs
In order to strengthen their ability to mobilise funds for micro-loans and
other programmes, government will look into the feasibility of an expansion
of deposit-taking facilities towards approved NGOs.
4.5.7 Alternative collateral
Given the critical role collateral plays in the attraction of conventional
bank credit, attention will be given to the recognition of other types of
securities and collateral substitutes, especially in the rural areas where
land is communally held and with respect to women entrepreneurs.
4.5.8 Information on access to finance
In as far as lack of knowledge about available financing programmes or the
process of application constrains access for individual small enterprises,
the proposed national network of service centres can also play a significant
role. LSCs could also facilitate the establishment of special local lending
programmes as a form of joint action between financial institutions,
parastatals, NGOs and local authorities or community groups.
4.6 The physical infrastructure
The development and financing of business and industrial premises (shops,
offices, factories, market stands, hawker shelter, etc.) and infrastructure
facilities, including the supply of electricity, water, telecommunication
connections, sewage, street lights, parking facilities, etc., is usually
seen as the responsibility of either the private sector or local
authorities, rather than the government.
Yet, due to the past neglect of the needs of black townships and emergent
enterprises a serious backlog of even basic facilities has emerged in both
rural and urban area and has been identified in the RDP as one of the areas
deserving special attention. Here we refer to the supply of electricity to
businesses, basic services and the road infrastructure in commercial and
industrial areas, facilities for fresh produce and other markets, industrial
incubator structures, telecommunications, postal delivery services and
appropriate business zoning and planning processes.
Recent political changes, the prospects of less violence and crime in the
townships, and the gradual emergence of legitimate local authority
structures have increased the chances for greater private-sector and
local-authority involvement in the improvement of township business
infrastructures. In addition, parastatals like Eskom and Transnet/Intersite
and the regional development corporations are increasingly involved in this
sphere, with funds solicited from wholesale financing institutions, regional
governments or foreign sources. Nevertheless, it seems likely that requests
and proposals in this sphere will figure prominently in local RDP
committees, especially in the rural areas and in new urban townships.
Government support will be guided by the following principles.
4.6.1 Given its limited budget, the DTI is not in a position to directly
channel funds for such projects. Its role will be the monitoring of
needs and gaps in the funding process and the encouragement of close
co-operation between different government departments and levels of
government, wholesale financiers, parastatals and the private sector.
4.6.2 Much attention has recently been given to the need for industrial
incubators (hives) and commercial premises at rentals affordable for
emergent enterprises. These needs can be handled in different ways:
- The incubator (or industrial start-up premises), if not established
through private enterprise, can be viewed as a variation of LSCs, for
which structured support programmes can be developed.
- Existing suppliers of such accommodation, like the SBDC and the
regional development corporations, have to consider the need for and
justification of rental subsidies and the feasibility of such
subsidisation within their own funding as well as other possible
support programmes. The SBDC already has such a scheme, but this may
need adjustments to strengthen its development impact.
- The DTI and/or provincial governments could investigate the scope
for an affordable system of start-up rental subsidies with sliding
scales of subsidisation for specific categories of emergent
entrepreneurs (e.g. small manufacturers and rural hives). Such a
scheme might also help motivate the private sector to construct more
incubators and other small-business premises.
4.6.3 Special attention has to be given to the planning and physical
infrastructure needs of women entrepreneurs. This includes a flexible
planning approach towards home-based enterprises, the provision of
creche facilities close to businesses, and more public toilet
facilities.
4.6.4 In the rural areas and many of the resettlement villages there is
often a critical shortage of built-up work spaces, combined with the
lack of access to electricity, water and telephones. Government
matching-grant funding for physical infrastructure needs (mainly via
the RDP) may have to focus very strongly on these basic needs,
together with efforts to improve transport to remote places.
4.6.5 High crime rates and continuing violence are serious obstacles to
small-business growth since they increase the risks for small
enterprises and often cause major losses of stock, damage to buildings
or reduced turnover. Attempts by central, provincial or local
authorities and other agencies to help establish peace in the
townships and decrease the crime rate should also be seen as important
stimulants for SMME growth.
4.7 Training in entrepreneurship, skills and management
The acquisition of relevant vocational, technical and business skills is
generally regarded as one of the critical factors for success in small
enterprises. In addition, literacy and entrepreneurial awareness are seen
as particularly important to enable people to advance from survivalist
activities into larger and better earning enterprises. With the rapid
expansion in the range and number of small enterprise all over the country,
South Africa faces a daunting challenge in the sphere of
small-business-orientated education and training.
Responsibility for education, training and experience transfers rests on a
wide range of institutions, including the central and provincial tiers of
government, NGOs, parastatals and the private sector. This also applies to
the sphere of entrepreneurship sensitising, the training in skills relevant
to small enterprises in different sectors and industries, and the
acquisition of management experience by small-business owners and staff.
During the past few years the range of training programmes made available
for and relevant to small businesses has expanded considerably. In fact, a
general lack of awareness about the spread of already existing facilities
and what they offer the small-enterprise sector or those interested in a
business career, constitutes one of the shortcomings of the whole training
process.
Bearing in mind the diversity of SMMEs and the wide range of training
suppliers, the governments sees the following challenges as core elements
in a national training strategy for small enterprises.
4.7.1 Knowledge about presently available training programmes has to be
disseminated more effectively to reach entrepreneurs all over the
country. Such information should also help match particular needs and
specific training programmes. The planned national grid of LSCs
should play a significant role in this process.
4.7.2 School curricula and other school-related activities should give more
scope for the inculcation of entrepreneurial attitudes and a general
awareness about self-employment opportunities.
4.7.3 All suppliers of training have to reconsider the nature, content and
effectiveness of their programmes, taking into account the small-
business environment in the different sectors of the economy and
working closely with the business sector. Thus, training has to
become far more sector-specific, focusing on the particular needs and
practical problems of small enterprises. Different programmes will
have to be developed for i.a.
- survivalist entrepreneurs lacking even basic literacy
- micro-enterprises in rural areas, where language capabilities are
critical for the absorption of experience
- women entrepreneurs wanting to focus on particular issues and
problem areas and needing particular time considerations to match home
duties and training
- business and skill needs in sectors like construction,
manufacturing, small-scale agriculture, tourism, etc.
- self-employment problems experienced by the youth, where the
emphasis will have to fall on awareness about opportunities and
development paths
In addition, training should in general help to break with traditional
gender roles in business and skill categories.
4.7.4 Training programmes have to be modular, so that trainees can combine
training from different institutions. Linked to this is the need for
some accreditation of small business-related programmes, in order to
protect trainees and allow training paths. A two-pronged strategy
will have to be considered by the relevant institutions, after
broad-based consultation:
- greater concern for SMME-related training needs and programmes in
the activities of established industry training boards and
- the establishment of a new Informal-Business Training Board to give
particular attention to training issues related to micro- and
survivalist enterprises which are unlikely to be addressed by the
levy-funded Industry Training Boards. This would include issues like
certification, accreditation, matching grants and better co-
ordination of these training efforts.
4.7.5 Raining incentives of different government departments have to be
coordinated more effectively. This will have to include the manpower
training programmes funded by the Department of Labour for the
unemployed, those linked to RDP-funded labour-based construction
projects and others related to subcontracting preferences for emergent
SMMEs.
