SMME POLICY FRAMEWORK, INSTITUTIONAL ARRANGEMENTS, AND ROLES OF VARIOUS INSTITUTIONS INVOLVED IN SME DEVELOPMENT IN SA

Third Tri-nations Summit for Small Business Development (November 18-22, 2008)
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PRESENTATION OUTLINE
SMME LANDSCAPE IN SOUTH AFRICA SMME DEVELOPMENT POLICY FRAMEWORK 3 PILLAR STRATEGY FRAMEWORK INSTITUTIONAL ARRANGEMENTS AND INSTITUTIONAL MANDATES 4 PILLAR SUPPORT FRAMEWORK

Outline

SMME LANDSCAPE IN SA
CLASSIFICATION ENTERPRISE CHARACTERISTICS FINANCIAL SUPPORT NEEDS
Medium long term debt & equity finance Asset base, working capital, property finance, etc.

PRACTICAL SUPPORT NEEDS

Regulatory compliance, technological support quality control, market intelligence, process and systems reengineering.

Medium
Opportunity driven,

Up to 200 employees Developed technical & business skills Turn Over > R25m / annum

Small

up to 50 employees developed technical/ limited bus. skills and technological know-how turn over < R25m per annum

Short medium term debt Asset base & working capital finance

Technology transfer and Technical assistance, Appropriate business infrastructure, Market linkages, Coaching and mentoring, standards and certification, Business start advice, Access to support information, formalization processes, business development & Technical Skills training

Necessity driven, survival

Micro

Up to 5 employees Turn over within R1000 000 current VAT Registration threshold per annum Some technical and very limited bus. skills and technological know-how Owner self / family employment Income generated within minimum wage band

Short term loans Working capital finance

Survivalist

Short term loans Stock purchase finance

Business start advice and information Seed funds ( grant 3 support)

SMME DEVELOPMENT POLICY FRAMEWORK

2004: 10 YEAR REVIEW

FROM 1995 White Paper Policy Framework

Creating an enabling legal framework Streamlining regulatory conditions* Facilitating access to business support information and advice Facilitating access to marketing and procurement Facilitating access to finance Facilitating access to affordable physical infrastructure Providing training in entrepreneurship, technical skills and management skills Improving industrial relations and the labour environment Facilitating access to appropriate technology and technical assistance Encouraging joint ventures Capacity building and institutional strengthening Introducing differential taxation and other financial incentives

Substantially strengthen support for SMMEs access to finance Create an enabling regulatory environment Expand market opportunities for specific categories of small enterprises Localize small-business support through a grid of coordinated information and advice-access points Initiate a national entrepreneurship drive and expand education and training for small business Co-fund minimum businessinfrastructure facilities in localauthority areas across the country Encouraging increased private sector participation Ensuring action across the entire entrepreneurship continuum 4 Integrating government funded

2005 NATIONAL STRATEGY FRAMEWORK

STRATEGIC PILLARS FOR THE SMME STRATEGY

Strategic Pillar 1:
Increase supply for financial and non-financial support services

Strategic Pillar 2: Creating demand for small enterprise products and services

Strategic Pillar 3:
Reduce small enterprise regulatory constraints

At the core of this new strategy, is The principle of integration, which relates to ; Integration of different socio-economic policy areas Integration of programmes within the public sector (cutting across national, provincial and local government) and between the public and private sectors Integration of the activities of different entrepreneurship and small enterprise 5 promotion institutions

NATIONAL STRATEGY FRAMEWORK

ENHANCED RECOGNITION

Attends to special foci Various strategies include:

Transformation and equity (BBBEE) Special target groups (youth, women and the disabled) Special geographic areas (poverty areas and areas with high unemployment) New enterprise organisational forms (such as co-operatives and Franchises) Special sectors (growth sectors as identified in the National Industrial Policy and high performance sectors for SMMEs as identified in the Small Business Reviews

INSTITUTIONAL ARRANGEMENTS THE DEPARTMENT OF TRADE AND INDUSTRY; NATIONAL FRAMEWORK

National Small Business Advisory Council
Dedicated for policy advocacy,

Strategy implementation impact monitoring Advice on research agenda for the small enterprise sector and strategy reviews

Small Enterprise Development

Agency

Dedicated national non-financial support services, Agency targeting Micro, Small, Medium enterprises, National business support network including business incubation centres. Partnership with agencies sponsored by other spheres of government and the private sector
Dedicated for business development

The Enterprise Organisation

incentives administration

THE FINANCING LANDSCAPE AND INSTITUTIONAL MANDATES

IDC NEF
SAMAF

R0

R10K

R250K

R1m

R3m+

AGENCIES SPONSORED BY PROVINCIAL GOV

Khula

Micro-enterprise finance Samaf not l direct lending

SME Finance NEF Exclusive for bee finance Khula not direct lending

Industrial Finance 8 Medium sized enterprises to large corporate

4 PILLAR SUPPORT FRAMEWORK National-government support

the dti National Small-Business Advisory Council Parastatals interacting with SMMEs Developm ent-finance institutions DBSA, IDC, NEF, NDA, Land Bank, Samaf, etc. National departments and related agencies with line functions affecting SMMEs SmallEnterprise Development Agency International and interregional support and cooperation Partners

Combined community and private services

Provincial-government departments with line functions affecting SMMEs

Capacity and supply for support services RESEARCH AND INFORMATION DISSEMINATION GOVERNMENT CLUSTER COORDINATION OF APEX PROJECTS DTI-PROVINCIAL COORDINATION STRUCTURES PROVINCIAL COORDINATION STRUCTURES OUTREACH PROGRAMMES CONTRIBUTION BY BBBEE CODES OF GOOD PRACTICE

Communicat ions and media services Corporate services for SMMEs

Local and provincial support

Provincial SmallEnterprise Agencies District municipality initiatives in SMME support Municipality functions affecting SMMEs

NGOinitiated support services Education, training and research for SMMEs

Local agencies and initiatives to strengthen SMMEs

Need and/or demand for SMME-support services

Communitybased support services, incl. savings schemes, loan systems and advice centres Extended familybased services Sector/trade associations and sectorfocused initiatives Business Chambers and area-focused associations Private specialised support services Smallenterprise consultants Financia l institutio ns Venture capitalists

THANK YOU
Mandisa Manjezi [email protected] +27 12 3941849 www.thedti.gov.za
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