Interaction between Seda and other small-business organisations as forerunner to integrated service delivery Christiaan Jacobus Fortuin A Research Project presented in partial fulfilment of the requirements for the degree of Master of Development Finance at the University of Stellenbosch Supervisor: Professor Wolfgang Thomas Degree of confidentiality: A March 2008 ii DECLARATION Hereby I, Christiaan Jacobus Fortuin, declare that this study project is my own original work and that all sources have been accurately reported and acknowledged, and that this document has not previously in its entirety or in part been submitted at any university in order to obtain an academic qualification. C.J. Fortuin Student number: 12471682 December 2007 iii ACKNOWLEDGEMENTS The author would like to thank Professor Thomas, who supervised this research, for his assistance during the research project. Though extremely busy with his lecturing and consulting work, Professor gave time, insights and assistance whenever needed. I would also like to thank the managers and staff members without whom this project couldn?t have happened. The contributors are numerous, but the author would particularly like to thank the staff members of Seda Siyanda for their support and assistance. The paper is dedicated to Rochelle and Chrisli Fortuin who taught me to persevere and to make a success of live?s challenges. iv ABSTRACT The need for Small, Micro and Medium Enterprise (SMME) growth in South Africa is beyond question. Government sees SMMEs as an important vehicle to boost the economy of the country because of the contribution they make to job creation. According to recent estimates by the Department of Trade and Industry (DTI), small businesses represent 98% of the total number of registered firms, employ 55% of the country?s labour force and account for 35% of GDP. Unfortunately South Africa has a low survival rate among start-up businesses compared to other developing economies. Some believe that the reason for the failure of government programmes to support small businesses is due to poor delivery. This is one of the key issues to be addressed by all business support players. The key to success is to pursue a private sector led approach where experienced business advisors and mentors can add value to the businesses of customers. The research focuses solely on support organisations within the Siyanda region. The findings support the notion that Seda, as government?s small business support vehicle, will have to utilise support organisations more in order to make a success of its mandate. The investigation has identified some recommendations that may lead to an improvement in the current environment. The first approach is to ensure that people who render small business support have business experience and understand small enterprises. Secondly, to ensure that sector programmes are focused on a particular objective and that the overall strategy remains integrated and focused. In order to achieve this, the private sector should participate and share the costs. In recommending measures to improve the promotion of small business support at a local level, it is important to focus on what works best and that is ultimately private- sector organisations. v OPSOMMING Die behoefte aan groei van Klein, Mikro en Medium Ondernemings (SMMEs) in Suid- Afrika word nie debateer nie. Die regering sien SMMEs as ?n belangrike medium om die land se ekonomie ?n hupstoot te gee vanwe? die bydrae wat hulle tot werkskeppping maak. Volgens onlangse skattings van die Departement van Handel en Nywerheid, verteenwoordig kleinsake-ondernemings 98% van die totale aantal geregistreerde ondernemings en verskaf hulle werk aan 55% van die land se arbeidsmag, en dra hulle by tot 35% van die bruto binnelandse produk. Ongelukkig het Suid-Afrika ?n lae oorlewingsyfer onder nuwe besighede in vergelyking met ander ontwikkelende ekonomie?. Sommige mense glo die rede vir die mislukkig van regeringsprogramme wat kleinsake-ondernemings ondersteun, is swak dienslewering. Hierdie is een van die sleutelkwessies wat aangespreek behoort te word deur alle sake-ondersteuningspartye. Die sleutel tot sukses is om ?n privaatsektor-gedrewe aanslag te volg waar ervare sake-adviseurs en -mentors waarde kan toevoeg tot kli?nte se besighede. Die ondersoek het sekere aanbevelings geidentifiseer wat mag lei tot ?n verbetering van die huidige omstandighede. Die eerste stap is om te verseker dat mense wat kleinsake-ondersteuning bied wel sake-ondervinding het en die kleinsakebedryf verstaan. Tweedens, om te verseker dat die sektor se programme wel gefokus is op ?n spesifieke doelwit en dat die oorkoepelende strategie? ge?ntegreerd en gefokus bly. Ten einde dit te bereik, moet die privaatsektor deelneem en die kostes deel. By die soeke na stappe om die bevordering van kleinsake op plaaslike vlak te verbeter, is dit belangrik om te kyk wat (elders) reeds geslaag het. Dit is alte dikwels stappe wat deur die privaatsektor onderneem word. vi TABLE OF CONTENTS Page DECLARATION....................................................................................................... ii ACKNOWLEDGEMENTS....................................................................................... iii ABSTRACT ............................................................................................................ iv OPSOMMING..........................................................................................................v LIST OF TABLES ................................................................................................... ix LIST OF FIGURES................................................................................................. ix LIST OF ACRONYMS AND ABBREVIATIONS.......................................................x CHAPTER 1: INTRODUCTION..............................................................................1 1.1 Background to the Study..............................................................................1 1.2 Literature Review .........................................................................................2 1.3 Research Problem and Goals of the Study ..................................................3 1.4 Framework of the Report..............................................................................3 CHAPTER 2: SMALL BUSINESS DEVELOPMENT IN SOUTH AFRICA 6 2.1 Overall Growth and Key Development Challenges ......................................6 2.2 The Macro-economic Development Framework...........................................8 2.2.1 RDP.............................................................................................................8 2.2.2 GEAR...........................................................................................................8 2.2.3 ASGI-SA.......................................................................................................9 2.3 Evolving SMME Development Strategies...................................................10 2.3.1 Types of small and medium enterprises.....................................................10 2.3.2 Strategies prior to 1994..............................................................................13 2.3.3 The 1995 White Paper and subsequent developments..............................14 2.4 Key institutions in public sector SMME support..........................................15 2.4.1 Ntsika Enterprise Promotion Agency..........................................................16 2.4.2 Khula Enterprise Finance Ltd .....................................................................16 2.4.3 DTI .............................................................................................................17 2.4.4 Provincial ?SMME Desks?...........................................................................17 2.4.5 Local authority responsibilities ..................................................................18 2.5 Shortcomings of the SMME Policy Framework in Post-Apartheid SA ........18 2.6 Summary and Conclusions ........................................................................22 vii CHAPTER 3: SEDA'S ROLE IN SMALL ENTERPRISE DEVELOPMENT 24 3.1 Seda?s Origin and Perceptions about its Role............................................24 3.2 Core Services and Programmes of Seda...................................................25 3.3 Seda's Target Market 26 3.4 Seda?s Service Delivery Model and Delivery Network................................28 3.4.1 Diversity of South Africa?s SMME and Support Needs...............................30 3.4.2 Sector Diversity of SMMEs.........................................................................31 3.4.3 Geographic Spread of SMMEs..................................................................32 3.5 Challenges arising for Seda across the country.........................................32 CHAPTER 4: SMALL BUSINESS DEVELOPMENT IN THE SIYANDA AREA 35 4.1 Basic facts about the Region and District...................................................35 4.1.1 Population composition by race 36 4.1.2 Economic Activities of the region 37 4.1.3 SMME activity in the Siyanda District 39 4.2 Needs and limitations of local SMMEs .......................................................40 4.3 Local SMME Support Structures and Bodies .............................................42 4.4 Problems experienced in the SMME Support Process...............................44 4.4.1 Geographical vastness of the Region........................................................44 4.4.2 Limited Skills of Support Staff ....................................................................44 4.4.3 Lack of Experience of Service Providers....................................................45 4.4.4 Inadequate Infrastructure ...........................................................................45 4.5 Challenges for Seda Siyanda.....................................................................46 4.5.1 Limited Geographical Representation in the District ..................................46 4.5.2 Quality of Clients ........................................................................................46 4.6 What do these fundamental problems imply for Seda?..............................47 CHAPTER 5: SURVEY OF SEDA PARTNERS IN THE SIYANDA DISTRICT 49 5.1 Approach to the interview fieldwork ............................................................48 5.2 Core Findings of the Survey .......................................................................51 5.2.1 Focus of the Organisation ..........................................................................51 5.2.2 Number of Years in Business.....................................................................52 5.2.3 Geographical Spread .................................................................................53 5.2.4 Employment Profile ....................................................................................55 5.2.5 Sector Specific Services rendered by Service Providers............................55 5.2.6 Service currently offered by Respondents..................................................57 5.2.7 Linking Service Suppliers...........................................................................58 viii 5.3 General Remarks .......................................................................................59 CHAPTER 6: TOWARDS A NEW STRATEGY FOR SEDA.................................61 6.1 Need for a new approach in rural areas......................................................61 6.2 Critical elements in an integrated partnership approach ............................62 6.2.1 Strengthening the capacity of support organisations..................................62 6.2.2 Following a focused approach....................................................................64 6.2.3 Building awareness and sharing of information..........................................64 6.2.4 Access to physical infrastructure................................................................65 6.2.5 Survivalist vs. Opportunity Entrepreneurs ..................................................66 6.3 Potential obstacles in the strategies transformation ...................................67 List of Sources 68 Annexure A: Project Research Questionnaire 72 ix LIST OF TABLES Page Table 2.1: Economic Sector contribution to the GDP 6 Table 2.2: Categories of small businesses 11 Table 2.3: Thresholds per Economic Sector 12 Table 2.4: Small-business awareness and use of government support 19 Table 2.5: Summary of Performance Results for Selected Support Programmes 20 Table 2.6: Unlocking the potential of South African entrepreneurs 22 Table 3.1: Overview of the main outputs related to the outcomes. 