While tremendous progress has been made in the development of the country’s small business sector, much still needs to be done.
challenges facing the sector included access to markets, finance, business premises and appropriate technology
Inception
Inception of formal structures to support small business development in South Africa can be traced back to 1995 when the Department of Trade, Industry and Competition’s White Paper on the National Strategy for the Development and Promotion of Small Business in South Africa was promulgated on 20 March 1995 (the dtic, 2021).
The intent
The intention of the strategy was to create an integrated and interdependent process in which big business, multinationals, parastatals and small enterprise can participate equally in economic development. While the intent was noble, the strategy highlighted the fact that focused support was required to bring the small business sector to the levels required to become an equal partner in economic development.
The challenges
The strategy identified eight critical challenges facing the sector at the time. These included the legal and regulatory environment, access to markets, finance and business premises (affordable rental rates), the acquisition of skills and managerial expertise, access to appropriate technology, the quality of the business infrastructure in poverty areas and, in some cases, the tax burden.
Two decades down the road
Tremendous progress has been made from 1995 to date, including the establishment of government institutions such as the Small Enterprise Development Agency (SEDA) and the Department of Small Business Development (DSBD) to create an enabling environment for the development of small business, private-sector involvement through sponsorships, and the direct roll out of small business development programmes. The establishment of the Broad-Based Black Economic Empowerment (B-BBEE) Codes of Good Practice were envisioned to be a game-changer for small-enterprise support structures from a government legislature perspective. The B-BBEE codes encapsulate small-enterprise support through the enterprise and supplier development (ESD) element, which is further broken down into the three categories of preferential procurement, supplier development and enterprise development. Implementation of the B-BBEE codes necessitated the proliferation of ESD implementation models provided by independent service providers. The work being done by the independent service providers includes support in the areas of entrepreneur skills development, business function development services, and coaching and mentoring.
The following table highlights the performance of the small enterprise sector, as per SEDA’s latest report:
| Key Indicators | 2020 Q1 Results |
| Number of formal SMMEs | 755 265 |
| Number of informal SMMEs | 1 748031 |
| Numbers of jobs created | 10 406 070 |
(Source: SEDA, 2020)
In its report, SEDA highlights key challenges hindering the effective and efficient development of SMMEs. Many of these challenges were identified in the White Paper, but additional challenges have been noted (SEDA, 2020).
Looking at the progress made over the past two decades, it goes without saying that while much has been achieved in establishing structures to support the small business sector, a lot still needs to be done to trickle the benefits of these structures down to the SMMEs – in practical ways.
- SMME development in South Africa: Two decades on - March 1, 2021