AN INTERGRATED STRATEGY FOR SMALL ENTERPRISE SUPPORT Accelerating

AN INTERGRATED STRATEGY FOR SMALL ENTERPRISE SUPPORT Accelerating Service Delivery

Background 1. 1995 first Presidential Conference on Small Business 2. 1996 White Paper on National Strategy for the Promotion and development of Small Business 3. 1996 Small Business Act 4. 1997 Second Presidential Conference for Small Business 5. 1998 - Regulatory Review 6. 1999 – Mid-term review 7. 2001 Reference Group on Access to Finance 8. 2001 Study on Mentorship and credit guarantee scheme 9. 2001 Study on entrepreneurship promotion 10. 2001 Study on regulatory impact assessments

Problem Statement The rate of creation of new enterprises and their survival currently has not resulted in a significant contribution to employment creation and empowerment Quantitative Characteristics Of the Small Business Sector § § § Incorporates about 1, 7 m entrepreneurs -3. 8% of the population - 41% of whom are women Contributes about 40% to SA’s GDP Maintained positive employment in most sectors over the past decade Includes the informal sector activities which absorb 2, 8 million people or 26% of the employed labour force in 2000 Covers more than 95% of all business firms in the country

Progress made to date • • Broad policy framework provided through the National strategy for the Promotion of Businesses Basic foundation laid through various government initiatives e. g procurement policy at National, Provincial & Local level Experience gained in the provision of sustainable support e. g micro finance, capacity building Transformation of specialized parastatals to provide services to SMMEs Increased participation of the corporate sector in Small Business support Mainstreaming small business support in the dti New programmes to develop local economies - Community Public Private Partnership - Local economic development agencies

Challenges • • • Limited contribution of Small Businesses formal employment & economic growth Poor co-ordination of Small Business support interventions Impact of support difficult to measure due to lack of base line information Lack of entrepreneurship culture Over concentration of Small Businesses in micro category Capacity of implementing agencies limited Need for a coherent voice of small business (fragmentation of business associations) Need for support targeting to address spatial disparities (small town, rural and peri-urban areas) Impact of HIV/AIDS Access to finance/capital High mortality rates and poor image of small business

Opportunities 1. Extension of global markets 2. Regionalisation process 3. Restructuring of state assets 4. Sector growth potential 5. Agriculture 6. Tourism and cultural industries 7. Manufactured products (niche markets) 8. Construction and repair as well as maintenance 9. Transport services 10. Textiles and clothing

Links to Overall Government and dti objectives • Economic growth • Employment • Investment • Black Economic Empowerment • Geographic spread • Future competitiveness • Women’s enterprises

Sharpening Focus of Support Micro-Enterprises • Survivalist Micro-Enterprise • Satisficing Micro-Enterprise • Social upliftment • Training and job search • Local economic development • Micro finance • Co-operative ventures Small to Medium Sized Enterprises (including growth oriented micro enterprises) • Increasing scale of support for black firms Small Scale Operations In Growth Sectors (Competitiveness • Technology support Sector Differentiation Adapted support packages e. g. • Construction • Agriculture/Farmers • Tourism

Area Differentiation Small Towns Rural and Peri-urban areas • Local Economic Development • Community Public/Private/Partnerships

Strategy Pillars ENTREPRENEURSHIP UNLOCKING OPPORTUNITIES ENHANCING CAPACITY • Entrepreneurship training and education • Strengthening of business associations • Business restart succession • Franchising Support Market Access • Government Procurement • Exports • Business to business linkages • Corporate linkages Access to finance SECTORAL STRATEGIES • Agroprocessing • Tourism • Construction • Information Technology • Cultural Industries RESEARCH INFORMATION AND ADVICE CONDUCIVE REGULATORY ENVIRONMENT MONITORING AND EVALUATION Training and Mentorship Adherence to quality and measuring standards Access to technology

Critical Success Factors • Integration and interaction of small, medium and large enterprise segments in all sectors of the economy • Public – private partnerships • Alignment with national and international standards e. g - Quality - Measurement • Sustainability of support • Significance of impact • Refocusing of support institutions • Use of foreign donor funds • Localising support infrastructure (e. g. chambers, institutions)

Role Players: Towards Effective Partnerships 1. National Government 2. Linkages with other national development strategies - Intergrated manufacturing strategy - Local economic development strategy - Black economic empowerment - Education and training - Intergrated rural development - Restructuring of state assets - Trade and Investment promotion strategy 2. Provincial or Local Government 3. National parastatals 4. International co-operation 5. Education, training and research institutions 6. Business and sector associates 7. Private service suppliers 8. NGO’s

Funding 1. Quest for more resources 2. - Less than 1% of the national budget is channeled for small business support 3. 2. Facilitate cost recovery 4. 3. Spreading financing responsibility 5. 4. Maximise overall resource inputs

Critical Changes – Summing Up • Segmentation of small business into 3 categories • Sector focussed support programmes • Stronger differentiation of location – determined support • Special instruments targeting - Women - Youth - Rural - Black • Refocussing strategy into 3 support areas - Entrepreneurship - Unlocking opportunity - Enhancing capacity • Emphasis on the training and proffesionalisation of public and private sector practitioners • Institutional realignment to link financial and non financial support at service points

Critical Changes – Summing Up (Continued) • Localised support infrastructure • Establishment of a national small business advisory board • Establishment of a micro-finance agency • Production of an annual small business review and a regional rotating annual summit • Research project to establish profile of small business in South Africa