26 Table 3.2: Distribution of active, formally registered SMEs by Economic Sectors 31 Table 3.3: Contribution of SMEs to employment 31 Table 3.4: Geographical spread of formal SMEs 32 Table 4.1: Municipal Areas and population 35 Table 4.2: Population composition of the Siyanda District 37 Table 4.3: Geographical spread of SMMEs in the Siyanda District 39 Table 4.4: Challenges faced by SMMEs 41 Table 4.5: List of small business support organizations 43 Table 5.1: Details of small business support organisations 50 LIST OF FIGURES Figure 2.1: South Africa real GDP growth 7 Figure 3.1: Seda?s Target Market 27 Figure 3.2: Different levels and functions within the Seda network 29 Figure 3.3: Seda?s Service Delivery Process through Branch Offices 30 Figure 4.1: Map of Northern Cape Districts 36 Figure 5.1: Focus of Organisation 52 Figure 5.2: Number of years in business 53 Figure 5.3: Available Offices 54 Figure 5.4: Representation 54 Figure 5.5: Employment Profile 55 x Figure 5.6: Sectors in which Respondents operate 56 Figure 5.7: Ways to assist Seda 57 Figure 5.8: Business Development Services 58 Figure 5.9 Linkages 59 LIST OF ACRONYMS AND ABBREVIATIONS ASGI-SA Accelerated and Shared Growth Initiative for South Africa ANC African National Congress BBSDP Black Business Supplier Development Program BEE Black Economic Empowerment CDE Centre for Development and Enterprise COSATU Congress of South African Trade Unions CPPP Community Public Private Partnership Programme CSBP Centre for Small Business Promotion CSIR Centre for Scientific and Industrial Research DA Democratic Alliance DTI Department of Trade and Industry EIC Enterprise Information Centre EMIA/TISA Export Marketing and Investment Assistance Scheme FET Further Education and Training GDP Gross Domestic Product GEAR Growth, Employment and Redistribution Strategy GEM Global Entrepreneurship Monitor IDC Industrial Development Cooperation ISBDS Integrated Small Business Development Strategy LBSC Local Business Service Centres MAC Manufacturing Advice Centres MIDP Motor Industry Development Programme NAMAC National Advisory Manufacturing Centre NEF National Empowerment Fund NGO Non-Governmental Organisations NP National Party xi NSBC National Small Business Council PGDS Provincial Growth and Development Strategy RDP Reconstruction and Development Programme RFI Retail Financial Intermediaries SBDC Small Business Development Cooperation Seda Small Enterprise Development Agency SME Small Medium Enterprises SMEDP Small/Medium Manufacturing Development Programme SMME Small Micro Medium Enterprises SPII Support Programme for Industrial Innovation TAC Tender Advice Centre 1 CHAPTER 1 INTRODUCTION 1.1 Background to the Study The White Paper on the National Strategy for the Development and Promotion of Small Business in South Africa (1995) and later the Revised National Small Business Act (29 of 2004), all tried to create an environment that is conducive for the development of small businesses. The establishment of the Small Enterprise Development Agency (Seda), which provides support through a national network of access points, is a direct result of the Amendment of the Small Business Act (2004). Government sees the SMMEs as an important vehicle to boost the economy of the country because of the contribution it makes to job creation. Unfortunately South Africa has a low survival rate among start-up businesses compared to other developing economies. This is one of the key issues to be addressed by all business support players. However, for the small business sector to make a meaningful contribution to the economy it needs to be integrated into the mainstream of the economy. This would require a concerted effort from both the public and private sectors. Despite an aggressive roll-out programme, Seda has not achieved its roll-out target due to resources restraints and sometimes political interferences. In order to overcome these challenges and provide cost-effective support, linking research centres such as universities and further education training (FET) colleges, business chambers, non-governmental institutions, becomes important. Ntsika, the forerunner of Seda, has failed in providing small business support and in order to change the current situation, an enterprise driven solution is needed ? one, where all social partners including business, government, labour and institutions like Seda play a role in achieving it. The focus of the research will be on how best to establish this interaction between Seda and other small business organisations. 2 The research leads to questions such as, how can a network be established where more people can access business information, identify new business opportunities, attend business related courses and have access to professional advice that will lead to competitive and profitable enterprises? Furthermore, does the implementation of this strategy, have any impact on the sustainability of Seda? These are just some of the questions I hope to address through the course of the research project. 1.2 Literature Review Since the adoption of the White Paper on the National Strategy for the Development and Promotion of Small Business in South Africa (1995), a considerable amount of time and money was spent on developing the small business sector. Unfortunately, quite a number of hopeful and potential entrepreneurs are still not fully aware of the services that are available to them (Berry, et al., 2002; Foxcroft, et al., 2002). Other sources like the SMME Survey (2004) as well as the GEM Report (2006) concur with Berry and Foxcroft. Orford and others (2005) believe that the reason for the failure of government programmes to support small businesses is due to poor delivery. They argue that business advisors have no or little business experience and are therefore in no position to offer adequate advice to their clients. In response to all these challenges government decided to form Seda by merging Ntsika and National Manufacturing Advisory Centre (Namac). The functions of Seda have been set forth in the Revised National Small Business Act (29 of 2004). Later on, the Community Public Private Partnership Programme (CPPP), the Godisa Trust and the Technology Transfer Centre Programme, now called Seda Technology, was also incorporated into Seda. It is still a new organisation and its establishment was not without challenges. Seda experienced political resistance when it started with its roll-out programme, especially in one or two powerful provinces. These provinces started their own interventions namely the Red Doors and the Gauteng Enterprise Propeller that has similar objectives as Seda. It has and shall in future lead to competition for available 3 funding, because Seda looks towards provinces as well as local municipalities to co- fund some of its operations. If the situation persists, Seda?s legal mandate of delivering localised business support is in jeopardy. The Democratic Alliance, an opposition party in South Africa, has recently argued that Seda is not delivering on its mandate and suggested an alternative model to the current one (DA, 2006). They proposed a one-stop shop that renders non-financial as well as financial services. Thomas (2001) suggested that support programmes for SMEs be reviewed and adjusted. He explored the idea of using NGOs as well as Business Chamber Organisations, although he had some reservations about the fragmentations that existed, as possible alternative support organisations. 1.3 Research Problem and Goals of the Study Small and Medium Enterprises need more than money to start and survive in the current competitive market. They need access to support that takes their needs, as well as their particular market in which they operate into consideration. Seda has a legal mandate to make its services available within a reasonable distance of its potential clients. It cannot fulfil this mandate without the support of government as well as other social partners. It will render a better service if the private sector, especially business associations and organised business, join the delivery channel. The primary aim of this study, therefore, will be to establish, firstly, how this interaction can be established and what form it must take. The study will focus on service providers operating within the Siyanda District, which is a district municipality within the Northern Cape. Alternatively, the study will determine what other options are available in order to establish a denser network of support organisations. 1.4 Framework of the Report The author decided on a three-stage approach to this research project. The research relied on primary data from face-to-face as well as telephonic interviews and 4 questionnaires. Secondary data was sourced from prominent local authors in the field. Stage 1 The first stage was to assess and understand the legal framework that guides small and medium enterprise development. It was necessary to have a full grasp of the related issues before proceeding further. This information was gathered by reviewing existing relevant government documents like The White Paper on the National Strategy for Development and Promotion of Small Business in South Africa, The Integrated Small ?Enterprise Strategy as well as the different Acts, in particular the Amendment of the Small Business Act. Stage 2 This involved face-to-face in-depth interviews to gauge the response of social partners. In order to cut down on costs, some interviews were conducted via the telephone, whilst other partners that are not local had the option to complete a questionnaire. Secondary data analysis was used and the information was gathered from reports and other documents compiled by authors in the field. Stage 3 This phase concluded with an interpretation of the data, and the conclusions from the findings as well as recommendations. The following represents the chapter layout for the study undertaken. Chapter 1: Introduction Chapter 1 introduces the report as well as the process that was followed. Chapter 2: Small Business Development in South Africa Chapter 2 provides an assessment of the performance of the SMME sector by drawing on quantitative and qualitative analyses. The author proceeds to propose some broad conclusions by reflecting on the key drivers and inhibitors of the sector?s development to form a coherent picture of the SA SMME sector. 