4.7.6 Serious attention has to be given to the staff training needs of SMME-
support agencies, in order to expand their capacity to handle the
challenges emanating out of this White Paper. Responsibility for this
task rests as much with the tertiary training institutions, including
the small-business units attached to some universities, as it rests
with the broader training community. Once again, the needs of rural
areas and small, community-based NGOs trying to support micro- and
survivalist enterprises have to be addressed proactively.
4.7.7 Parallel to more training efforts it is necessary to expand applied
research about problems, needs and development trends in South
Africa's SMME sector, and about developments in southern Africa.
These efforts should occur in close co-operation with tertiary
education institutions, the business sector and relevant parastatals
and government departments. Given strong interest among foreign donor
agencies and other institutions in this element of South Africa's
development process, the mobilisation of research funds and the
arrangement of joint projects should not be too difficult.
4.7.8 In tandem with increased training there is also need for the rapid
expansion of business-mentorship systems of the type developed in the
past by the SBDC and the International Executive Service Corps (IESC),
but also new approaches like small-industry extension workers. These
schemes should include general, volunteer-type mentorships as well as
sector- or industry-focused technical and business mentoring, with the
cost shared by different stakeholders. The government will channel
its support primarily via LSCs.
4.7.9 Another important avenue for intensive experience exchange are
business internships and traineeships for SMME managers at well-run
enterprises. This approach, which is comparable to apprenticeships
emphasised so much in other countries, also has to be expanded rapidly
in South Africa, with particular focus on black and women
entrepreneurs. Franchises, joint ventures and other types of
partnership agreements can play a similar role and should also be
expanded further in South Africa.
4.7.10 Although the main thrust in all these spheres has to come from the
private sector, government accepts the need for some support. In
order to help co-ordinate initiatives and work out a new approach
towards limited financial support for SMME-focused training, an
institution closely linked to the SBDA will be established as soon as
possible.
4.8 Industrial relations and the labour environment
The relationship between labour and small enterprise is complex and open to
frequent misunderstanding. At one level - survivalist activities and the
majority of micro-enterprises there is little difference between the worker
and the enterprise; earnings generated by the enterprise, net of direct
expenses for material and other inputs, are identical with the remuneration
of the operator, who is usually also the owner and the only worker. In
fact, the majority of these micro-enterprises employ no outside labour; at
best they engage other family members and relatives, with individual rewards
entirely dependent on earnings and the needs of the household. Any
improvement in the business will improve net income and the earnings of the
household.
With respect to small and medium enterprises there is widespread belief that
the relationship between labour and enterprise is adversarial, i.e.
owners/operators want to keep labour's remuneration as low as possible in
order to be able to compete with larger enterprises. Linked to this
perception is an antagonistic attitude vis-a-vis industrial councils, trade
unions, the Department of Labour and other authorities, which are alleged to
artificially increase the cost of labour - thereby endangering the
competitiveness of these enterprises.
A view more in line with the RDP and modem international thinking holds that
more egalitarian labour relations in SMMEs and a participatory style of
management, combined with deliberate attempts to improve the skills base
results in higher levels of productivity, which enhances the competitiveness
of enterprises. Similarly, steps to safeguard the basic interests of
workers should not be confined to the rigid enforcement of existing
industrial council agreements but should seek to develop the industrial
relations system in such a way as to take into account the needs and
interests of small enterprises.
In working towards such a new dispensation for labour in small enterprises,
government will support reforms in the following areas.
4.8.1 The particular needs and interests of small enterprises should be
accommodated through greater flexibility and simplicity in the present
system of collective bargaining. Rather than moving towards blanket
exemptions from industrial council agreements, or a dual system of
collective bargaining, industrial councils should become more
representative of the different industries, including the
small-enterprise segments. Agreements should be negotiated to make
provision for the needs and interests of small enterprises.
4.8.2 Government will support initiatives for encouraging a greater degree
of organisation of workers and employers in this sector as well as
voluntary participation by employers in collective bargaining.
4.8.3 Where industrial councils do not exist, or collective bargaining is
not feasible, government would like to see other appropriate ways
evolving to safeguard minimum labour standards. In fact, adherence to
certain basic standards may in future become a condition of
eligibility for concessionary finance and other services. Attention
will also be given to support programmes to address specific
shortcomings in basic standards.
4.8.4 Where appropriate, survivalist enterprises should have beneficial
access to the services provided by LSCs in the labour sphere.
4.9 Access to appropriate technology
Just like training, finance and business premises, technology is often seen
as an important factor influencing the success of small enterprises, but not
always accessible to them. This applies to both ends of the technology
spectrum, viz. sophisticated technology needed for the competitiveness of
small enterprises in the modern manufacturing and services sectors, and
"appropriate' technology for small enterprises operating in the
labour-intensive, low-skill spheres. Both of these areas deserve more
attention and may justify some government support.
4.9.1 Over the past few years a number of institutions have started to focus
on the technology needs of small enterprises, with the CSIR the most
important parastatal. The DTIs Support Programme for Industrial
Innovation can also be used for this purpose, as could research
sponsored by the Foundation for Research Development (FRD) and more
proactive work by the National Productivity Institute (NPI).
Universities and technikons as well could give greater recognition to
the SMME-related issues and technical research. In fact, the time
seems ripe for a well propagated, multi-year programme, spearheaded by
the CSIR, involving all the relevant bodies, both public and private,
to systematically address small-enterprise needs in the field of
appropriate technology. Much of this will, however, have to be
implemented in the context of specific industry or sector programmes.
Financial commitments of the state will have to await the preparation
of detailed proposals based on broad consultation. Significant
resources may also be forthcoming via foreign donor programmes and
private-sector involvement.
4.9.2 At the grassroots level the proposed network of LSCs would seem to be
the best channel to filter technology information through to
individual small enterprises and to identify needs that warrant
subsidised research. Even here the focus should, as far as possible,
be sectoral, giving special attention to the particular economic
structure and sector specialisation in each LSC neighbourhood. For
example, in the rural areas a lot of emphasis will have to fall on
product development and the introduction of low-cost state-of-the-art
technology.
4.10 Encouraging joint ventures
The needs of small and medium enterprises are often so complex that even a
comprehensive range of support services cannot do justice to all the
requirements. The most effective way to acquire experience and skills,
enter new markets, structure additional financing and meet market
competition is quite often the entering of a joint venture with an
experienced local or foreign partner. This can happen among small numbers
of co-operative partners, it can be a black/white partnership, a big
business/small enterprise link-up, a franchise relationship or some
three-pronged foreign/local venture. Lately, there has been increasing
interest in black/white partnerships and joint ventures incorporating
foreign trade or investment partners.
In other developed countries such joint ventures are far more prevalent than
in South Africa, where racial segmentation, oligopolistic exclusiveness and
sanctions as well as disinvestment have prevented such developments in the
past. Lack of experience and the effect of economic stagnation have also
strengthened distrust around joint ventures in the past.
Political changes and the dawn of a new economic strategy, with its emphasis
on exports, international competitiveness and co-operation at all levels,
are currently generating strong interest in joint ventures, with particular
attention to black-owned or -controlled enterprises. This interest, and the
active involvement of foreign donor agencies and larger investment groups in
the facilitation of such ventures, suggests that there may be no specific
need for public funds for that purpose. This, however, should not preclude
parastatals, like the IDC, the SBDC and the regional development
corporations, from taking up shares in joint ventures, either directly or in
trust for local partners unable as yet to fund the purchase of shares, or
from other types of supportive involvement.
