The annual budget for the Department of Small Business Development (DSBD) is set to increase, from
R1.5 billion in 2018/19, to R2.7 billion by 2020/21. Transfers and subsidies account for 85% of DSBD’s budget, with R769 million allocated to the Small Enterprise Development Agency (SEDA) and the remaining R492 million going to the incentive schemes implemented by the Industrial Development Corporation (viz. the Black Business Supplier Development Programme, the Cooperatives Incentive Scheme, the Enterprise Incubation Programme and the National Informal Business Upliftment Scheme).
The significant increase in the DSBD’s budget over the medium term is attributed to the R2.1 billion SMME and Innovation Fund, announced by the President in February 2018, which aims to empower small to medium start- up businesses that display innovation and high chances of success.
The Inaugural South African SMME Access to Finance Report estimates that formal SMMEs employ between two and three million full-time employees.
The National Development Plan projects that, if all its recommendations are implemented, the South African economy will grow by 5% per annum, with between 60% and 80% of this value created by SMMEs and expanding businesses.
The World Bank ranks South Africa 82nd out of 190 countries for ease of doing business, and 136th for ease of starting a business, down from 74th and 131st in 2017.
The Real State of Entrepreneurship Survey 2017, produced by social enterprise Seed Academy, found that 50% of entrepreneurs in South Africa were youth and 47% were women. Eighty-seven percent of all small businesses were self-funded and only 5% of surveyed entrepreneurs received funding from formal sources.
The Organisation for Economic Co-operation and Development’s 2017 Economic Survey of South Africa found that only 26% of bank lending to business goes to SMMEs.