5 Chapter 3: Seda?s role in Small Enterprise Development This chapter introduces Seda and the role that it plays in developing SMMEs in South Africa. It also highlights some of the current challenges experienced by Seda in rolling out its services. Chapter 4: Small Business Development in the Siyanda area. Chapter 4 provides a review of the SMME economy in the Siyanda District. This Chapter highlights the unevenness of development within the district, the needs and limitations of SMMEs as well as the problems experienced by support organisations in rendering services to SMMEs. Chapter 5: Survey of Seda Partners in the Siyanda District. Drawing on primary research collected through service provider interviews, some conclusions are drawn based on the following: ? Focus of the organisations ? Geographical spread ? Sector specific services rendered ? Business development services on offer Chapter 6: Towards a new strategy for Seda In Chapter 6, some proposals are made that Seda could consider in rendering a better service to its clients. Chapter 7: Conclusion 6 CHAPTER 2 SMALL BUSINESS DEVELOPMENT IN SOUTH AFRICA 2.1 Overall Growth and Key Development Challenges South Africa has traditionally been a primary sector-based economy, revolving around the wealth of mineral resources and favorable agricultural conditions. However, the economy has been characterised by a structural shift in output over the past four decades. As the result of this shift the tertiary sector has become a bigger contributor to the Gross Domestic Product. This is not unique to South Africa ? many other governments have increased their share relative to the rest of the economy. Table 2.1: Economic Sector contribution to the GDP Sector Relative size 1960 (%) Relative size 2006 (%) Contribution to growth (% points) Agriculture, forestry and fishing 10.6 2.4 -0.3 Mining 11.8 7.0 0 Manufacturing 19.0 16.1 0.8 Electricity, gas and water 2.3 1.9 0.1 Construction 2.8 2.3 0.4 Wholesale and retail trade, catering and accommodation 13.2 12.3 0.9 Transport, storage and communication 9.4 8.4 0.5 Finance, insurance, real estate and business services 10.0 19.5 1.6 Community, social and personal services 15.7 18.6 0.6 Total value added 94.9 88.6 4.6 Taxes on products less subsidies 5.1 11.4 0.4 GDP at market prices 100 100 5.0 Source: South African Reserve Bank. 7 The world economy recorded its third successive year of real growth at a rate of approximately 5% in 2006. On the African continent real growth was around 5,5% for the third successive year. In both these instances it was the first time in at least 25 years that growth had progressed at such a firm pace for such an extended period. South Africa exhibited exceptional momentum, with real gross domestic product increasing at a rate of 5% in 2006, broadly in line with growth in the preceding two years. Average growth over three successive years at this pace had previously been observed in the period from 1979 to 1981. Annualised growth accelerated from 4,5% in the third quarter of 2006 to 5,5% in the final quarter, mainly due to an improvement in growth in all the main sectors of the economy. With a large measure of macro stability achieved, the aim of economic policy is to lower unemployment and poverty through raising the growth potential of the economy. Figure 2.1: South Africa?s real GDP growth Source: South African Reserve Bank. 8 2.2 The Macro-economic Development Framework Over the last four decades South Africa has undergone significant political as well as structural changes. Its developmental framework focuses on achieving macro- economic objectives and reducing poverty through a range of social and economic policies, notably the Reconstruction and Development Programme (RDP) and thereafter the Growth, Employment and Redistribution strategy (GEAR) and now lately the Accelerated and Shared Growth Initiative for SA (ASGI-SA). 2.2.1 RDP Confronted by the legacy of past policies, South Africa?s government has committed itself to correcting structural injustices and improving the living conditions of citizens. Immediately after the 1994 elections the RDP was adopted. It was used as the African National Congress (ANC) manifesto during the election, as ?an integrated programme, based on people, that provides peace and security for all and builds the nation, links reconstruction and development and deepens democracy? (The RDP, 1994:7). The RDP focused on meeting the people's basic needs, such as housing, water and electricity; developing the country's human resources; building the economy; and democratising state institutions and society. This policy failed to facilitate economic growth because it failed to address human resource development and small business development successfully (Hirsch, 2005:70). 2.2.2 GEAR In its attempts to accelerate growth, the government introduced the Growth, Employment and Redistribution: A Macro-Economic Strategy (GEAR) in 1996 as a macro-economic strategy with specific targets. It aimed at achieving macro-economic balance by reducing fiscal deficits and lowering inflation as well as encouraging local and foreign investment. Various targets were set, e.g. sustaining a growth rate of 6% by the year 2000 and achieving wealth redistribution by way of job creation realised through economic growth and labour market reforms (Khamfula, 2004). Although it was received well by local and international commentators, labour leaders raised their concerns because they felt that the policies made too many concessions to foreign investors. Cosatu?s, General Secretary Mr Mbazima Shilowa, implied that 9 they were not properly consulted, which created the impression that labour did not support the strategy (Sunday Times, 7 July 1996). Through GEAR the South African government achieved macroeconomic stability but the main challenge to South Africa, as a nation, remains the building of an economy capable of sustaining economic growth that benefits all citizens, including the poor. This requires the creation of jobs, as well as the overcoming of large social deficits in education, health, welfare and economic infrastructure. 2.2.3 ASGI-SA It aims to guide and improve on the country?s economic recovery since 1994. Asgi- SA?s main aim is to halve unemployment and poverty by 2014, ten years after the policy was first set out in 2004, and 20 years after South Africa?s first democratic election in 1994. In developing Asgi-SA it was concluded that interventions to accelerate growth in a shared manner must surgically target weaknesses unique to South Africa?s economy and government. Asgi-SA has initiatives which fall into six broad categories to address these constraints (Asgi-SA Annual Report, 2006: 3): ? Substantially investing in infrastructure; ? Targeting economic sectors with growth potential; ? Developing the skills of South Africans; ? Building up small businesses to bridge the gap between the formal and informal economies; ? Improving public administration; and ? Creating a macro-economic environment more conducive to economic growth. The promotion of small, medium and micro enterprises (SMME) remained a key element of government?s strategy. The RDP did not achieve its objectives due to a weak SMME development strategy and Asgi-SA aims to use SMMEs as a vehicle to bridge this gap between the two economies. 10 President Thabo Mbeki describes the two concepts as follows: ?The First Economy is modern, produces the bulk of our country's wealth, and is integrated within the global economy. The Second Economy (or the Marginalised Economy) is characterised by underdevelopment, contributes little to the GDP, contains a big percentage of our population, incorporates the poorest of our rural and urban poor, is structurally disconnected from both the First and the global economy, and is incapable of self- generated growth and development? (Mbeki, 2003). 2.3 Evolving SMME Development Strategies 2.3.1 Types of small and medium enterprises Before we discuss the development of a SMME strategy, it is important to define the term, small business. The National Small Business Act of 1996 defines a ?small business? as ?a separate and distinct business entity, including cooperative enterprises and non-governmental organisations, managed by one owner or more which, including its branches or subsidiaries, if any, is predominantly carried on in any sector or sub sector of the economy mentioned in column 1 of the Schedule referred to in Table 2.4. In South Africa?s case we include micro businesses whilst it is excluded in the global terminology. Micro enterprises are occasionally described as businesses whose turnover is below the compulsory VAT registration limit of R300 000, but this does not correspond to the official definition. The term SMME covers quite a vast array of businesses, in terms of ownership structure, sectors, activities, size and formalities. The National Small Business Act (Act 102 of 1996) classifies small businesses into the following four categories: ? Micro enterprises, which includes survivalist enterprises; ? Very small enterprises; ? Small Enterprises; and ? Medium Enterprises. Although the Small Business Act has provided an official definition of four size categories (micro, very small, small and medium), this is not followed by the official 11 state agencies in that they either add new categories (?survivalist category?) or ignore some (?very small category,?), without explanations (Stats SA, Ntsika, 2000). Table 2.2 outlines the criteria for each of the following: survivalist, micro, very small, small and medium enterprises. Table 2.2: Categories of small businesses Survivalist Enterprise Micro- enterprise Very Small enterprises Small enterprises Medium enterprises Income generated is less than minimum income standard or poverty line. No paid employees. Asset value is minimal. Economic activity directed at providing minimal means to keep the unemployed & their families alive Turnover is less than VAT registration limit (R300 000/yr) Usually lack formality regarding registering for tax, labour legislation, premises and accounting procedure. 1-5 employees. Less than 10 paid employees Operate on the formal market and has access to technology. Lower limit is the self- employed with no employees, such as artisans & professionals. Less than 50 employees More established than very small enterprises Business practices are more complex. No longer directly supervised by entrepreneur; secondary coordinating mechanism has been developed. Growth into medium scale enterprise requires accumulation of resources and appropriate incentives for enterprise expansion. Less than 100 employees Still owner/ manager controlled, but more complex management structure. Decentralisation of power to management and division of labour differentiate medium from small enterprises. Separation of ownership is the barrier between medium and large enterprises. Source: White Paper on National strategy for the development and promotion of small business in South Africa (1995). 12 In order to be classified into one of the above categories, the business has to fulfill each of three quantitative criteria relating to employment, turnover and assets. Except for micro enterprises, the number of employees is the principal criterion. In the case of micro enterprises, the turnover of the enterprise is the critical criterion (Ntsika, 1997). Table 2.3 shows the thresholds per sector, as prescribed by the Small Business Act and revised by the National Small Business Amendment Bill of 2003. Table 2.3: Thresholds per Economic Sector Sector or sub- sectors in accordance with the standard Industrial Classification Size or class Total full-time equivalent of paid employees Less than : Total annual turnover (Rm) Total gross asset value- fixed property excluded (Rm) Less than : Agriculture Medium Small Very Small Micro 100 50 10 5 5.00 3.00 0.50 0.20 5.00 3.00 0.50 0.10 Mining and Quarrying Medium Small Very Small Micro 200 50 20 5 39.00 10.00 4.00 0.20 23.00 6.00 2.00 0.10 Manufacturing Medium Small Very Small Micro 200 50 20 5 51.00 13.00 5.00 0.20 19.00 5.00 2.00 0.10 Electricity, Gas and Water Medium Small Very Small Micro 200 50 20 5 51.00 13.00 5.10 0.20 19.00 5.00 1.90 0.10 Construction Medium Small Very Small Micro 200 50 20 5 26.00 6.00 3.00 0.20 5.00 1.00 0.50 0.10 Retail and Motor Trade and Repair Services Medium Small Very Small Micro 200 50 20 5 39.00 19.00 4.00 0.20 6.00 3.00 0.60 0.10 13 Wholesale Trade, Commercial Agents and Allied Services Medium Small Very Small Micro 200 50 20 5 64.00 32.00 6.00 0.20 10.00 5.00 0.60 0.10 Catering, Accommodation and other Trade Medium Small Very Small Micro 200 50 20 5 13.00 6.00 5.10 0.20 3.00 1.00 1.90 0.10 Transport, Storage and Communications Medium Small Very Small Micro 200 50 20 5 26.00 13.00 3.00 0.20 6.00 3.00 0.60 0.10 Finance and Business Services Medium Small Very Small Micro 200 50 20 5 26.00 13.00 3.00 0.20 5.00 3.00 0.50 0.10 Community, Social and Personal Services Medium Small Very Small Micro 200 50 20 5 13.00 6.00 1.00 0.20 6.00 3.00 0.60 0.10 Source: Schedule 1 to the National Small Business Act of 1996, as revised by the National Small Business Amendment Bill of March 2003. 