eskomenterprisedevelopment

CSI Research: Entrepreneur and Small Business Support

National Context

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.

Overview of CSI Spend in Entrepreneur and Small Business Support

smallbusiness

 

Guidelines for effective funding

  • 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.

Source: Trialogue Business in Society Handbook 2017. 

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