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Policy Papers and Research

Tracking SMME Development in South Africa: Issues of Finance, Training and the Regulatory Environment

"The significance of issues concerning finance, training and regulation has been a continuous thread in South African policy discussions about the development of the country’s small, medium and micro-enterprise (SMME) economy for more than a decade. Better access to finance, skills and leadership training and more flexible regulations are identified as key strategic elements in supporting the three national pillars of promoting entrepreneurship; strengthening the enabling environment for SMMEs; and enhanced competitiveness and capacity at the enterprise level. The monitoring of research on the SMME economy in South Africa is viewed as a critical issue of high policy relevance. Against this backcloth, the aim is to provide a synthesis of existing research in South Africa concerning the three important themes of: (1) finance; (2) training and skills acquisition; and (3) the regulatory environment for SMME development. Several research gaps are identified for further analysis."

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Source details: 

Rogerson, C.M. Urban Forum (2008) 19: 61. https://doi.org/10.1007/s12132-008-9025-x,  Online ISSN1874-6330

The contribution of business incubators and technology stations to small enterprise development in South Africa

"This paper examines the contribution of small business incubators to the development and promotion of small medium and micro enterprises. The International Labour Organization argues that small business incubators are innovative instruments that are increasingly considered to be of prime importance in developing and promoting competitive small firms. The location of technology stations at universities of technology points to the importance of these universities in the development of technology-intensive small firms."

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By: , Pages 259-268 | Published online: 02 Sep 2008, http://dx.doi.org/10.1080/03768350802212022

Tourism, business linkages and small enterprise development in South Africa

"Although considerable attention is given to the prospects for developing small, medium and micro-enterprises (SMMEs) in South Africa's tourism economy, very little relevant research has been undertaken in this regard. In this article, the findings are presented from over 60 detailed interviews conducted with key enterprises and entrepreneurs involved in tourism, outsourcing and small enterprise development in South Africa. The aim is to examine opportunities for outsourcing and business linkage development in South Africa's tourism economy, and to investigate the difficulties that confront the tourism SMME economy through examining the status of business linkages between large tourism enterprises and SMMEs in South Africa. The South African research is located within the context of existing works on tourism and small enterprise development in developing countries."

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Source details: 

By:  &, Development Southern Africa Journal, Pages 29-59, Published online: 01 Jul 2010http://dx.doi.org/10.1080/03768350220123882

Enterprise development unpacked: A tool for prosperity

This report explains how, through enterprise development, people can earn a living and rise out of poverty. In turn over time they create jobs as well as empower other individuals and the communities in which they live. Market development, commercial business services and social enterprise are part and parcel of Enterprise Development. Moreover it encompasses finance, entrepreneurship development, investment and growth in Small Medium and Micro Enterprises (SMMEs), including initiatives that range from enabling the start-up of small businesses to providing business skills development through training, mentoring, coaching.

Economic growth is key to addressing unemployment, gender equality, health and other poverty related issues worldwide. Enterprise development (ED) is an important tool and essential element to economic growth. Raizcorp, in an article entitled Enterprise Development Made Easy, defines enterprise development as investing time, knowledge and capital to help small and medium enterprises establish, expand or improve businesses, including empowering modest income generating informal activities to grow and contribute to the local economy.

According to the Tourism Empowerment Council of South Africa (TECSA), a company enterprise development policy should be developed with outcomes in mind such as:
• steering the economy towards a stable environment that nurtures growth and increases the country’s economic competitiveness.
• fostering a synergistic relationship between the private and public sector to embrace social investment as a common vision.
• fostering an entrepreneurship culture amongst previously disadvantaged groups.
Through enterprise development people can earn a living and rise out of poverty. In turn over time they create jobs as well as empower other individuals and the communities in which they live.

Market development, commercial business services and social enterprise are part and parcel of enterprise development. Moreover it encompasses finance, entrepreneurship development, investment and growth in small, medium and micro enterprises (SMMEs), including initiatives that range from enabling the start-up of small businesses to providing business skills development through training, mentoring, coaching.