Since there still exists considerable suspicion and fear about the risks and
possible disadvantages of joint ventures and co-operative enterprises, Local
Service Centres might be used to channel information about joint ventures
and other types of partnerships, and facilitate networking at grassroots
level. In addition, the government will explore the need and scope for an
appropriate coordinating mechanism to ensure that foreign joint-venture
initiatives give due attention to black partners, contribute effectively to
capacity building among emergent enterprises and fit in generally with the
RDP framework.
4.11 Capacity-building and institutional strengthening
As in other areas of the socioeconomic development process organised
business has an important role to play in the strengthening of small
business interests. This relates as much to business organisations operating
at national and sectoral level, as it applies to those focusing on the
provincial and local level. Of particular concern are those organisations
that represent the interests of emergent small, medium and micro-enterprises.
Compared to the more developed countries, South African business
organisations are financially weak, and most of them have a very limited
capacity to actually support and strengthen small businesses. A high degree
of fragmentation further weakens these institutions, with the legacy of
apartheid all-pervasive.
In some countries the government has brought about unity, more effective
compliance to development policies and greater financial strength of
organised business through compulsory membership of a national body and the
delegation of certain statutory functions to these associations.
This government is very concerned about the fragmentation and relative
weakness of existing small-business associations. At the same time it
respects the autonomy of organised business, which looks back on a long
tradition of voluntary membership and demand-driven services.
Against this background the government would like to consult with all
relevant stakeholders about developments in, among others, the following
directions.
4.11.1 Each SMME should be a member in at least one business-related
association of their own choice.
4.11.2 There should be freedom of association, combined with the development
of a system of voluntary accreditation (at provincial or national
level) for business associations wanting to be eligible for any type
of government support or involvement in the government's SMME-support
strategy. Through such accreditation minimum standards would be set
with respect to accountability and transparency.
4.11.3 Associations with significant support will be eligible for
representation on the envisaged NSBC.
4.11.4 Accredited business associations can operate as LSCs, if they
maintain the services related to different types of LSCs.
4.11.5 Accredited business associations can also supply other services which
qualify for financial assistance, like training programmes for
particular target groups, micro-enterprise support schemes, raw
material acquisition schemes, etc.
4.11.6 The DTI, SBDA or provincial SMME desks can use accredited business
associations to implement any of the support policies. This is more
likely to occur in rural areas. Such involvement should make the
associations eligible for capacity-building support.
4.11.7 Existing business associations should be encouraged to adjust their
member base and member services, in order to become more
representative and inclusive in terms of gender, race, size of
business, degree of informality and controlling structure.
4.11.8 All accredited business associations should be actively involved in
the planning, implementation and monitoring of SMME-related
development strategies at local and provincial levels, with particular
emphasis on the needs and capacities of the different economic and
business sectors.
4.11.9 Small enterprises should be effectively represented at all tripartite
socioeconomic and RDP-related forums.
4.12 Differential taxation and other financial incentives
Over many years representations have been made for the differential
treatment of small enterprises in order to reduce their tax burden and
facilitate the reinvestment of small-enterprise profits, which are often
the only basis for new investments or the expansion of existing small
enterprises.
South Africa's tax system is currently under investigation by the Katz
Commission on Tax Reform, with several of the proposals contained in the
Interim Report (dated 18 November 1994) applying to small enterprises. In
rejecting several of the requests put forward to the commission, it argued
that too wide a range of tax concessions or concessions offered to poorly
defined segments of the business community will lead to large-scale tax
avoidance and loss of state revenue.
Without committing government at this stage or entering a debate about the
merits of different proposals the following list includes suggestions made
to the DTI for consideration by the tax authorities at this or some later
reform stage. Some of the proposals are alternatives to non-tax support
policies, which could have been included in the respective earlier sections
of this part of the White Paper. Concluding the list are a few other
financial incentives that warrant reconsideration under the appropriate
programmes.
4.12.1 For many years there have been representations for a lower rate of
corporate taxes for small enterprises, comparable to the situation in
the United States and in several other countries.
4.12.2 An alternative to the above is the exemption of a minimum amount of
profit from taxation, in order to encourage reinvestment.
4.12.3 More generous depreciation allowances could have a similar effect to
a tax-free profit level.
4.12.4 Exemptions to or rebates from import duties on manufacturing inputs
and capital equipment could be important to re-exporting small
businesses (like boat builders) where significant cashflow is tied up
in import duties.
4.12.5 With the cost of tax compliance often quite substantial for small
enterprises, it has been suggested that higher write-offs could be
granted for expenses incurred, The same has been suggested for
training, research, technology transfer and export marketing expenses.
4.12.6 To stimulate subcontracting by larger firms and greater volumes of
loans to small enterprises by the banking sector, tax incentives have
also been proposed. This could similarly apply to profit-orientated
research, consultancy, training and technology transfer institutions
who are to be encouraged to shift their focus to SMME-related issues,
even though those clients are not able to afford the same fees.
4.12.7 Tax incentives have also been suggested to help overcome the gender
bias of larger firms and service establishments vis-g-vis SMMEs owned
by women.
4.12.8 A different type of proposals relates to the normalisation of tax
arrears of SMMEs, including those involved in VAT, income tax, import
duty and other tax non-payments. As in the case of bond and rental
arrears such steps can only be undertaken in a concerted way, with
full acceptance of all tax dues after the moratorium. If managed
successfully, such a normalisation might open the gate to far higher
future levels of tax compliance, especially if the transition happens
during an upward phase of the business cycle and coincides with other
SMME support action. To strengthen future compliance, eligibility for
all public-sector support would be made conditional to such
compliance.
4,12.9 At local authority and Regional Services Council (RSC) level the
differentiation of rates and user charges could also be an instrument
for the promotion of small enterprises.
4.12.10 In the industrial sector the industrial-development incentives
granted under the Regional Industrial Development Programme (RIDP)
have for many years largely excluded small enterprises. More recently
an adjusted set of simplified incentives (Small Enterprise RIDP/SRIDP)
has been made available to smaller enterprises, without attracting
vast numbers of applications. Where the RIDP is as a whole under
reconsideration, the particular needs of small-scale manufacturers may
call for a totally different application of funds available for that
sector. The DTI is currently negotiating the transfer of the SRIDP
allocation to the Directorate for the targeted assistance programme.
4.12.11 The same remarks about the RIDP can apply to export incentives
provided under GEIS and the EMA scheme to small-scale exporters. To
reach a large number of SMMEs, a sector or niche-focused
export-facilitation process may be far more economic than cash
payments to a few applicants.
4.12.12 Finally, direct funding supplied to accredited training institutions
under the Department of Labour's unemployed training programme has
been criticised on the same grounds. If channelled through provincial
SMME desks, sector associations, regional development corporations or
other sector-focused channels more effective use may be made of those
funds.
Government is interested to have all of these proposals and issues
discussed in the relevant bodies, including the NSBC. As far as the
Katz Commission's proposals in the Interim Report are concerned, the
following two are particularly relevant to SMMEs:
- a non-compulsory once-off tax amnesty;
- further investigation should be undertaken on the possibility of
initiating an incentive for investment in small firms, similar to the
UK Business Expansion Scheme.
-------------------------------------------------------------------------------
PART FIVE
Institutional reform
The responsibility for support and assistance to medium, small, micro- and
survivalist enterprises falls upon a wide range of organisations,
associations or agencies. They include all levels of government, a whole
range of parastatals, a large number of NGOs and community-based
organisations (CBOs), the full spectrum of business associations, an
increasing number of private institutions and several foreign donor
agencies. The commitment to this national strategy and the degree of co-
operation between all these organisations largely determines the
effectiveness of our national small business-support system, which was seen
as being critical for the rapid unfolding of the South African small-
enterprise sector.
