Entrepreneur and small business support

national context in entrep and small business support image

● The National Development Plan’s vision is that, by 2030, 90% of all new jobs will be in small, medium
and micro-sized enterprises (SMME).
● The World Bank ranked South Africa 74th out of 190 economies in 2017, for ease of doing business. In
2016, South Africans required 43 days to start a business, compared to the 46 days needed in 2015.
● Based on the 2016/17 Global Entrepreneurship Monitor (GEM) report, SMMEs contributed 36% of South
Africa’s GDP in 2015.
● According to the Bureau for Economic Research’s 2016 report, titled The Small, Medium and Micro
Enterprise Sector of South Africa, in 2015, more than two-thirds (67%) of SMMEs were classified as
informal. The proportion of SMME owners as a percentage of all employees decreased, from 15%
during 2008 to 2012, to 14% during 2013 to 2014.
● The GEM report showed that entrepreneurial intentions in South Africa dropped, from 11% in 2015,
to 10% in 2016. Entrepreneurial intentions have halved since 2010 (20%).
● The GEM report also showed that, in 2016, 67% (up from 62% in 2015) of small businesses closed
because they were either not profitable or were unable to access finance to sustain the business.
● Entrepreneurial participation by South Africans between 25 and 34 years old decreased significantly,
from 11% in 2015, to 6% in 2016. South Africa is ranked 58th out of 65 economies for entrepreneurial
participation by this age group. However, over the past three years entrepreneurial participation
among 45 to 54-year-olds has continued to increase, accounting for 28% of all early stage
entrepreneurial activity in 2016, according to the GEM report.
● In 2016, the gender gap in terms of entrepreneurial involvement narrowed to seven women for every
10 men, in line with the averages for Africa.
Broad-Based Black Economic Empowerment (BBBEE) Strategy, 2003
This strategy was promulgated to help advance South Africa’s economic transformation. It is a necessary
government intervention to address the systematic exclusion of the majority of South Africans from full
participation in the economy. Recommended interventions include facilitating a significant increase in the
number of black-empowered and black-engendered enterprises. This strategy is further complemented
by the BBBEE Codes (including the revised BBBEE Codes) and various sector Codes that government has
since gazetted to help empower black communities and small businesses. These Codes include enterprise
development as one of the key pillars.
The Integrated Small Business Development Strategy in South Africa (2004–2014), 2003
Recognising the role of small businesses in job creation and economic empowerment, this strategy aimed
to promote entrepreneurship, more competitive small businesses, and to unlock the potential of SMMEs
through the creation of better business environments that help accelerate growth.
Cooperatives Development Policy for South Africa, 2004
South Africa faced challenges with increasing the number and variety of viable economic enterprises. It
was therefore imperative for the government’s economic policy to promote the development of emerging
economic enterprises and to diversify the ownership, size and geographic location of those enterprises. To
this end, this policy deals with the promotion and support of emerging cooperative enterprises, including
small, medium, micro and survivalist cooperative enterprises. The policy complements SMME policies, as
well as the BBBEE strategy, by facilitating the creation of a viable self-sustaining cooperative movement
that can contribute to the creation of jobs, income generation and resource mobilisation, thereby
enhancing sustainable human development in South Africa.
Youth Enterprise Development Strategy (2013–2023), 2013
This policy provides support for young entrepreneurs, with the objective of creating and managing
sustainable and efficient businesses that are capable of providing decent permanent jobs. Interventions
include mentorship and coaching; business incubation; business infrastructure support; linkages
to procurement opportunities; entrepreneurship awards, promotion and awareness; and the youth
entrepreneurship collateral fund. Government acknowledges that enhancing youth economic participation
cannot be achieved by its efforts alone, but is a shared responsibility that calls for a partnership with the
private sector and broader civil society. Enterprise and supplier development requirements stipulated in
the BBBEE Codes have propelled private sector involvement through various interventions, particularly
business incubation, linkages to procurement opportunities, and mentorship and coaching.
● Establishing business hubs that focus on a single sector or type of product line can be very effective.
Through these hubs, resources can be pooled, innovation encouraged, skills transferred, information
exchanged and a platform for networking provided by pulling entrepreneurs into each other’s orbits.
 ● Incubator and entrepreneurial programmes with a higher entry threshold generally have better
outcomes. However, this marginalises entrepreneurs with limited education, experience and resources.
 ● Banks tend to view SMMEs as risks, rather than opportunities. Cash flow is often a problem, so
funders can play a role in offering favourable terms, such as shorter settlement terms and providing
access to partners who may be able to offer discounts. Funders can also work with enterprise
development colleagues to leverage their ability to remove barriers to accessing finance and resources.
 ● Large companies are beginning to realise that making small businesses part of their supplier base
is more than corporate social responsibility – it is good business. SMMEs can be more flexible in
providing innovative products and services to meet corporate needs. They can also be quicker and
more responsive in delivering services locally, which can save on costs. Their knowledge of local
markets can be extremely valuable for large companies trying to enter new markets.