Black economic empowerment (BEE) compliance is measured by means of a scorecard. The scorecard is based on various elements and your company is measured out of a maximum of 100 points. The BEE scorecard focuses on seven main elements within the South African workplace. These seven elements look at ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development and sector specific contributions.

A strategy has been presented at the various management forums, following the five pronged approach of financier, partner, advisor, implementer and integrator to build human capital and institutional capacity as per the Development Bank of Southern Africa (DBSA) mandate. The DBSA favours a 10-step strategy starting with identifying opportunities for enterprise development in its project pipeline aligned with the key focus areas, linked to sectoral value chains and broad-based black economic empowerment (BBBEE) transformation charters, opportunity and needs based, identifying criteria and partners, structuring alliances, using tested models or develop it where it does not exist, benchmarking, agreeing on an exit strategy and incorporating monitoring and evaluation. A mentoring and coaching programme will be rolled out for DBSA interested staff and for the project beneficiaries. The intention is to start learning from pilot initiatives. We are counting on your support as development activists to help DBSA do its share of reducing the unemployment rate and boosting economic growth in southern Africa.

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Source Details:

By Dr Ingrid Verwey, Development Planning Division Working Paper Series No. 18 (2011), https://www.dbsa.org

 

Business incubators in developing countries: characteristics and performance

This paper outlines the distinguishing characteristics of incubators in selected developing countries. Based on recent experiences, good practices and the lessons (to be) learned are drawn. 

Since the last decade, the revolution in information technologies and liberalisation of trade regimes have created enormous opportunities for knowledge-based businesses as well as challenges for planners to create the one billion new jobs now needed the world over. The business incubation centre (BIC) helps tackle the obstacles faced by entrepreneurs and facilitates the venture creation process. While numbers are increasing - to around 3,500 worldwide including over 1,500 in the developing countries - their performance and sustainability are being questioned. The determinants of success in the Olympiad of venture creation can be expressed as five interlinked rings: public policy that stimulates entrepreneurial businesses and provides the business infrastructure; private sector partnerships for mentoring and marketing; knowledge base of learning and research; professional networking, national and global; and community involvement to promote entrepreneurism and cultural change. This paper outlines the distinguishing characteristics of incubators in selected developing countries. Based on recent experiences, good practices and the lessons (to be) learned are drawn. Case examples from China, Brazil and other developing countries indicate the variety of approaches.

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Source Details:

By: International Journal of Entrepreneurship and Innovation Management Volume 3, Issue 1-2https://doi.org/10.1504/IJEIM.2003.002217.

 

Supporting Youth in Entrepreneurship - Summary report of a policy development seminar organised by the OECD and the European Commission, Brussels, 22nd-23rd September 2014

The Organisation for Economic Co-operation and Development and European Commission organised a seminar on public policy support for youth entrepreneurship in Brussels on 22nd and 23rd September 2014. The seminar was intended for senior policy-makers, particularly those involved in dealing with the European Social Fund.

The seminar examined:

  • The importance of developing youth entrepreneurship policies.
  • The EU funding opportunities for youth entrepreneurship programmes.
  • The ways in which obstacles to youth entrepreneurship can be addressed using specific programmes, illustrated by a number of inspiring practices.
  • Key aspects of successful youth entrepreneurship programmes.

Read more: Supporting Youth in Entrepreneurship - Summary report of a policy development seminar organised by...

Business Incubation for Small Enterprise Development: South African Pathways

"Business incubation is a critical tool for ensuring the survival of start-up small enterprises. Over the past 15 years, South Africa has progressively expanded its commitment to business incubation as part of broader support for the small enterprise economy. The objective in this paper is to highlight the different pathways of contemporary business incubation occurring in South Africa with particular attention to the divergent trajectories as well as common challenges faced by the unfolding network of state-supported incubators and of private sector incubators. This paper extends the limited literature on business incubators in South Africa by offering detailed insight into the differences between incubators operating under state as opposed to private ownership. Methodologically, use is made of detailed case studies of four functioning business incubators as well as the results from a national audit conducted in 2013 of the state of small business incubators in the country."