The government has no intention to curtail this diversity of support
agencies, but it has every intention to make sure that scarce public
resources are channelled in the most effective way through this system.
This section outlines an institutional framework designed to achieve these
goals.
5.1 The Department of Trade and Industry (DTI)
5.1.1 Within the national government the DTI is the coordinating body for
all policies related to the small business sector and for all
SMME-support programmes directly or indirectly assisted by the
government. It is also responsible for the co-ordination of small
business strategies pursued by the provincial governments within the
national policy framework.
5.1.2 A Chief Directorate for Small Business will be established in the
department, to incorporate the existing unit for small business and to
be responsible for all matters related to the government's support for
small, medium, micro- and emergent enterprises.
5.1.3 Co-operation between different government departments in matters
relating to small business support will be monitored by the DTI, using
appropriate channels and committees. An Interdepartmental Committee
on Small Business has already been established.
5.1.4 Given the growing importance of foreign investment to South Africa -
also to the small-business sector - the DTI Chief Directorate will
maintain close links with the Investment Centre recently proposed by
the department.
5.1.5 With only a small staff the Chief Directorate will rely on the close
co-operation with the NSBC, the SBDA, the provincial SMME desks and
regional development corporations to further detail, plan and
implement the different support strategies outlined in this White
Paper. This will always be done in close interaction with the SMME
sector itself and its representative bodies.
5.1.6 The DTI will maintain strict control over organisations receiving or
channelling public-sector funds for small business support. Each
project's funding will be based on agreed upon Terms of Reference and
a Memorandum of Understanding. Monitoring and evaluation on an
input/output basis will be done at the end of specific project phases,
and will be based on mutually agreed and objectively verifiable
indicators. Recipients of financial support will be under contractual
obligation to utilise the funds strictly within the framework of the
respective programmes.
5.1.7 At the end of each financial year the DTI will conduct a detailed
evaluation of 20 per cent of the organisations who receive financial
support from the public sector. The organisations will be randomly
selected. The evaluation will be conducted by the DTI itself or by an
appointed agency. Sufficient funds will be allocated for the
evaluation of programmes.
5.1.8 In Part Seven of this White Paper future funding options for the
strategy outlined are briefly discussed. The bulk of the public funds
are likely to be channelled through this department.
5.1.9 The department, in co-operation with the SBDA, will prepare an Annual
Small Business Review, to be tabled at the NSBC and in parliament.
This document will, among others, outline progress made over the year
in the different problem areas and with all the support programmes.
It will also set bench marks for progress in South Africa's SMME
sector and try to quantify macro trends. The first review will also
contain a summary of the March 1995 conference and should appear by
mid-1995.
5.2 The National Small Business Council (NSBC)
5.2.1 Given the wide diversity of support agencies, business associations
and public-sector bodies involved in support of and assistance for
small enterprises, and given the complexity of the small business
sector, it has been agreed upon that an inclusive National Small
Business Council be established as soon as practically possible, most
likely within the broader ambit of the National Economic Development
and Labour Advisory Committee (Nedlac), The NSBC will, in close co-
operation with the DTI, sanction the national small business-support
framework and become an effective national sounding board of small
business interests and concerns.
5.2.2 Initial proposals for the role, functions and composition of the NSBC
are currently under discussion with Nedlac and other relevant
stakeholders. Based on the principle of stakeholder representation
the council will be autonomous of government and consultative in
nature, but it will operate in close interaction with relevant central
as well as provincial government departments.
5.2.3 Organised business, NGOs active in the SMME sphere and parastatals
involved in support for small enterprises will also be represented on
the NSBC, which is likely to meet at quarterly intervals.
5.2.4 The SBDA will provide the secretariat for the NSBC.
5.2.5 The provincial governments will be represented on the NSBC; it will,
however, be left to them to decide what other consultative bodies they
establish at provincial level to co-ordinate and steer small business-
support activities.
5.3 The Small Business Development Agency (SBDA)
5.3.1 In order to co-ordinate and facilitate the implementation of the
different strategy areas that form part of the national small-
enterprise strategy, the government will establish a new Small
Business Development Agency, operating separate from the DTI though.
closely linked to it.
5.3.2 The SBDA will consist of a number of autonomous operational units or
subsidiaries, with each an executive director at the head. Some of
these units will be located at the agency headquarters, whereas others
could be located in other provinces or towns.
5.3.3 The agency will be a not-for-profit entity, with a board of directors
not exceeding 16, including the chief executive officers of all the
operational units as executive directors and a small number of
external non-executive directors, including the Chief Director for
small businesses of the DTI as well as directors representing key
stakeholder groups.
5.3.4 While details about the SBDA are still being worked out and under
consultation, the following operational units seem likely to evolve:
- a Property Trust (taking over some of SBDCs property assets)
- an SMME Finance Trust
- a co-ordination unit for Local Service Centres
- a credit-guarantee facility (taking over SBDCs credit-guarantee
scheme)
- a unit to co-ordinate sector-support programmes
- an SMME export-support programme
- a Training and Information Unit
- a Programme Development and Administration Unit (the core unit,
which also includes the NSBC secretariat)
5.3.5 Each of the SBDA units will be funded differently, in line with the
nature of the activities. Initially, public-sector assets taken over
from the SBDC will constitute the financial base of some of the units,
with others funded by donor contributions or allocations from the DTI.
The principle of differentiated funding and unit-autonomy will also be
maintained in future, with only basic overheads and the core unit
financed through the DTI. In this way each of the units will have to
explore the full range of financial resources and adjust its
activities according to its means.
5.4 Wholesale funding agencies
A number of national development agencies have in the past played a
significant role in the provision of capital and recurrent funding for
small-enterprise support programmes. In some cases, like the IDC and the
South African Foreign Trade Organisation (Safto), these programmes have been
implemented directly by these bodies, whereas others, like the DBSA, the
Independent Development Trust (IDT) and Kagiso Trust, channelled their funds
through provincial or local implementation agencies which can be viewed as
"retailers". The latter included regional development corporations (like
Transido, KFC, BNDC, CSBC, etc.), NGOs and CBOs.
The Small Business Development Corporation operated both as wholesaler
(channelling some of its funds to NGOs) and as retailer (at times even
considering loan funds from the wholesalers).
While the government is keen to see some rationalisation and streamlining of
the complex structure of national, regional and local funding and
implementation bodies, the present structure can only change gradually. It
is therefore foreseen that the wholesalers will continue to supply
concessionary funds for implementation agencies at regional and local level.
At the same time, close co-operations between the SBDA units and these
wholesalers should help to bring about a gradual streamlining of the funding
process.
5.5 Restructuring the SBDC
Since the release of the Discussion Paper in October 1994, considerable
progress has been made to restructure the SBDC on a basis acceptable to key
shareholder groups, including the government. While details are being
worked out, the likely changes most relevant for this White Paper can be
summed up as follows:
5.5.1 The corporation will continue to exist as a private-sector-dominated
partnership of government and the corporate sector.
5.5.2 The SBDC will narrow the focus of its activities to the financing of
viable small enterprises.
5.5.3 Programme funds made available to the SBDC over the past decade (but
not incorporated in its share capital) will be returned to government
with the SBDA to be the main channel.
