Government Policies that Support SMMEs in South Africa

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Government Policies that Support SMMEs in South Africa

In March 1995, the Department of Trade and Industry (dti) published the White Paper on National Strategy for the Development and Promotion of Small Businesses in South Africa. The White Paper encourages the initiation of a support framework that includes the enabling of legislation, institution reform, leveraging financial and other forms of assistance, for small businesses to develop.


The White Paper communicated the Government’s reasoning for small business promotion as follows:


“ With millions of South Africans unemployed and underemployed, the Government has no option but to give its full attention to the fundamental task of job creation, and to generating sustainable and equitable growth. Small, medium and micro-enterprises (SMMEs)represent an important vehicle to address the challenges of job creation, economic growth and equity in our country. Throughout the world, one finds that SMMEs are playing a critical role in absorbing labour, penetrating new markets and generally expanding economies in creative and innovative ways. We are of the view that – with the appropriate enabling environment – SMMEs in this country can follow these examples and make an indelible mark on this economy. The stimulation of SMMEs must be seen as part of an integrated strategy to take this economy onto a higher road – one in which our economy is diversified, productivity is enhanced, investment is stimulated and entrepreneurship flourishes.”


National Supportive Policies for SMMEs in South Africa


There are a number of government policies that support the growth and development of entrepreneurship and small business development that have emerged. The following policies and strategies were developed to integrate the strategy to support SMMEs;


The micro-economic reform strategy


The micro-economic reform strategy identifies the need to ensure equity (through broad-based black economic empowerment [B-BBEE] and gender initiatives), to prioritise growth sectors, geographical focus (focusing on areas of high poverty and unemployment), and the need for strong co-ordination and support measures.


For small business development the strategy entails the following measures:


  • Specific sectoral initiatives to promote small business development
  • The introduction of new products to support small enterprises
  • Greater co-ordination across government
  • The consolidation of all mentorship programmes
  • Improved access to finance
  • Increased access to markets through competition policy and export promotion
  • The promotion of entrepreneurship
  • The expansion of business support infrastructure and the provision of localised support infrastructure.


Accelerated and Shared Growth Initiative South Africa (AsgiSA)


AsgiSA gives a breakdown on a number of focus areas that need to be monitored and supported through policies, strategies and programmes. These are areas of importance  in regards to the development of small business promotion and growth. They include the following:


  • Access to the procurement opportunities for small businesses
  • Easing the regulatory burden on small enterprises
  • Access to finance particularly venture capital
  • Easing cash flow problems experienced by small enterprises doing business with the government


Draft Regional Industrial Development Strategy (RIDS)


The Draft Regional Industrial Development Strategy suggests the establishment of special economic zones (SEZ) these are zones such as industrial parks, logistics parks, industrial estates and innovation hubs. It also considers other aspects such as promoting growth in regional unions and support for industrial clustering among firms, to be able to foster regional industrial development. The strategy proposes the development of a Systemic Competitiveness Support Facility or “Thematic Fund” to sustain innovative regional development initiatives. Therefore the fund will supply a support facility for innovative start-ups.


Broad-Based Black Economic Empowerment (B-BBEE) strategy


The B-BBEE Strategy includes measures to increase procurement for black-owned enterprises, and to strengthen the supply capacity of black-owned firms. The objectives of the B-BBEE Strategy are as follows;


  • To achieve a substantial increase in the number of black people who own and control existing and new enterprises
  • To achieve a substantial increase in the number of black people who own and control existing and new enterprises in the priority sectors of the economy, which government has identified in its macro-economic reform strategy
  • Achieving a significant increase in the number of new black enterprises
  • Increasing the proportion of ownership and management of economic activities vested in community enterprises and co-operatives.


National strategy for the development and promotion of franchising in SA


The objectives of this strategy seeks to do the following;


  • Promote the contribution of franchising to, among other things, the economic empowerment of historically disadvantaged entrepreneurs through increasing their participation in franchising
  • Create an entrepreneurial culture through franchising
  • Create an environment conducive for the growth of franchising
  • Promote linkages between big and small enterprises in order to stimulate the creation of new franchise enterprises.


Strategic framework on gender and women’s economic empowerment


This strategy suggests initiatives that are aimed to provide support to women-owned businesses. The strategy aims to provide the following;


  • Provision of business information
  • Entrepreneurial education and training
  • Financing
  • International trade
  • Research and statistics
  • Science and technology
  • Too provide rural women with economic literacy


National youth enterprise strategy


The youth enterprise strategy outlines three key objectives for the implementation of the strategy.


  • Ensure that entrepreneurial skills, talent and experience are nurtured among young women and men to enhance their capacity to participate in all aspects ofSouth African social, economic and community life
  • Ensure that young women and men are recognised as a key target group of need, and a resource in the development of small enterprises within national, provincial and local economies
  • Maximise access to financial and non-financial resources for young women and men who are in business or planning to enter business.


Co-operatives policy and development draft strategy


The co-operatives strategy aims to make sure all policies, strategies and support programmes created to support SMMEs are put in place and available to support co-operative entrepreneurship, and encourage participation of these enterprises in the economy. Support programmes, giving access to finance, technical skills and markets, will be drawn up across the government and its agencies to grow the co-operatives sector.


Draft strategy framework for forestry enterprise development


The Department of Water Affairs and Forestry’s drafted the Forestry Enterprise Development strategy (FED). The purpose of the programme is to provide training, extension services, and financial and business services to forestry enterprises. It presents a Forestry Enterprise Development Programme to develop a market-driven and profitable business venture involving previously disadvantaged communities and individuals. Four types of business that are being targeted in this sector are;


  • Timber-production enterprises
  • Contracting enterprises
  • Timber processing, value adding and marketing enterprises
  • Non-timber forest-product enterprises.