2.3.2 Strategies prior to 1994 The former South African government?s refusal to nourish the entrepreneurial potential of the black population served to discourage the development of a virile and dynamic small business sector. Instituted by Apartheid legislation and aggravated by severe execution, entrepreneurial development was greatly suppressed in certain sectors of the community (Thomas, 1999). Therefore, when examining the growth and the transformation of the SME sector within the South African context, the change in the political environment is virtually the most important reason. The Land Act of 1913 banned Africans from owning land outside certain areas and that inhibited them from becoming commercial farmers. Later in 1923, the Native (Urban Areas) Act was implemented which confined African residents to Native Areas. After the National Party (NP) came to power in 1948, things worsened. The Group Areas Act of 1950 stripped them of their right to run a business outside their own area. 14 Other laws and educational policies were implemented that suppressed entrepreneurial development, but with the advent of the Thatcher era, the South African government also changed its stance. Whether it was the influence of Thatcher or not, privatisation, deregulation, commercialisation and small business development were suddenly on the agenda of the government. As a result of these changes, the Small Business Development Cooperation (SBDC) was established in 1981, ?which was allowed to lend to some no-white business people? (Hirsch, 2005: 209). The importance of small business development and the value that it plays in job creation and in political stabilisation was acknowledged. In his analysis of small business support in the transition to post-apartheid, Thomas identified the following shortcomings: ? The approach lacked legitimacy; ? It lacked full geographic coverage; ? It lacked clear target-group prioritisation; ? It lacked financial sustainability; ? The approach lacked professionalism (Thomas, 1999: 32-33). Based on the above shortcomings the present government recognised the need to use the promotion of SMMEs as a means to redress past inequalities, create jobs, upgrade skills, redistribute income, democratise the economy, reduce poverty and ensure economic growth. Political support to small and medium-sized enterprises has not only been displayed through small business legislation (e.g. the National Small Business Act 102 of 1996), but also via the newly designed Competition Act (No 89 of 1998). 2.3.3 The 1995 White Paper and subsequent development The post-apartheid government was adamant that SMMEs should play a more meaningful role in the economy. The idea to achieve economic freedom was captured in the framework of the RDP, but after a series of sixty workshops the 1995 White Paper on National Strategy for Development and Promotion of Small Business in South Africa was published. It was the first time that a document of this magnitude targeting the entire spectrum of small enterprise development was published. A year 15 later, the National Small Business Act (Act 102 of 1996), was promulgated, which enacted the strategy. The overall objective of the strategy was to create an enabling environment for SMME growth in the country as a way of addressing basic inequalities in the economy. In order to achieve its mandate, the following key objectives were set: ? Create an enabling environment for small enterprises ? Facilitate greater equalisation of income, wealth and earning opportunities ? Address the legacy of apartheid-based disempowerment of black business ? Support the advancement of women in all business sectors ? Create long-term jobs ? Stimulate sector-focused economic growth ? Strengthen cohesion between small enterprises ? Level the playing fields between bigger and small businesses as well as between rural and urban businesses ? Prepare small businesses to comply with the challenge of an international competitive economy (White Paper, 1995: 17). 2.4 Key institutions in public sector SMME support These two groundbreaking documents paved the way for the establishment of various institutions and programmes. The two principal initiatives were the Ntsika Enterprise Promotion Agency, to provide advice and assistance to new and small businesses, and Khula Enterprise Finance, to promote the provision of finance, especially microfinance, and guarantees to small businesses. Government decided at the time to part ways with the SBDC, now Business Partners, and used the money to invest in starting Khula. 16 All of these entities that were formed reported to the Department of Trade and Industry (DTI). The DTI is responsible for ? Policy-making and legislative activities; ? Procurement programmes; ? Promoting partnerships between Government and Industry organisations; and ? Information and publicity. 2.4.1 Ntsika Enterprise Promotion Agency Ntsika was established to provide non-financial support to SMMEs via a range of programmes that was available through a network of service providers: ? Local Business Service Centres (LBSCs): For assistance in business administration and general business advice. ? Tender Advice Centres (TACs): To provide assistance and training to SMMEs on government tendering processes and to inform clients of current tenders. Most of the LBSCs were also accredited TACs in order to sustain themselves. ? Manufacturing Advice Centres (MACs): These were coordinated and monitored by the National Advisory Manufacturing Centre (NAMAC) in collaboration with the Centre for Scientific and Industrial Research (CSIR). 2.4.2 Khula Enterprise Finance Ltd In surveys among small enterprises all over the world, access to finance comes out as one of the most urgently felt needs. The recent Global Entrepreneurship Monitor (GEM) for South Africa of 2006 indicated that respondents felt that it is still difficult to access funds, especially start-up funding. Khula Enterprise Finance was established to promote the provision of finance, especially microfinance, and guarantees to small businesses. The schemes currently existent can be grouped as follows: ? Business Loan Scheme: Loans are forwarded to Retail Financial Intermediaries (RFIs) which are SMME departments of commercial banks or Non-governmental Organisations (NGOs). ? Guarantee Schemes: The guarantees are underwritten by Khula to reduce the risk of borrowing to SMMEs without sufficient collateral. Various schemes with 17 different partner organisations, including the old SBDC, now Business Partners, have been introduced. ? Equity Funds: SMMEs can access funding from private investors whom Khula may partner. In addition to this Khula also runs a mentoring scheme to assist with the capacity building of service providers and potential RFI staff. Recently Khula also indicated that they are considering financing clients directly. 2.4.3 DTI Other institutions that have been established to give effect to the strategy include: ? the Centre for Small Business Promotion (CSBP) attached to the Department of Trade and Industry; ? The National Small Business Council (NSBC); ? a pre-shipment export finance guarantee facility to expand access to working capital; ? the Competitiveness Fund for consultancy advice on technology and marketing; ? The National Empowerment Fund(NEF) to focus on Black-owned Businesses; ? GODISA small business incubation centers (partly under the Ministry of Labour); ? Industrial Development Zones (IDZ) programme; ? The Motor Industry Development Programme (MIDP); ? Small/Medium Manufacturing Development Programme (SMEDP); ? The Industrial Development Cooperation (IDC), now a flagship programme of the government was retained as one of the legacy institutions to provide venture capital as well as normal finance in access of R 1 000 000. 2.4.4 Provincial ?SMME Desks? The White Paper on National Strategy for Development and Promotion of Small Business in South Africa proposed that provincial SMME desks are established to link national programmes with local implementation bodies as well as establish a comprehensive SMME database. They should also ?facilitate forum-type contact between all SMME stakeholders in the province and channel their grievances or 18 proposals to relevant implementation or policy-making bodies? (White Paper, 1995: 45). Sadly, most of these SMME desks failed to operate fully due to capacity problems. Although they were supposed to organise annual service provider forums only two of the nine provinces succeeded in it (Bloch and Daze, 2000). 2.4.5 Local authority responsibilities The local government implements the policies and strategies of the provincial government. The establishment of district and local municipalities presented opportunities for the enhancement of providing support to SMMEs. Through their IDP and LED strategies, district and local municipalities are supposed to identify the opportunities for economic development locally and identify the stumbling blocks impeding effective development of local economies. Very few rural municipal areas have any type of facility for the support of small business. It is a known fact that local municipalities do not have the necessary skills or financial resources to assist SMMEs and all plans remain just dreams. Some LED strategies were also developed without taking the integrated SMME strategy and the Seda processes into account. As such there is a need to align the LED strategies to the PGDS and the provincial and national SMME strategy and the national LED framework. 2.5 Shortcomings of the SMME Policy Framework in Post-Apartheid SA Although the strategy had political support and one can even go as far and say that it was and still remains a good strategy with well intended policy measures, it suffered from sub-optimal implementation. Thomas, Broembsen, Al Berry and others as well as Herrington, all concluded that there are still continuing problems with government support programmes. In 2004 The Centre for Development and Enterprise (CDE) concluded that unless you address broader issues, like infrastructure provision for SMMEs, life for small businesses will remain difficult (CDE focus, June 2007). 19 The Small and Medium Enterprise Survey undertaken yearly is one of the most comprehensive studies to be undertaken. It targets at least 2500 enterprises per annum. The 2004 SME Survey focused on the SMME perception of government support. The most damning statistic coming from the report was that less than 15% of respondents had heard of any government support structure. Table 2.4 shows what percentage of businesses surveyed was aware of the services and who made use of them. Table 2.4: Small-business awareness and use of government support Government Initiative % of businesses which are aware of programme % business which have used programme SETAs IDC Competitiveness Fund Ntsika Export incentives Manufacturing Advisory Centres Khula Brain 61 45 32 13 12 11 9 4 32 7 11 1 2 1 1 1 Source: SME Survey, 2004. This paper does not intend to analyse and discuss the shortcomings in detail, but the following can be seen as a general list of findings: ? Uncertainty of Financial Support from Government; ? Limited SMME outreach in rural areas (it is still more biased towards the urban community); ? Quality of the SMME support programmes; ? Problems with delivery institutions and delivery mechanisms. In a recent study that was undertaken by the World Bank (2007) the shortcomings of the SMME strategy as identified by Thomas already in 1999 and Orford (2005) were supported. Table 2.5 shows a performance rating system that explained some of the programmes that were evaluated in the study in South Africa. 