5.5.4 The SBDC will co-operate with the establishment of the different SBDA
units, providing technical and other support and assisting in the
operational running on an agency basis as long as this is required.
5.5.5 The government's shareholding of the SBDC will be held by the SMME
Finance Trust, which will also be able to operate as a wholesaler for
other SMME finance agencies.
5.5.6 The SBDC will continue as a national institution with a regional
office network. The extend to which this network of six regional
offices will expand to cover every province or be reduced in order to
allow other regional development corporations to take over some of the
functions, will be determined by developments at provincial and
national level.
5.5.7 Regional committees will be transformed into regional boards, with the
composition of the board to include provincial development agencies,
the provincial government and the private sector.
5.5.8 The SBDC's organisational structure, finance policy and management
culture will be reformed, in particular with respect to
- the composition and powers of various committees and board
structures; the highest decision-making structure will have to reflect
its target group;
- the composition of the loan book; it has to move away from a 30/70
structure of black/white loan volumes;
- the structure of the corporation's senior staff.
A compromise along these lines should safeguard the continuation of
SBDC services, yet allow a new national and regional structure to
evolve over the next two years. At the same time it should be clear
that in future public-sector support funds will be channelled strictly
in accordance with the principles established in this White Paper.
Where appropriate, the SBDC will be used to implement such programmes,
just as other organisations capable to do so will be used.
5.6 Small-business support at provincial level
5.6.1 This White Paper has outlined a national strategy to support small
enterprises, based on the explicit understanding that responsibility
for such support is shared between national and provincial
governments. In fact, it has been stressed that the devolution of
responsibilities goes much further, with attention falling
increasingly on the local level of government and non-governmental
agencies.
5.6.2 Responses to the Discussion Paper indicated that provincial
governments, regional development corporations and organised business
feel strong about their partnership role in the shaping of support
policies and their adaptation to local and provincial needs and
circumstances. Such differentiation is plausible and can be achieved,
but it also has distinct risks and limitations. Thus,
- much of the funding for SMME support at provincial level, including
the provision of share capital for development corporations, will have
to come from central government;
- certain of the publicly funded programmes - like export subsidies,
credit guarantees and the subsidisation of core programmes - will have
to be uniform for all the provinces in order to prevent confusion
and/or competitive "bidding' for higher incentives;
- not all the provinces have the capacity to develop "own" programmes
and effectively control their implementation;
- costly overlaps of programmes and implementation staff should be
prevented.
5.6.3 Thus, much of the policy implementation will be planned at national
level (by the DTI or the SBDA units), with the active and continuous
participation of provincial representatives, but it will be
operationalised at grassroots level through a whole range of
organisations. Regional development corporations and regional SBDC
offices may be the most suitable bodies for some of the implementation
tasks, whereas existing or new training bodies may be suitable for
others, Local Service Centres for another few, and so on.
5.6.4 It follows from this approach that the provincial SMME desks, which
have been proposed in the Discussion Paper and which are likely to
evolve from now on, will remain small, with their main focus on the
effective linking of national or sectoral programmes and local or
regional implementation bodies. They should also facilitate
forum-type contact between all the SMME stakeholders in the provinces
and channel their grievances or proposals to relevant implementation
or policy-making bodies. Through their representation on the NSBC the
SMME desks are, in fact, playing a critical role in assuring the
grassroots orientation of our national SMME strategy.
5.6.5 Each of the provinces has one or more development corporations
focusing (i.a.) on the needs of small enterprises. The future
relationship between these bodies has to evolve in the light of
regional needs, the relative significance of each and the existence of
other bodies, like the SBDC, IBEC, Get Ahead, etc. In several
provinces the merger of existing development corporations is currently
under consideration. Where all the shares are held by the state
(formerly the homelands and now the provincial governments) such steps
are logical, even though top-down mergers do not necessarily improve
operational efficiency or strengthen the focus of operations. Thus,
it is possible that other considerations - like the involvement of the
private sector, the differentiation of functions in particular areas
or the existence of other bodies - may soon lead to tendencies in the
opposite direction, viz. a partial privatisation, unbundling and
stronger geographic, sectoral or functional focusing of the
corporations.
None of these processes should be prevented or accelerated unduly. It
will probably take another two years for an efficient support
structure to evolve in each region. In this process one or other
organisation - the provincial SMME desk, one of the evolving
corporations or a broadly-based NGO - may crystallise out as the most
effective coordinating instrument for SMME support in the province.
5.7 Local authorities
5.7.1 All over the world there is increasing realisation that the most
effective level for the promotion of SMMEs is the village, town, city
or metropolitan area. Local authorities have direct "contact" with
each enterprise, down to those involved in survival activities, and
their administrative infrastructure could be useful for the
implementation of support programmes.
5.7.2 In our past, local authorities have seldom played a significant
supportive role with respect to SMMEs. More recently there is greater
understanding and tolerance in matters like informal markets, hives
and incubators, flexible zoning, business-infrastructure facilities,
etc. This trend is likely to increase rapidly, as the composition of
elected local councils changes and new municipalities struggle to
increase local job creation and rates-generating business activities.
5.7.3 Once again, this White Paper cannot prescribe to local authorities how
they should structure their support for SMMEs. Many of the principles
and programmes outlined here should be of direct relevance to local
governments. Besides, NGOs, organised business, LSCs (assisted by the
CSIR) and the development corporations are also important players at
the local level. The real challenge actually lies in the effective
orchestration of all the efforts of these bodies, together with the
programmes implemented via the SBDA and other national agencies, in a
way that local economic development is strengthened and small
enterprises are supported.
Where local authorities - or other local institutions, like community
development corporations or business chambers - play a proactive,
facilitatory role in this co-ordination process, they can be of great
help to the provincial desks as well as the SBDA (which will most
probably establish a section or unit for local SMME-support
programmes). Where no such inclination exists, the provincial desks,
the SBDA and other local, regional or national agencies may have to
play a more proactive role in those local areas, at least until
attitudes change.
5.8 Local Service Centres
One of the most important instruments to spread support for small
enterprises at local level is the envisaged nation-wide network of Local
Service Centres (or, more appropriately, called Business Service Centres).
Following on the strong positive response to this proposal in the Discussion
Paper, a task team coordinated by the CSIR, which also includes foreign
experts in this field, currently investigates the preconditions for the
evolution of such a nation-wide network. Based on the already existing
range of information or service centres established and run by a diversity
of organisations, the strategy aims at its expansion towards a fairly dense
national grid. The team will also prepare proposals for a support programme
for LSCs and the structuring of a monitoring and co-ordination body to lead
the whole initiative. The following points summarise the essence of the
envisaged approach.
5.8.1 The LSC network should enable the government's small enterprise
support, and that of other support agencies, to reach all corners of
our country.
5.8.2 The LSCs should have as lowest common denominator the provision of
information and advice services to small enterprises in their
vicinity. To achieve operational efficiency and maintain acceptable
standards of service, Local Service Centres have to be accredited with
the SBDA (or an appointed agency) in order to be eligible for
government support.
5.8.3 In addition to the common services of business-information centres,
LSCs - which can be set up by any type of SMME-support agency or
through any local initiative - can each expand their services to
include (i.a.) training, mentoring, business plan preparation,
marketing and subcontracting support (e.g. the Business Opportunity
Centres), etc.
5.8.4 Each LSC has to have its own control structure, with accreditation
likely to demand proof of accountability and transparency.
