Entrepreneurs and small businesses were supported through CSI by 40% of corporates and received an average of 8% of CSI expenditure in 2022. This is a decrease from 1997, when 69% of companies supported this sector and it received 11% of CSI expenditure, possibly due to such support moving from CSI to separate enterprise development budgets.
Within the sector, CSI spend has predominantly been on skills development. There has been an increase in the proportion of funding that goes towards infrastructure, facilities and equipment, as well as the provision of finance. As companies have become increasingly aware of the many issues that start-ups face, funding has shifted towards more holistic support and not just training.
Type of intervention
- Consistent with previous years, the largest share of funding for entrepreneurs and small businesses was directed to skills development (49%), down from 62% in 2021.
- Funding for the provision of infrastructure, facilities and equipment (24%), and finance (18%) increased in 2022, from 17% and 13% in 2021, respectively.
- On average, more than half of small businesses (52%) supported through CSI were part of the company value chain (up from 44% in 2021), with the proportion ranging from 10% to 100%.
The changing entrepreneurship and small business support landscape
– The National Small Business Act, 1996 (Act No. 102 of 1996) was promulgated to promote small businesses in South Africa, via the establishment or the National Small Business Council and the Ntsika Enterprise Promotion Agency.
– Approximately 700 000 small, medium and micro enterprises (SMMEs) provided jobs for almost half of the employed labour force.
– The National Empowerment Fund Act, 1998 (Act No. 105 of 1998) (NEF Act) established the National Empowerment Fund, which facilitated and promoted black economic participation by providing both financial and non-financial support to black-owned businesses.
Umsobomvu Youth Fund was established to create a platform for job creation and skills development for South Africa’s young people. The fund provided black youth aged 18 to 35 with start-up financing of between R100 000 and R5 million.
– The Broad-Based Black Economic Empowerment (BBBEE) Act, 2003 (Act No. 53 of 2003) was promulgated to address the systematic exclusion of the majority of South Africans from full participation in the economy. Recommended interventions included facilitating a significant increase in the number of black-empowered and black-engendered enterprises.
– The Integrated Small Business Strategy in South Africa aimed to increase the contribution of small enterprises to growth and development in South Africa.
– The Small Enterprise Development Agency (SEDA) was established in December 2004 through the National Small Business Amendment Act, 2004 (Act No. 29 of 2004). It was mandated to provide business development and support services for small enterprises and entrepreneurs. The establishment merged three entities: Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre and the Community Public Private Partnership (CPPP) programme.
– The National Youth Development Agency (NYDA) was established following a merger of the Umsobomvu Youth Fund and the National Youth Commission (NYC).
– The then Department of trade and industry (dti) introduced the Youth Enterprise Development Strategy (YEDS), which fostered youth economic participation by enhancing youth entrepreneurship.
– The Ministry of Small Business Development was established, demonstrating government’s commitment to place SMMEs and cooperatives at the centre of economic growth and job creation. The Department of Small Business Development (DSBD) was thereafter established as a standalone national department.
– According to SEDA, there were more than 2.25 million SMMES in South Africa in 2015. Over 1.49 million (66%) were classified as informal.
– At the beginning of the Covid-19 pandemic lockdown, government announced a loan guarantee scheme worth R200 billion for struggling businesses, but by March 2021 only 14 827 loans, valued at R18.2 billion, had been approved by banks.
– The number of SMMEs in South Africa declined by 11%, from 2.65 million in the third quarter of 2019 to 2.36 million in the third quarter of 2020.
– According to SEDA, the number of SMMEs in South Africa was 2.33 million in 2021. These organisations provided over nine million jobs.
– The Draft Block Exemption Regulations for Small, Micro and Medium-Sized Businesses was published in August to enable collaboration between SMMEs and promote their growth and participation in the economy.
– The Global Entrepreneurship Monitor report indicated that 17% of youth in South Africa are involved in establishing new businesses (up from 10% in 2020). These numbers are most likely ‘survival-driven’, in an economy that is not creating jobs fast enough.