20 Table 2.5: Summary of Performance Results for Selected Support Programmes Programme Economic Rationale Target beneficiary Selection Operating Efficiency Impact/cost effectiveness Inspection verification M&E Government funded programmes SMEDP 2.5 2.0 2.0 2.0 1.5 EMIA Pavilions 3.0 2.5 3.5 3.0 3.0 Khula RFI?s 3.0 2.0 3.0 2.0 2.5 NEF 2.5 2.5 2.5 2.0 2.0 SPII 3.5 3.0 3.0 2.5 3.0 Ntsika LBSC 3.0 2.0 2.0 2.0 2.5 GODISA Softstart 3.5 2.5 3.0 2.5 2.5 Gauteng GEP 2.5 2.5 3.0 2.5 2.5 Total 2.9 2.4 2.8 2.3 2.4 Bank-supported programmes Competitive- ness Fund 3.5 2.5 3.0 3.0 2.0 Sector Partnership Fund 3.5 2.5 2.0 2.2 2.2 BBSDP 3.5 2.8 3.0 N/A N/A Total 3.5 2.6 2.7 2.6 2.1 Source: South Africa Enhancing the Effectiveness of Government in Promoting Micro, Small and Medium Enterprise Note: How to read the scoring A score of 1: The programme has little or no economic rationale in terms of addressing market distortions. A score of 2: The programme has a degree of merit; it may be susceptible to improvement. A score of 3: The project is overall worthwhile. A score of 4: The economic rationale is very sound. The best performers assessed were the National Pavilions, a programme under the Export Marketing and Investment Assistance Scheme (EMIA/TISA) and the Support Programme for Industrial Innovation (SPII). The BBSDP impact study showed 21 acceptable performance on some dimensions. The weaker programmes, in terms of rationale and operational capacity, includes the SMEDP, which appears to have excessively loose selection criteria. The NEF is a newly started programme, designed to address directly BEE firms and may face operating problems of cost- recovery although it is early to make judgments. Khula Enterprise Finance?s Retail Financial Intermediary (RFI) programme has also proved weak on selection and economic impact, considering the large number of RFI failures. The LBSC programme proved disappointing for reasons of uneven geographical spread, inadequate funding and management problems. Based on the review and the experiences of eight years of SMME policy, in 2003 the DTI issued a new SMME Strategy: ?Unlocking potential in an enterprising nation: The Integrated Small Business Development Strategy in South Africa 2004-2014?. The Integrated Small Business Development Strategy (ISBDS) sets out three strategic directions: ? Promoting entrepreneurship; ? Unlocking potential through better business environment; and ? Promoting more competitive small businesses. The core of the strategic approach of the revised strategy is captured in the three pillars shown in Table 2.6 encompassing an array of objectives: 22 Table 2.6: Unlocking the potential of South African entrepreneurs PILLAR 1 Promoting entrepreneurship PILLAR 2 Creating enabling environments PILLAR 3 Enhancing competitiveness & capabilities at enterprise level Strengthen national awareness about the critical role of entrepreneurs Maintain small- business-sensitive business regulations Strengthen managerial, business and technical skills Promote alternative forms of ownership Improve access to finance Facilitate improved quality, productivity and competitiveness Expand franchise opportunities Strengthen access to markets via procurement, exports and business linkages Support technology transfer, incubation and the commercialisation of research products Strengthen business associations and networks Facilitate the availability of business infrastructure and premises Expand SMME-focused sector support strategies Localise support and expand delivery networks Source: Integrated Small Enterprise Development Strategy, 2005. As a result of this re-think, in December 2004 as part of a rationalisation process, the Ntsika and NAMAC organisations, along with the CPPP, were merged under the Small Enterprise Development Agency (Seda). The Small Enterprise Development Agency (Seda) will localise support through a national network of access points. 2.6 Summary and Conclusions The South African SMME sector is expected to fulfil a number of roles ranging from poverty alleviation, job creation, economic growth, equity as well as the creation of internationally competitive enterprises. It is, however, difficult to achieve this when you still have to deal with skills development, ranging from literacy to technological advice. 23 One of the greatest challenges is to learn from past mistakes and not to repeat them. By comparing the developments before 1994 and after 1994, it is clear that although political support was evident in the latter period, similar mistakes were made. A strategy that can link the supply side effort and demand potential will go a long way. The success or failure of any strategy depends ultimately on the successful implementation of lessons learned. 24 CHAPTER 3 SEDA?S ROLE IN SMALL ENTERPRISE DEVELOPMENT 3.1 Seda?s Origin and Perceptions about its Role In response to perceived failings of the current small enterprise support infrastructure, the government decided to merge Ntsika and Namac to form the Small Enterprise Development Agency (SEDA). The agency aims to provide a comprehensive package of services with uniform quality throughout the country. Seda will incorporate all existing small enterprise support programmes as different product offerings under one organisation (e.g. tender advice, business advice, manufacturing advice). A key aspect of the programme will be information sharing through a common information system, which will enable the tracking of clients, and the development of good data on clients, performance and client satisfaction. Seda, was established in December 2004 as an agency under the Department of Trade and Industry (DTI). It was created when three organisations merged namely, Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre (NAMAC) and the Community Public Private Partnership Programme (CPPP). The Godisa Trust and the Technology Transfer Centre Programme, now called Seda Technology, were also incorporated into Seda in 2006. The staff, offices and programmes of these entities were transferred to Seda. Integrating these three different organisations was a major challenge for Seda during its first 15 months of operation. The network transferred under Seda included 8 provincial Manufacturing Advice Centres (MACs), 17 MAC Satellite Offices and 4 LEDA Centres ? a total of 29 offices. In the mergers, Seda inherited a staff of 296. The inherited products included various diagnostic tools and other products and projects from all three organisations. The legislation establishing Seda (Revised National Small Business Act, 29 of 2004) defines Seda?s objectives, functions and governance structure. The functions of Seda are set forth in the Act as follows: i. Implement the policy of the national government for small enterprise development; 25 ii. Design and implement a standard national delivery network that must uniformly apply throughout the Republic in respect of small enterprise development, integrating all government funded small enterprise development agencies across all spheres of government; iii. Design and implement small enterprise development support programmes: ? Facilitate the building of sustainable and competitive enterprises; ? Facilitate the promotion of entrepreneurship; ? Facilitate the creation of an enabling operating environment for small enterprises (including sources, capacity-building services, products and services); ? Facilitate access by small enterprises to non-financial reprises; iv. Establish provincial structures to ensure the effective implementation of its functions. 3.2 Core Services and Programmes of Seda Seda was formed to provide non-financial, enterprise development and support services through its network of outlets. These services include information, advice, mentoring, counseling, handholding and training. The above services are related to basic issues related to starting or running a business as well as more complex and specialised business development needs, including exporting, access to government procurement opportunities, business planning, etc. Seda is currently developing a set of programmes for its customers from particular sectors prioritised in the Asgi-SA, such as crafts and tourism, agribusiness, and small scale mining. 26 Table 3.1: Overview of the main outputs related to the outcome Expected Output Outcome Small enterprise development support Market Access, Tendering, Export Assistance, Business Linkages, Retail Support, Productivity Improvement, Business planning, Small scale mining, Cooperative support, Franchising Entrepreneurship promotion and development Start-up assistance and training, Business registrations, Entrepreneurship awareness campaigns, Agribusiness support programme Capacity building programmes for service Providers Business counseling and advice, Assistance to access tender opportunities, Export assistance, Business planning, Cooperatives support Source: Seda Business Plan 2007/08. 3.3 Seda?s Target Market Seda targets to serve customers with 20% of the focus on medium sized enterprises, whilst the small, micro (formal and informal) and co-operative enterprises get 80% of the focus. The definition is based on the official definition as stated in the Act (102 of 1996), but in the interim Seda applies the criteria based on the number of employees. As can be seen, most of Seda?s activities are based on the lower end of the small enterprise sector, namely micro to small enterprises, which is less than R5,0 million turnover and which is in line with the new Black Economic Empowerment (BEE) codes. 27 Figure 3.1: Seda?s Target Market Source: Seda?s Strategic Plan 2007/8 ? 2009/10. Seda?s clients consist of all potential entrepreneurs as well as existing enterprises on all phases of the business cycle. The five phases Seda applies to identify customer needs as well as designing its services are listed here: i. Pre-Start Ups, refers to those clients who are considering to enter into business and who have expressed a keen desire to enter into a small enterprise. This phase is characterised by consideration and preparation. ii. Start-Up refers to those individuals who have taken the decision to enter into business and are in the process of staring their own small enterprises. This stage normally ends when the first sales are made, or within 3 months of the first sale. This phase is characterised by starting and first sales. iii. Growth/maturity refers to those businesses that have survived the first three months of operation, or have been in business for some time, but are in a positive growth phase. The characteristics are positive growth after survival. Medium enterprises Small enterprises Micro enterprises Survivalist enterprises Necessity- driven /Survival Potential entrepreneurs Characteristics ?Less than 200 employees ?Developed technical & business skills ?Less than 50 employees ?Developed technical/limited business skills ?Less than 5 employees ?Limited technical and business skills ?Individual self employment ?Very limited technical and business skills 20% 80% Opportunity-driven / Entrepreneurial 28 iv. Stagnation refers to the state of a business that has ended their growth phase and has stagnated on a specific level for some time, without further growth evidence. This phase could be for many years and is also characterised by stability. v. Decline refers to a business that is in trouble since it has been in steady decline over a period. These businesses need turnaround strategies to get them back on track (Seda business plan, 2007/08). 3.4 Seda?s Service Delivery Model and Delivery Network In line with the guidelines of the National Small Business Amendment Act, 2004, each province is required to establish a Seda provincial office, with a branch office in each of the districts and Enterprise Information Centres (EIC) on a municipal level. Therefore, Seda?s service delivery network consists of the national office and the provincial network with three tiers: ? Provincial Offices; ? Branch Offices on district level; ? Enterprise Information Centres (EIC) on local level. The Provincial Offices and Branches are fully owned by Seda and staffed by Seda employees. EICs are not owned or managed by Seda, but contracted to deliver certain services. They are normally independent support organisations. 29 Seda NATIONAL OFFICE Seda PROVINCIAL OFFICE Seda BRANCH OFFICE ENTERPRISE INFORMATION CENTRES Management, coordination and support to the provincial network. Co-ordination, facilitation and support Funds disbursement and administration Marketing and stakeholder relations Service provider identification Vetting and monitoring of District Branches Information centre identification and support Performance management Delivery of products and services Implementation of programmes and projects Identification of opportunities and business linkages for small enterprises Accommodation of public and private sector partners in small enterprise development and support Development, support and monitoring of enterprise information centres. Information, referrals and advice Assessments Counselling Data capturing on small enterprises, service providers and market opportunities. Figure: 3.2. Different levels and functions within the Seda network Source: Seda Strategic Plan 2007/8 ? 2009/10. The model that Seda decided to use incorporates experienced service providers or mentors. Seda contracts a large number of specialised service providers to provide training programmes, consultancy services, etc. for Seda clients subsidised from their Technical Fund. This system was used by the legacy institution as well as by the then SBDC. 30 Figure 3.3: Seda?s Service Delivery Process through Branch Offices Source: Seda Business Plan, 2007/08. 