5.8.5 The government will not be responsible for the funding and/or
management of local service centres. It may, however, on the basis of
criteria and guidelines still to be worked out, financially support
some of the activities undertaken by certain of the centres. Such
support will be conditional to the centres meeting specific conditions
and remaining registered with the SBDA.
5.8.6 In order to make available support services of good quality, the LSCs
will be encouraged to enter franchise-type relationships with the
suppliers of information, advice, training and other services. The
government (via the SBDA) may consider to financially assist these
franchises with respect to programmes directly relevant for formerly
disempowered entrepreneurs or LSCs in low-income urban or rural
communities.
5.8.7 As far as practically possible, LSCs should encourage groups of small
enterprises to strengthen their co-operation within particular
sectors, industry niches or geographic regions. Training and
mentoring efforts to strengthen such group action may also qualify for
some support.
5.8.8 As soon as the LSC concept has been detailed and accepted, multi-year
targets will be set. Ideally, LSCs should be located within easy
access to SMMEs in every province and district. LSCs should also be
able to link clients to other centres or information facilities in the
country, using computerised exchange networks.
5.8.9 Compared to all the other policy areas forming part of the national
strategy, the establishment, maintenance and gradual expansion of a
national grid of LSCs will constitute the most important vehicle for
small business support in the near future and it is likely to demand a
substantial share of public sector funding for the small business
field. It should, in fact, be the one programme that can best help to
integrate services available for small enterprises at the local level.
5.9 NGOs and small-business support
Many NGOs are actively involved in small business support, with their
funding coming from local or foreign sponsors. While it is not foreseen
that these NGOs will in future be fully funded by either the DTI or other
government departments, they should be eligible for programme funding with
respect to areas of their expertise. In addition, NGOs could function as
LSCs, with some of their activities directly assisted by government. Those
wanting to be eligible for support will have to be accredited with the SBDA.
5.10 Organised business
Reference has been made earlier to the important role chambers of business
and sector or industry associations play in the support of SMMEs. This
trend is likely to increase further, in line with trends towards more
inclusive membership structures. Business associations can also play a
critical role in the planning and successful implementation of the LSC
system. Where they directly supply services to their clients which are
related to state-assisted programmes, these associations - if accredited -
should also be eligible for support.
-------------------------------------------------------------------------------
PART SIX
Action programme
We have so far outlined the different elements of the national SMME-support
strategy and the evolving institutional framework through which the strategy
should be implemented. We can now look at the process of strategy
implementation based on a broad time framework.
6.1 An integrated view
In order to put the strategy process into an overall perspective, the
Diagram on page 50 illustrates the link between the enabling environment and
the institutional support framework, the two aspects covered in Parts Four
and Five of this White Paper. Guided by the overall vision of growth and
development promotion (A) within the RDP, the hundreds of thousands of small
enterprises (B) operating in the economy so far dominated by big business,
multinationals and parastatals (C), should gradually face an improved
business environment (D), due to the impact of the different support
agencies (E).
While general support, like better access to finance, training, marketing,
etc. would benefit all SMMEs in the particular sphere, it is a central part
of the government's policy that, as far as practically feasible and
financially possible, specific target areas should be supported on the basis
of tailor-made support packages. The target areas (F) have been mentioned
in section 3.5, and further references have been made in later sections.
The elements of these packages will depend on the particular needs and
problems of the target groups as well as resources available. As a rule,
the package elements will consist of combinations of policies discussed in
Part Four (D).
It should be clear that all these policies, institutions and systems cannot
be developed overnight. Even with a vigorous approach by government, it
will take a few years to address all the aspects in the enabling environment
and to establish all the support agencies. A ten-year horizon will be
needed to reach all the target groups through systematic programmes. By
then it should be possible to start phasing out some of the targeted
programmes and to reallocate resources.
Given the diversity and complexity of issues, policies and support agencies,
it is not possible to spell out clearly how the government will go along to
implement this framework. After all, much will depend on the co-operation
of the private sector, NGOs and parastatals with their support action. Yet,
within a broad time framework the following action programme summarises the
government's commitment for the road ahead.
6.2 Short-term: Action since mid-1994
The activities listed below have started after the change-over in government
and they are likely to dominate the scene up to April 1995.
- Preparation of the Discussion Paper and analysis of grassroots feedback
- Initiation of institutional reform processes (e.g. SBDC)
- Preparation of the White Paper and confirmation by cabinet and parliament
- Interim Committee for the NSBC
- Preparations for the establishment of the SBDA
- Presidential Conference on Small Business with implementation proposals
- Establishment of Chief Directorate in the DTI
- Assessment of existing business-service facilities and planning of LSC
strategy
- Start of re-orientation of state procurement toward small-enterprise
suppliers
During this period no additional budget funds were available; most of the
initiatives were funded via foreign support.
6.3 Short-term: Fiscal year 1995/96
The tentative budget is likely to cover R180 million including RDP
allocations, supplemented by foreign donor funds. The following action is
scheduled:
- Establishment of the NSBC within the Nedlac framework
- Establishment of the SBDA
- Establishment of the SMME Finance Trust
- Implementation of SBDC reforms negotiated early in 1995
- Preparation of legislative proposals (enabling acts)
- Negotiation with provinces about their role and resources in SMME support
- Preparation of the first SMME Annual Review (October 1995)
- Development of key support programmes (via the SBDA)
* Black advancement
* Local Service Centres (core grid)
* Expand the credit-guarantee scheme (positioned outside the SBDC)
* Export-support strategies
* Co-ordination and accreditation of training
- Focus on initial high-priority target areas (Phase I)
* Women entrepreneurs
* Youth self-employment
* Planned rural infrastructure development, also focusing on the needs of
SMMEs
6.4 Medium-term developments 1996/97 - 1997/98
These will be the first two budget years prepared after acceptance of the
White Paper. This should enable a substantially higher budget allocation.
The following priorities seem logical.
- Develop a systematic funding framework for SMME support
* and communicate this to the SMME community and the NSBC
- Develop monitoring and evaluation systems for programme assistance
- Expand access to finance for micro-, survivalist and small enterprises
- Expand the LSC network grid
- Facilitate the development of further sector and target programmes (Phase
II)
- Strengthen the capacity-building process, in particular for
* provincial SMME support staff
* business and sector/industry associations
- Expand links with the SADC countries in SMME support areas
6.5 Medium-term developments 1998/99 - 1999/2000
At this stage the full spectrum of enabling policies should be in place and
all the support agencies should function. It is now a question of reaching
out to all parts of the country and strengthening existing programmes.
- Further expand financial resources for SMME support (especially joint
funding)
- Broaden core programmes (access to finance, etc.) to reach all parts of
South Africa
- Systematically expand sector/target programmes (Phase III)
- Start shifting emphasis in SMME support from central/provincial to local
economic development
- Regularly monitor and adjust existing programmes
- Expand interaction with the SADC and other African countries as well as
multilateral bodies
6.6 Longer-term action 2000 to 2005
Much of the action will be determined by the progress made up to 2000, the
unfolding of targeted programmes and the provision of resources.