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Source details: 

By: Masutha, M. & Rogerson, C.M. Urban Forum (2015) 26: 223. https://doi.org/10.1007/s12132-014-9242-4

 

[Conference] National Youth Entrepreneurship Conference, IDC

High unemployment compounded by scarcity of critical skills among the youth is one of the challenges confronting our youth. If tackled in a strategic manner, the potential to place the company on a path to sustainable economic growth is massive after all better lives, access to economic opportunities and improved social cohesion are some of the aspirations of our youth. The IDC’s strategy and interventions to addressing Youth unemployment are indeed based on a deeper understanding of critical issues affecting our Youth.

The national Youth Entrepreneurship Conference tackles the relatively slow uptake of entrepreneurial opportunities by SA's youth, while driving awareness of the IDC's unique offering for entrepreneurs between the ages of 18-36 years.

Read more from the conference in the IDC media room

Enterprise Development Programmes For Black Entrepreneurs

Enterprise development involves the growing of small and medium-sized black businesses through the provision of finance and support, assisting in their business development and sustainability. In creating a programme for enterprise development, budding entrepreneurs and all they hire will earn a living, which in turn uplifts their quality of life. These programmes could lead to long term economic growth for entrepreneurs, their families and friends and their entire communities.

This article provides comprehensive listings of enterprise development opportunities.

Read more: Enterprise Development Programmes For Black Entrepreneurs

The Enterprise Development Report launched by Impact Amplifier and New York University’s Center for Global Affairs (July 2013)

"We designed this research in light of changes to the B-BBEE Codes to begin exploring the essence of Enterprise Development: its transformational potential. Since no previous studies have been made publically available, our starting point was to frame the landscape of current Enterprise Development strategies and understand how these are decided and implemented. Sixty Enterprise Development practitioners from the Top 100 companies on the Johannesburg Stock Exchange, representing some of South Africa’s largest ED programs, contributed their time and insights to this study. They shared details about all aspects of their companies’ ED strategies and offered rich, thoughtful commentary on their perceptions of Enterprise Development as a tool for achieving socio-economic change."

Read more: The Enterprise Development Report launched by Impact Amplifier and New York University’s Center...

Position of the International Labour Organisation (ILO)

The ILO believes that ED should consist of “people-centred” and “sustainable” support, always grounded in triple-bottom-line sustainability[1]. In order to promote ED, the ILO developed a “sustainable enterprise” programme in 2014 that consists of 3 main pillars[2]:

  1. Creating enabling environments for sustainable enterprises and employment - Encouraging policy that supports ED
  1. Entrepreneurship and business development - Assisting enterprises to develop – particularly target groups such as youth and women
  1. Sustainable and responsible workplaces. - Linking productivity to better working conditions and more environmentally friendly practices.

[1] International Labour Organisation, “Sustainable Enterprises: Creating More and better jobs”, pg 2.

[2] Ibid, page 4

Barriers to Enterprise Development: The Case of SMMES Operating in the South African Motor Body Repair Sector.

This research investigates percieved barriers faced by Small, Medium and Micro Enterprises operating in the South African motor body repair sector. Despite various support strategies spearheaded by both Government and private sector for the development of these small businesses, not much has been achieved in this particular sector due to lack of research.

An exploratory survey was carried out to ascertain barriers to enterprise development needs of auto body repairers. Funding opportunities are still scarce, causing a negative impact on equipment acquisitions, infrastructure development and access to market.

There is need for proper multiskilling training on motor body repairs. Support measures for enterprise development for auto body repairers include the need to set up dedicated lines of credit, acquisition of appropriate repair equipment from Original Equipment Suppliers, certified training from Original Equipment Manufacturers’, specific sector focus from various small business funded programmes, procurement of proper infrastructure and employment of better marketing strategies to remove poor business perception from the public. Unless measures are taken to address these problems the disadvantaged communities will forever lumber in poverty.

Read more: Barriers to Enterprise Development: The Case of SMMES Operating in the South African Motor Body...

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