3.4.1 Diversity of South Africa?s SMME and Support Needs It is difficult to measure the actual size of the small business sector in South Africa. It is compounded by the fact that there is a large number of enterprises that operate outside the legal framework. According to calculation done by the Annual Review of Small Business in South Africa (2004) the SMME sector amounts to between 2,77 to 3.55 million businesses. It includes trading as well as not yet operational entities. 31 3.4.2 Sector Diversity of SMMEs Table 3.2 shows the distribution of registered active SMMEs per economic sector. As can be seen from the information, most are involved in financial and business services, wholesale and retail as well as manufacturing, the validity of this information is not debated in the paper. Table 3.2: Distribution of active, formally registered SMEs by Economic Sectors Economic Sector No. of Firms % Distribution Financial and Business Services 183308 43.0 Retail, Motor Trade and Repairs 58019 13.6 Manufacturing 52468 12.3 Community, Social and Personal Services 29849 7.0 Construction 26977 6.3 Wholesale Trade and Allied Services 26493 6.2 Agriculture 16365 3.8 Catering and Accommodation 14666 3.4 Transport, Storage and Communication 13955 3.3 Mining and Quarrying 1852 0.4 Electricity, Gas, Water 835 0.2 Unknown 1453 0.3 TOTAL 426240 100 Source: Stats SA Integrated Business Register, 2004. Table 3.3: Contribution of SMEs to employment (%) Economic Sector Micro Very Small Small Medium Total Agriculture 39 11 31 19 100 Mining and Quarrying 0 0 4 93 97 Manufacturing 14 18 21 45 98 Electricity, Gas and Water 0 12 17 57 86 Construction 34 31 18 13 96 Trade, Hotels and Restaurants 43 28 14 13 98 Transport, Storage and Communication 30 18 15 35 67 Financial and Business Services 16 28 20 33 97 Source: Annual Review of Small Business in South Africa, 2004. 32 Table 3.3 shows the contribution of the different sizes of enterprises to employment (2004). 3.4.3 Geographic Spread of SMMEs Most of the support rendered by the legacy institutions was urban based and according to the Annual Review of Small Business in South Africa 2004 it is evident that 20% of SMMEs are in rural areas whilst 25% are in towns and the majority is operational in the six metropoles. Gauteng, Western Cape and KwaZulu Natal, host the majority of registered small enterprises. Table 3.4 shows the distribution of formal SMMEs between provinces. Table 3.4: Geographical spread of formal SMEs Province Formal SME (%) Gauteng 46,7 Western Cape 18,2 KwaZulu Natal 12,6 Eastern Cape 5,2 Mpumalanga 3,5 Free State 3,0 North West 2,6 Limpopo 2,3 Northern Cape 1,1 Unknown 4,8 TOTAL 100 Source: Stats Integrated Business Register, 2004. 3.5 Challenges arising for Seda across the country The importance of SMME development in South Africa leaves little scope for organisations to deal with their growing pains. Seda is now into its third year of operation but the jury is already out. As it deals with completing the roll-out process of its networks it faces internal as well as external challenges. 33 A recently published World Bank report on government?s small business intervention concluded ?A new SMME strategy was presented by DTI in 2003, articulating the Government?s strategic directions, creating a new Small Enterprise Development Agency and promoting the objective of broad-based Black Economic Empowerment. Growth and performance of the sector has, however, not been commensurate so far with efforts and investments involved. Though there has been a large increase in small and micro-business start ups over the past decade, survival rates have also been low and a critical mass of small enterprises has yet to be integrated into a number of sub-sectors. In addition, the impact of the various incentive programmes, in terms of economic returns and (added value), has been less than consistent? (World Bank Report, 2007). The DA has also added its voice to the debate and recently proposed in its report to parliament a one-stop shop for enterprise development. They were of the opinion that the current strategy will only lead to further complicating small business development instead of promoting it (DA, 2006). Solutions to these challenges are not easy but it?s a good start to acknowledge the challenges that the organisation faces. The following challenges were identified by the Chief Executive Officer of Seda during the annual summit of 2006: i. Inadequate funding In Chapter 2 of this report it was pointed out that in the past the lack of primary funding lead to the failure of the government?s SMME strategy. During the second part of the last financial year (2006/07) the board had to place a moratorium on all expenditure in the absence of secured funding from government. Seda is put under pressure to either identify other sources of funding or convince government on all levels of the importance for it to deliver on its legal mandate, thus justifying more government funding. ii. Lack of cooperation from regional structures which see Seda as competition Red Door in the Western Cape as well as the Gauteng Enterprise Propeller in Gauteng were started in these provinces to render SMME support. Seda does have the political and financial support of the provincial governments, but it is experiencing political resistance in these areas. Seda still does not have a provincial office in the 34 Gauteng Province. This issue should be proactively addressed before it leads to unnecessary competition for scarce resources, especially financial resources. iii. Limited experience and skills in business advising of Seda and the service providers? staff Staff turnover in Ntsika was identified as one of the weaknesses, with Seda having lost four of its Executives (Finance, Human Resources, Marketing and Network Operations) in a short space of time. Resources are already scarce in the field and it does raise concerns at the lower levels of the organisation. Seda has started to develop the capacity of its staff as well as service providers, but experience is only gained over a period of time. In order for the organisation to grow, it will have to focus on retaining skilled staff, especially staff in senior positions. iv. High and sometimes unrealistic expectations that breeds impatience The criticism of the DA is testimony to the impatience. Seda must learn to manage the expectation of its stakeholders by keeping them informed of its role, the status of its roll-out process, as well as its successes and challenges. Initially people were under the impression that Seda will assist them financially, which is not the case. By not communicating with its immediate stakeholders people can easily get unrealistic expectations. Thomas (2007) advised the leadership of Seda to be strong enough to weather the storm in an article in the Small Business Monitor. v. Expansive geographic space and scale that has to be covered regardless of population densities Legislation dictates to Seda to take its services to its clients. Thus, for example, the Northern Cape is sparsely populated but Seda must have representation in all the districts and service all municipal areas. Rendering the same quality of service to sparsely populated areas becomes extremely challenging. 35 CHAPTER 4 SMALL BUSINESS DEVELOPMENT IN THE SIYANDA AREA 4.1 Basic facts about the Region and District Siyanda District Municipality forms the mid-northern section of the province on the border with Botswana. Siyanda covers an area of more than 100 000 square kilometres (almost 30% of the entire Province) out of which 65 000 square kilometres compromise the vast Kalahari Desert, Kgalagadi Transfrontier Park and the former Bushman Land. The district encloses the municipalities of Kgatelopele, Tsantsabane, Mier, Khara Hais, Kai !Garib and !Kheis as well as the DMA. Table 4.1: Municipal areas and population Municipal Code Name Main towns Population (2001) NC082 Kai! Garib Municipality Kakamas, Keimoes, Kenhardt Surrounding rural areas of Blouputs, Kanoneiland, Marchand Augrabies, Alheit and Cilliers 57684 NC081 Mier Municipality Rietfontein, Askham, Noenieput, Grootmier, Kleinmier 6844 NC083 //Khara Hais Municipality Upington, Raaswater, Louisvale, Kalksloot, Leerkrans, Karos, and Lambrechtsdrift 73785 NC084 ! Kheis Municipality Groblershoop, Grootdrink, Wegdraai, Topline and Gariep 16027 NC085 Tsantsabane Municipality Postmasburg, Groenwater, and Skeyfontein 31013 NC086 Kgatelopele Municipality Danielskuil, Lime Acres 15447 DC8 DMA Riemvasmaak; Swartkopsdam 8600 Source: Integrated Economic Development Plan of Siyanda, 2006. 36 A very interesting characteristic of the population is that there is an internal migration from the rural to the urban centres. Thus, migration occurs to more economically viable municipalities, like //Khara Hais Municipality situated in Upington, which leads to outflow of the labour force and entrepreneurial potential in the economically weaker places. This pattern of migration also puts an additional stress on municipalities who have to accommodate these migrants within their limited resource base. Figure 4.1: Map of Northern Cape Districts 4.1.1 Population composition by race Table 4.2 illustrates the population composition of the Siyanda district in terms of race. It can be seen that the major part of the population in this district is made up of coloured people (64%), followed by black people (21%), with whites only representing 14%. In comparison to the Northern Cape as a whole, the share of coloured people is higher in the Siyanda District. 37 Table 4.2: Population composition of the Siyanda district (%) Siyanda District 1996 1997 1998 1999 2000 2001 2002 2003 2004 Black 22.10 22.04 22.00 21.90 21.80 21.80 21.70 21.70 21.60 White 15.15 15.00 14.80 14.70 14.60 14.40 14.30 14.20 14.10 Coloured 62.70 62.90 63.10 63.30 63.30 63.70 63.90 64.10 64.30 Asian 0.05 0.05 0.05 0.05 0.05 0.04 0.04 0.04 0.04 Total 100 100 100 100 100 100 100 100 100 Source: Integrated Economic Development Plan, 2006. 4.1.2 Economic Activities of the region The economic activities within the Siyanda region is dominated by agriculture and tourism. Little diversification exists and the role of mining became less important with the closure of mines. Agriculture Agriculture in the district concentrates on grape production with a little bit of cash crop production. Grape farming occupies by far the biggest part of prime farmland and the growth in this kind of farming increased so much with the addition of the table grapes for the fresh market that it necessitated the utilisation of less fertile land. Initially the grape farming included winemaking and the production of raisons. Diversification has taken place with the addition of a grape juice plants in Kanoneiland. Five cellars exist in the region as well as a private cellar in the Daysonsklip-area. The KWV also has a cellar in Upington. This type of farming is done by irrigation and a huge amount of fertilisation is used to keep the soil fertile, as natural fertilisation through flooding does not take place on a sustainable manner. Local cash crops include corn, mealies, nuts and cotton. The biggest area of the region is utilised for extensive grazing of sheep, goats and cattle. Farming units are usually very big, due to the low carrying capacity of the 38 land. The bulk of these farms are privately owned and farmed commercially. Game farming is also steadily gaining importance in the district. Subsistence farming exists in the Riemvasmaak and Kalahari region where it is practised by the small farmers. Empowerment of the previously disadvantaged people has been initiated, but much needs to be done to involve them in commercial farming. It is mainly within the Mier area where previously disadvantaged people own farmland. Communal Farming occurs in the Riemvasmaak area as well as the #Khomani-San area. Both these projects have been initiated as land reform projects. Tourism Tourism has the potential to enhance the economic base of the district. Attributes of the region that can be exploited via the tourism sector include the undisturbed landscape, the culture of the area (viz. #Khomani San; Nama-peoples) and the existing national parks as well as game across the area. Eco-tourism and eco- adventures like river rafting and 4x4-routes are also being exploited, but are far from utilising their full potential. Similarly the big game farms in the Mier area are under- utilised with much scope to add value to this facility. Opportunities like backpack trails, hunting and game watching are fields that have not been tapped fully. Mining This sector is not a significant contributor to the district GDP. No economically viable mineral resources have been found within the area, except some recent findings in the Rietfontein area. Small pockets of minerals like copper, zinc, calcite, lead, fluorspar, barite, wolfram and amethyst have been noted. Currently salt is mined at two pans, namely Groot Witpan, 95 km northwest of Upington and at Witpan, 115 km northwest of Upington. Mining of salt is risky and activities sometimes have to be stopped for years after good rains have been experienced. There are, however, salt plants in Upington which produce for the national market. 