- Further expansion of target programmes (Phase IV)
- Beginning of the phasing-out of some programmes (sunset clause to become
effective))
- Ongoing streamlining of the institutional framework
Diagram: The national SMME-support strategy in perspective
____________________________________
| A |
| Economic and development vision |
| Objectives of SMME support |
| Principles of support by government|
|____________________________________|
|
____________________ ________________|_________________ _________________
| D | |Big business | "The economy"| | E |
|Enabling Environment| | | | |Institutional |
|-Legislation | | C | |support framework|
|-Regulatory | | | |-DTI |
|-Information+Advice | | _____________ | |-NSBC |
|-Access to finance, | | | | | |-SBDA |
| markets, training, | | | SMMEs | | |-Provincial go- |
| technology |-|---- | | ---|-| vernments |
|-Physical infra- | | | B | | |-Parastatals |
| structure | | |_____________| | |-Local economic |
|-Taxation | | | | development |
|-Joint ventures | | | |-LSCs |
| | | | |-NGOs |
| | | | | |-Organised bu- |
| | |Parastatals | Multinationals| | siness |
|____________________| |________________|_________________| |_________________|
|
_________________|__________________
| |
| F |
| Target areas for packaged support |
| women, black people, rural areas, |
| youth, small manufacturers, |
| farmers, traders, etc. |
|____________________________________|
- Further decentralisation of support to local/sector levels
- Shift of the balance of support from government to private sector
- Expand efforts to assist survivalist enterprises to move into
micro-enterprises or outside employment
The further detailing of this preliminary action programme will take place
during the presidential conference at the end of March 1995. Systematic
reviews and policy previews will also be contained in the Annual Small
Business Reviews to appear during spring of each year.
-------------------------------------------------------------------------------
PART SEVEN
Funding the national strategy
7.1 The challenge
This White Paper presents a comprehensive strategy for SMME support,
including a wide range of possible programmes. Its goal is to reach small
enterprises across the country, and to achieve a significant and lasting
increase in the role of SMMEs in South Africa's growth and development.
Substantial financial resources will be needed to implement the proposed
strategy - undoubtedly much more than the resources made available in the
past, when SMME support reached only a small fraction of the small-business
community.
This need arises at a stage when fiscal discipline is critical for the
achievement of stable growth in South Africa, while strong competition
between the financial demands of different RDP sectors - like education,
health, housing, water supply, etc. - make it extremely difficult for
government to respond to demands for disproportionately high increases in
allocations.
There is ample evidence that public-sector funding for SMME support has been
extremely low during the past decades. Direct spending via the Department
of Trade and Industries has seldom been higher than about R60 to 80 million
p.a., whereas total government and parastatal allocations for SMMEs all over
the country (including the former homelands) may still have been less than
about R700 million, or 0,6 per cent of gross budget spending in 1993/94.
The situation was further aggravated by the fact that a relatively large
part of the loan funding for SMMEs benefited entrepreneurs who could easily
have been financed through normal commercial channels.
With DTI spending on SMME development in the 1995/96 fiscal year expected to
reach R180 million, a major upward shift will have occurred in the state's
commitment towards the sector. The increase reflects the combination of RDP
allocations of R100 million and regular departmental funds of R80 million.
Leaving aside departmental expenses, funds to operate the NSBC and an
operational grant for the new SBDA, a total of about R140 million is
earmarked for support programmes related to (i.a.) information centres,
micro-finance and credit guarantees, targeted assistance programmes and
institutional capacity building.
In order to mobilise all the available resources and co-ordinate programmes
optimally, the department intends to closely monitor all the funding
earmarked for small-enterprise support by different state departments. This
also includes close co-operation with the provincial governments.
7.2 Funding sources
All too often are requests for SMME support equated with "government-funded"
assistance, and is it expected that the central government has to somehow
find the necessary funds. In the different strategy sections of Part Five,
emphasis was already placed on the diversity of support programmes and an
equally wide spread of possible funders. In order to get this diversity and
its significance into perspective we briefly List the full range of funding
sources for SMME support programmes and support action. To stress the fact
that central government budget funding is only one of the sources, this
category is shown last on the List and self-help programmes first.
7.2.1 Self-help activities by groups of small businesses, operating as co-
operative or in loose associations (e.g. to facilitate marketing or
experience exchange).
7.2.2 Community self-help programmes to facilitate self-employment or the
start-up of enterprises (e.g. youth schemes in rural villages or
urban neighbourhoods).
7.2.3 Private-sector-funded (profit-orientated) services to SMMEs, e.g.
- credit through commercial banks or specialised institutions
- joint ventures, franchises, partnerships
- corporate social responsibility programmes
- business link-ups (subcontracting from bigger businesses)
- consultancies for SMMEs, including voluntary mentoring
7.2.4 NGO involvement in support programmes, funded from own revolving funds
or grants from other aid agencies
- e.g. mini-loan schemes, training schemes, marketing support, etc.
7.2.5 Services provided by business associations to SMMEs, either fully
costed or subsidised from own funds (cross-subsidisation) or external
support
- e.g. the South African Chamber of Commerce (Sacob), the National
African Federation of Chambers of Commerce (Nafcoc), etc.
7.2.6 Local-authority services to or support for SMMEs, provided at cost,
via rates and taxes, or in a subsidised form (cross-subsidisation or
funded from external subsidies)
- e.g. hawker stands, municipal hives, open markets, information
centres. The funding could also be pooled between several local
authorities or subregions.
7.2.7 Parastatal or statutory bodies involved in SMME support (fully or ad
hoc)
- use of own revolving funds/capital, e.g. the SBDC and regional
development corporations
- functionally specialised associations offering services at cost or
on a subsidised base (with funding from external sources or cross-
subsidisation) e.g. Safto (export support), universities (training
for SMMEs), CSIR
7.2.8 Wholesale funding agencies for SMME loans or other programmes
- concessionary loan finance (DBSA, IDC)
- grant funds (IDT, Kagiso Trust)
These agencies can tap government funds as well as capital-market
sources and foreign donor funds.
7.2.9 Provincial governments, funded from regional sources, loans or
central-government transfers
- staffing of provincial SMME desks
- support for provincial/local development corporations
- provincial SMME-support programmes
7.2.10 Foreign technical or financial assistance (grant or loan)
- government-to-government programmes or multilateral aid
- funding or assistance to other implementation agencies
- regional joint programmes (SADC)
7.2.11 Central government funding of SMME-support programmes - DTI operating
cost of Chief Directorate
- NSBC operating cost
- SBDA operating cost
* Local Service Centre support
* Finance Trust and Export support
* Other programmes handled via SBDA
- Direct or indirect funding of provincial support
- Tax incentives
- Other incentives (e.g. RIDP, Department of Labour, GEIS/EMA)
- Special RDP funds
7.3 Leveraging programme funding
All over the world the shortage of public-sector funds to meet all the
programme needs has led to innovative ways of leveraging available
resources, i.e. mobilising other financial resources through the prudent
use of state funds. Matching grants are the best-known examples. In that
case state funds only become available if the implementing agency mobilises
other financial sources. This could be direct contributions from the client
entrepreneurs, cost-sharing contributions from other partners in the
programme (e.g. big business in subcontracting support schemes) or joint
sponsorship from other agencies. The range of combinations is virtually
unlimited.
Aside from multiplying the resource input, matching grants and similar cost-
sharing schemes have the advantage that they exert additional discipline on
the programme managers; if others also have to contribute, state funds may
be less easily misused.
7.4 Meeting the challenge
The funding of support programmes in an economically responsible way
constitutes the biggest challenge of the whole national strategy.
Throughout the White Paper emphasis has been placed on ways to reduce the
cost of support programmes or to spread it over a wider range of support
agencies. Similarly, the benefits of support programmes have to be
disseminated as widely as possible, in order to reach SMMEs in all the
corners of the country. What is more, wherever feasible small enterprises
should themselves contribute to the cost of support services. In this way
the funding capacity should increase as the geographic coverage and
comprehensiveness of the support programme expands.
It is not possible at this stage to put this process into specific
quantitative terms, which also include expected claims on the fiscus. Yet,
to conclude this section a few fundamental principles are put forward, which
- if adhered to - could help us to meet the financing challenge.
Funds have to be mobilised from the widest possible range of sources,
including local public and private sources as well as foreign assistance.
In order to achieve the type of breakthrough envisaged in this White Paper,
allocations for SMME support in the central government's budget should
increase to at least about one per cent of total budget spending for the
next decade.
SMME support has to be closely integrated with all other development support
programmes of the RDP.
- All the programmes have to be based on strict financial discipline and
have to be structured in a way that self-help and own financial
contributions by entrepreneurs are encouraged and gradually increased.
- All targeted assistance should include sunset clauses and safeguards
against built-in cost escalation.
It is these challenges that constitute the basis of the task ahead for the
implementation of the national strategy.
-------------------------------------------------------------------------------
LIST OF WRITTEN SUBMISSIONS
Armscor, Pretoria
Centre for Developing Business, University of the Witwatersrand;
Johannesburg
Chartered Association of Certified Accountants; Johannesburg
Consultative Business Forum (CBF), Taskgroup report; Ermelo
Council for Scientific and Industrial Research; Pretoria
Council of Southern African Bankers; Johannesburg
Danish Confederation of Trade Unions; Copenhagen/Denmark
Danish Technology Institute; Copenhagen/Denmark
Department of Trade and Industry, Departmental Working Group; Pretoria
Development Alternatives Inc.; Bethesda/USA Development Bank of Southern
Africa; Midrand
Development Planning Research Unit, University of Cape Town; Cape Town
Eastern Cape Ministry of economic Affairs; Bisho
Eastern Transvaal SMME Workshop; Nelspruit
European Union, Delegation in South Africa; Pretoria
Foundation for African Business and Consumer services (Fabcos); Johannesburg
Foundation for Entrepreneurship, Durban
Free State Province, Workshop report; Bloemfontein
Gauteng; Ministry of Finance and Economic Affairs, Workshop report;
Johannesburg
Gazankulu Development Corporation; Giyani
Get Ahead Foundation; Pretoria
Grace Enterprises; Braamfontein
Income-Generating Projects for South Africa (IGPSA); Baberton
International Executive Service
Johannesburg Chamber of Commerce an Industry (JCCI); Johannesburg kaNgwane
Economic Development Corporation Ltd; Kanyamazane
Manchu Consulting; Sandton
Ministery van Economische Zaken, Netherlands Government; The Hague/The
Netherlands
Ministry of Environmental Affairs and Tourism; Pretoria
Ministry of Health; Pretoria
Ministry of Mineral and Energy Affairs; Pretoria
Ministry of Provincial Affairs and Constitutional Development; Pretoria
Ministry for Public Enterprises; Pretoria
Municipality of Upington; Upington
National African Federated Chamber of Commerce and Industry (Nafcoc);
Pretoria
National Association of Women Business Owners (Nawbo); Johannesburg
National Economic Initiative Transvaal; Sandton
National Industrial Chamber; Kempton Park
National Industry Associations, Workshop report; Cape Town
National Party, Pretoria region; Pretoria
North-West Development Corporation Ltd (formerly BNDC); Mmabatho
North-West Province, Economic Affairs; Mmabatho
Northern Cape: Provincial Legislature; Kimberley
Overseas Development Agency (ODA), British Division in Southern Africa;
Pretoria
Royal Danish Embassy; Pretoria
Rural Finance Facility; Johannesburg
Small Business Advisory Bureau; Potchefstroom
Small Business Development Corporation; Johannesburg
South African Chamber of Business (Sacob); Johannesburg
South African Foreign Trade Organisation (Safto); Sandton
South African Liquor Store Association; Bedfordview
Stutterheim Development Foundation; Johannesburg
Table Mountain Marketing; Cape Town
Technonet Asia; Singapore
Transkei Development Corporation; Umtata
Triple Trust Organisation; Cape Town
UNCTAD, Advisory Services on Investment and Technology; Geneva/Switzerland
Venda Development Corporation; Thoyohandou
Western Cape Ministry of Economic Affairs; Cape Town
Working Group on Women and SMMES; Pretoria
World Bank, Southern Africa Department; Washington, DC/USA
Index of policy issues and institutions
---------------------------------------
accreditation
agro-business
Annual Review (Handbook) on Small Business
black advancement
Bophuthatswana National Development Corporation (BNDC)
budgets
building controls
business associations/chambers
Business Expansion Scheme (UK)
business internships business licensing
business opportunity centres business service centres
business-linkage programmes
capacity-building
Central Statistical Services
Chief Directorate for Small Business
Ciskei Small Business Corporation (CSBC)
classification of small enterprises
co-operative strategies
collateral
commercial banks
community programmes
Competition Board
Council for Scientific and Industrial Research (CSIR)
creche facilities
credit-guarantee schemes
crime
Department of Justice
Department of Labour
deposit taking by lending NGOs
Development Bank of Southern Africa (DBSA)
development corporations, regional
disabled, self-employment
Discussion Paper (October 1994)
enabling environment
Eskom
European Union
Export Marketing Assistance(EMA)
farming
finance for SMMEs
Finance
financial resources
foreign donors, incl. assistance programmes
foreign investment
Foundation for Research Development (FRD)
franchising
Friedrich Ebert Foundation
General Export Incentive Scheme (GEIS)
Get Ahead
Gooi-goois
health conditions hives
incubators
Independent Development Trust (IDT)
Industrial Councils
Industrial Development Corporation (IDC)
Informal Business Enrichment Centre (IBEC)
Informal Business Training Trust(IBTT)
Informal-Business Training Board
information and advice
institutional restructuring
Interdepartmental Committee on Small Business
interest rates
International Executive Service Corps (IESC)
Investment Centre
Joint ventures
Kagiso Trust
Katz Commission on Tax Reform
labour relations
legal assistance
local authorities
Local Service Centres (LSCs)
macro-economic policies
manufacturing
marketing support
markets
matching-grant finance
medium-sized enterprises
mentors
micro-enterprises
mining enterprises
monitoring of assistance
National African Federation of Chambers of Commerce (Nafcoc)
National Economic Development and Labour Council (Nedlac)
National Productivity Institute (NPI)
National Small-Business Conference National Small-Business Council (NSBC)
nongovernmental organisations (NGOs)
Overseas Development Administration
physical infrastructure
private sector, role in SMME support
Property Trust
provincial governments
public procurement Public
Works Ministry raw material, supplies for SMMEs
Reconstruction and Development Programme (RDP)
Regional Industrial Development Programme (RIDP)
Regional Services Councils (RSCs)
regulations and de-regulation
rental subsidies
research on SMMEs
retrenched people, self-employment
rural enterprises
school curricula and entrepreneurship
securities see: collateral
small builders
Small Business Act
Small Business Development Agency (SBDA)
Small Business Development Corporation
small claims court
small enterprises
small exporters Small-Business Finance Act
South African Chamber of Commerce (Sacob)
South African Foreign Trade Organisation (Safto)
Southern African Development Community (SADC)
statistics on SMMEs
Stokvels
sunset clauses
survivalist enterprises
targeted support
taxation
technology, incl. transfer
tender procedures
-------------------------------------------------------------------------------