39 4.1.3 SMME activity in the Siyanda District In the absence of data on the total number of formal, non-incorporated businesses in the district, the Siyanda District Municipality levy database was used. Businesses are lately exempted from paying the levies, but most business owners still register their new businesses on the database. Some businesses might not be registered, but this still remains the most updated database of registered businesses in the district. Table 4.3: Geographical spread of (registered) SMMEs in the Siyanda District Nature of Activity Upington Keimoes Kakamas Grobblers- hoop Kenhardt Olifants- hoek Postmast- burg Daniels- kuil Lime Acres Total % Trade, hotels and restaurants 869 157 188 116 41 43 149 73 31 1 667 42.8 Agriculture 830 265 218 161 13 9 15 7 0 1 518 38.8 Construction 131 23 38 3 4 2 29 25 9 264 6.7 Financial and business services 96 19 24 6 6 3 20 7 4 185 4.7 Motor trade and repairs 70 5 7 2 3 1 13 2 0 103 2.6 Transport, storage and commu- nication 34 2 5 1 5 3 7 4 2 63 1.6 Manu- facturing 25 4 5 6 0 2 9 6 11 68 1.7 Electricity, gas and water 10 4 1 0 0 0 1 2 1 19 0.5 Mining and quarrying 7 2 4 0 0 0 6 2 4 25 0.6 Total 2072 481 490 295 72 63 249 128 62 3 912 100.0 % 53.0 12.3 12.5 7.5 1.8 1.6 6.4 3.3 1.6 100.0 Source: Own calculations based on database of Siyanda District Municipality, 2007. It is clear from Table 4.3 that the majority of businesses are located in and around Upington, which is also the main town in the district. This reaffirms the findings of the 40 CDE study (2007) that available infrastructure as well as the demand for services, which is lacking in the rural areas, plays a major role in encouraging entrepreneurship. The remote towns (e.g. Kenhardt) are less active in terms of SMME development, and this can be linked to the lack of infrastructure. Over the last decade the increased demand for eco-tourism or nature-based tourism has been the dominant and growing trend in the tourism industry. This has led to an increase in the number of guesthouses in the district. What is also clear from the above table is that the majority of the businesses are either active in the primary sector (esp. agriculture) or in the tertiary sector (trade, hotels and restaurants). Most of the black businesses that the local Seda office deals with come from the informal sector, especially in trade. Very few businesses are operating in the manufacturing sector or in the information technology field. 4.2 Needs and limitations of local SMMEs In the Siyanda District generic problems in terms of the Small Business Promotion Act include the following: ? lack of access to funding; ? information; ? business premises; ? markets; ? the tax burden and a legal and regulatory framework; ? lack of skills and managerial expertise; and ? lack of access to appropriate technology. Whereas the problems of SMMEs mentioned above are generic, SMMEs in the district encounter specific problems and constraints. A number of towns are struggling to survive resulting in economically active inhabitants leaving these towns. It is mostly older people who remain in these towns and they are looking for businesses to supplement their income, yet do not want to compete in the main- stream economy. 41 Other problem symptoms noted in the region include the following: ? a low number of loans granted to SMMEs under the Khula credit guarantee scheme; ? a high rate of rejections for bank finance (due to credit bureau or ITC listings); ? a lack of creativity in the business plans submitted to banks; ? a lack of security, collaterals and own contribution in terms of submissions to banks; ? poor credit records of SMMEs in the disadvantaged communities; ? a lack of mentors and business advisors in the district; and ? a high failure rate of government funded enterprise projects, especially at local government level. Table 4.4 further shows that the needs of the SMMEs differ and that many of their problems are related to specific sectors. Table 4.4: Challenges faced by SMMEs Economic Sector Major SMME challenges Agriculture Access to fertile land and water plays a very important role in this sector. Secondly, the lack of access to equipment finance and working capital, poor farm management and lack of technical skills contributes to the dismal performance of emerging farmers in this sector. Lastly, artificial market barriers created by existing farmers? cooperatives present a major market entry barrier to emerging farmers. Agro processing Agro-processing requires raw materials, a plant, machinery and technical knowledge. Agro products also require a market. Thus, the lack of access to markets, finance, technology and technical skills act as major barriers to SMMEs. Manufacturing Manufacturing activities require SMMEs to have access to markets, machinery, equipment and technical skills. The lack of technical skills and finance act as stumbling block to SMMEs in this sector. Tourism SMMEs need the tourism infrastructure, fittings and fixtures to operate guest houses, tour-guiding, bed and breakfast businesses in the townships. In addition to the requirement of initial capital, SMMEs in this sector require working capital to finance the day-to-day operations of their businesses. 42 Trade Wholesale business is volume business and requires investments in infrastructure as well as working capital. In addition to the capital requirements, wholesale business requires management information systems to ensure the tight monitoring and control of stock. Access to finance and business management skills contribute to the dismal performance of SMMEs in the trade sector. Access to finance also acts as a barrier of entry to SMMEs in this sector. Public sector procurement products and services Government departments procure large volumes of products and services from SMMEs. The main constraints facing SMMEs in this regard include the lack of access to working capital, insufficient specialisation, lack of tax compliance, and the absence of focus on the part of SMMEs. Late payment by government and other institutions also often causes cash flow problems for this sector. Source: Integrated SMME Strategy: Department of Economic Affairs NC. 4.3 Local SMME Support Structures and Bodies Table 4.5 lists SMME support bodies engaged in the district, with some indication of their focus. In analyzing these activities, the SMME service provider audit commissioned by the Department of Economic Affairs (2004) identified the following challenges: ? there is minimal participation of the private sector in SMME support activities; ? there is a lack of skilled service providers; ? little coordination and collaboration amongst service providers; ? support services are over-concentrated in Kimberley; ? few workshops and training sessions are held in the province to promote entrepreneurship; ? SMME support services are once-off and not holistic; ? there is a lack of aftercare and mentorship support services; ? duplication of services especially for training; ? SEDA offices offer only generic support services; ? there is little sector-focused support for tourism, arts and crafts, agriculture and trade; ? lack of mentorship support in the service delivery system; ? too few private business advisors in the province; 43 ? there is no advice centre for agro-processing and rural industries. Table 4.5: List of Small Business Support Organisations engaged in the District ame of Organisation ervice Provided BSA/Standard Bank/FNB/Nedbank usiness loans, Overdraft facilities, Asset finance, Agriculture equipment and business finance, Bridging finance, Equity finance, Performance Guarantees, Venture Capital, small business loans CT Productions aining and Capacity Building. nnalise Fourie CA ccounting, Auditing, Tax Consultancy, usiness Partners ommercial property finance, Equity finance, Business loans, Mentorship, Khula Start-up finance usiness Research Consultants - BRC mall business support, marketing, nablis SA usiness Skills, Finance and other support (Mentors) ET College: Upington ntrepreneurship training, business management and technical skills elp U Agencies CC mall business support e Consultancy ccounting, Auditing, Tax Consultancy, Management Consultancy O Focus: Lynnwood ntrepreneurship training, business management. G Harber ccounting, Management Consultancy Khara Hais Municipality mall business support, attract investment, provide infrastructure, spatial targeting, economic cluster development ational Productivity Institute oductivity improvement and capacity building initiatives. orthern Cape Chamber of Commerce and Industry bbying government and the private sector for financial and non financial support of its members range-ko-op usiness skills training, small scale mining support ver Solutions 1740 CC mall business support yanda District Municipality mall business support, attract investment, provide infrastructure, spatial targeting, economic cluster development 44 kills For Africa gricultural training, basic business skills kills Harvest CC mall business support, HR training, skills development solutions. abilis Development mall business support, Management Consultants, Project Managers , Local Economic Development. antsabane Municipality mall business support, attract investment, provide infrastructure, spatial targeting, economic cluster development nisa ntrepreneurship training, business management and technical skills. Source: Own Data. 4.4 Problems experienced in the SMME Support Process 4.4.1 Geographical vastness of the Region Seda is mandated to offer its services as close as possible to its clients. The Northern Cape is sparsely populated, with the Siyanda district covering more than 100 000 square kilometres. Some of the municipal areas are in excess of 300 kilometres away from the local Seda office. In the absence of Enterprise Information Centres, the branch is thus legally obliged ?to service them?. The amount of travelling that needs to be undertaken has a hugely negative effect on the budget. With the decrease in the annual budget, remote municipalities will see Seda staff even less. Seda either has to identify other sources of funding or convince government on all levels of the need for additional funding so that it can deliver on its legal mandate. Should Seda not be able to address the issue, it will have to revert back to charging fees for services rendered and rely on service fees. This will be detrimental to its ability to service the small business community in the way initially envisaged. 4.4.2 Limited Skills of Support Staff From Table 4.3 it is clear that the district is still primarily agrarian. None of the current business advisors employed by Seda Siyanda has any agricultural or a tourism background or have run their own enterprises before. With tourism the trendsetter in economic growth, it would make sense to have a specialist in the field. Currently, the 45 majority of the staff have a trade background, whilst Seda should ensure that staff, especially advisors, are trained in the required growth sectors. Unless this critical issue is addressed, staff will not be capable of providing valued services to their clients. Experience is not gained overnight and in the interim suitably experienced mentors from different sectors/industries will have to be recruited to assist advisors and clients. 4.4.3 Lack of Experience of Service Providers Seda Siyanda has more than fifteen ?Service Providers? on its database, i.e. persons who directly render services to clients. Mentors or such service providers can play a critical role in guiding and supporting small emerging enterprises, if they are experienced in their respective fields. Unfortunately the majority of the current service providers do it to earn extra income, with some having no idea of the small business sector, let alone the experience to run an enterprise. A number of completed interventions (like business plans) have been rejected by the Branch as a result of such poor quality. In fact, the majority of the business plans submitted to financial institutions are not funded. This increases the rate of overdue projects and results in clients losing confidence in the organisation. Seda has to develop the capacity of these externally recruited service providers and/or couple them with retired, experienced business owners. 4.4.4 Inadequate Infrastructure Municipalities have a major role to play in this sphere, which is often critical for the support of existing and new enterprises. Municipalities must remember that without the necessary physical structure, no development is possible. In some areas, e.g. Mier, access to markets are influenced by the absence of good roads, lack of electricity as well as the fact that they are not close to their suppliers. Operating a business in Mier is therefore more costly than operating one in Upington and it harms their competitiveness. 46 The respective LED and IDP documents should identify the opportunities for economic development locally as well as identify the stumbling blocks in the way of economic development. The current plans were developed without taking the integrated SMME development plan of the Province into consideration and neither was it aligned with the roll-out plan of Seda. The lack of office space in the remote municipalities has resulted in SMME support companies being located in the more developed towns. Support and mentor services that are dearly needed by SMMEs are therefore located away from the communities that need it most. Besides, local Government should more vigorously promote the development of infrastructure in order to bring down the costs of doing business. 4.5 Challenges for Seda Siyanda Several of the challenges identified above are directly applicable to Seda Siyanda, which serves the Siyanda District. 4.5.1 Limited Geographical Representation in the District The model Seda adopted made provision for a branch office in the district as well as Enterprise Information Centres in each of the six municipalities. This roll-out process was never implemented. The majority of those potential clients either have to travel to the branch or they have to wait for a monthly visit from the branch (unless they rely on other support agencies). Clients are therefore not attended by Seda-staff on a regular basis, thus creating a situation where there is a lack of awareness of Seda and its services. Yet, with a new developing organisation, creating awareness is of the greatest importance. In the absence of local Seda offices, Seda needs to identify local experienced mentors or business support organisations to fulfil those roles. 4.5.2 Quality of Clients The majority of the clients walking through the doors of Seda Siyanda are survivalist enterprises. They want to start a business to just put bread on the table, rather than to pursue an opportunity or to move from employment to self-employment. 47 As soon as the clients realise what is involved in running one?s own business, many of them disappear. They are also not very helpful when it comes to researching their own business opportunity, because as soon as Seda has appointed a service provider to assist them, this challenge becomes ?the problem? of the service provider instead of the owner of the business idea. This can be attributed to the fact that many survivalist enterprises do not have the necessary technical or managerial skills to really assess business opportunities. Appropriate training or mentoring may be needed to reorientate these clients towards opportunity enterprises. 4.6 What do these fundamental problems imply for Seda? While SMMEs are seen as agents of employment creation, redistribution, poverty alleviation and improvement in global competitiveness, clear guidelines for resource allocation from government is needed or otherwise the SMME strategy will struggle to meet these different and sometimes conflicting objectives. Orford (2005) as well as Thomas (1999) identified the lack of professional services rendered to SMMEs as possible reason for the failure of the SMME strategy. In order to rectify the situation, the recruitment of more experienced personnel or independent service providers is needed. This, however, may be difficult over the short term or in remote areas like the Northern Cape. In the light of this dilemma, it is recommended that Seda tries to strengthen linkages between micro/small enterprises and larger enterprises, such that the capacity of the first economy is used to support the second economy. One way of doing this is by focusing on the ?interaction between Seda and other small-business organisations as forerunner to an integrated service delivery?, as stated in the topic of this report. Thus, Seda has to recognise the important role that all relevant service providers, including competing support service providers like the Red Door and the Gauteng Enterprise Propeller, can play in order for it to achieve its mandate. Naturally, the benefit of this would also ease existing budget constraints. In the next chapter these opportunities are explored in the context of the Siyanda district. 48 CHAPTER 5 SURVEY OF SEDA PARTNERS IN THE SIYANDA DISTRICT 5.1 Approach to the interview fieldwork This section presents findings based on interviews with a range of service providers as well as current stakeholders/partners of Seda Siyanda. The results are primarily qualitative and are designed to demonstrate the services that other institutions render as well as their capacity to render these services throughout the district. Though the researcher would like to have determined how effective these services are rendered, this was not possible. In fact, most of the bodies or individuals interviewed do this to generate extra income, without those tasks necessarily being their core function. To start this part of the project, interviews were held with various Small Business Support Organisations ranging from Seda?s existing Service Providers to business chambers, educators and independent consultants. Interviews were also conducted with some of the local banks in order to get their perspectives on the needs of the SMME sector. As the next step, a semi-structured questionnaire was designed as a framework for more focussed face-to-face interviews. Not all questions were applicable to all the companies interviewed. The questions were designed to stimulate discussion and to uncover unique approaches used by the different organisations. The framework used for the interviews is included as Appendix. Data about the services of these different bodies was collected primarily by conducting face-to-face interviews, with most of the organisations interviewed located in and around Upington. The interviews ranged between 30 minutes and one hour, depending on the relevant information that the interviewee could provide. Five respondents requested to complete it on their own, with the questionnaire e-mailed to them for completion. 49 A total of 16 institutions were interviewed and brief telephonic discussions were held with a number of other people in the industry. Two of the e-mailed responses were not returned before the due date. Table 5.1 lists all 16 respondents with an indication of the length of their operation, the staff size and the person contacted. Seda?s own database of Service Providers was used as well as its current stakeholders. These partners include the Local Economic Development Units of Municipalities, Business Chambers and Banks. With the exception of the two local municipalities and the NPI (reflecting their head office staff), most of the bodies had a very small staff relevant for SMME support. Besides the local Seda office, no other company specialises in the rendering of non- financial support. Some financial institutions provide a combination of financial and non-financial support, with their main function being the provision of financial services on a commercial basis. Some of the Service Providers who registered after the research was started, were not approached to take part. Siyeda, a Local Business Service Centre, funded by Ntsika could not be included because most of the staff was employed by Seda Siyanda whilst the organisation was currently in the process of being de-registered. One Local Economic Development Officer was not available for the scheduled interview so that his views could not be included in this report. Local preachers and church leaders, who often influence people?s perceptions, were not approached for this study. Future studies of this nature should also consider to include the following role players in the broader society: ? Community Development Workers in the different wards ? Department of Labour ? Department of Social Services ? Farmers Associations ? Trade Unions ? Trade or Service Associations 50 Table 5.1: Small Business Support Supplies Interviewed Name of Organisation Contact Person Position in Organisation When was business started Number of Personnel ABSA Reagan Theron Portfolio Manager 2 in local office ACT Productions William Solomon Chief Executive Officer 1997 12 employees Annalise Fourie CA Annalise Fourie Owner 2000 1 employee Business Research Consultants - BRC Nelia van Deventer Owner 2002 2 employees Enablis SA Glenda Marias Basset Entrepreneur Development Associate 2004 21 employees Help U Agencies CC Samuel Esau Managing Member 1990 1 Full time 1 Part time Itile Consultancy Jacques Mazima Managing Director 2005 6 employees JGHarber Johan Harber Owner 2006 3 employees //Khara Hais Municipality Donovan Block Chief Accountant Pre-1994 720 employees National Productivity Institute Ronnie Pholose Senior Productivity Advisor 1968 100+ employees Northern Cape Chamber of Commerce and Industry Lesley Nugent Chief Executive Officer +/- 100 years ago 2 employees Silver Solutions 1740 CC D Klaasen Managing Member 2007 3 employees Siyanda District Municipality Mongile Gubula LED Officer 1996 5 Skills Harvest CC Deon Babu Managing Member 2003 2 Full time 6 Part time Stabilis Development V P McPherson Director 1999 14 Tsantsabane Municipality Charles Phuti LED Officer Pre-1994 159 employees Source: Survey Results. 51 5.2 Core Findings of the Survey As shown in the Annexure, the questionnaire covered the following key issues: ? Focus of the organisation: Does the organisation focus on SMME development? ? Available Resources: This includes human resources, how many offices the organisation has and whether it uses information or call centres. ? Industry profile: On which sector(s) does the organisation focus and on what specific needs? ? Support programmes available to SMMEs: What types of business development services does the organisation offer to potential clients? ? Linkages, both with Seda and other bodies: What are those linkages? A total of 23 questions covered these areas. 5.2.1 Focus of the Organisation It is clear from Figure 5.1 that SMME Development is not the primary function of these bodies. More than 50% of respondents do it only on a part-time basis and then primarily to generate additional income. Only one organisation, Enablis, focuses solely on SMME development with the focus on opportunity entrepreneurs (i.e. individuals who start a business in response to an opportunity that exists within the market). From the interviews, it is clear that not many, if any, are registered with other SMME development organisations like Khula, Umsobomvu Youth Fund, Business Partners, Sizanani or financial institutions to render SMME support services. 52 Figure 5.1: Focus of Organisation Source: Survey results. 5.2.2 Number of Years in Business Figure 5.2 shows that almost 50% of the respondents were in existence for 10 years or more. Only one business was started in direct response to adverts that requested service providers to register, thus there is only one business that is operating for less than a year. Most of the older businesses occupy offices in Upington, whilst the majority of businesses that have been operational for less than 10 years are operating from their respective homes. The older businesses show more of the characteristics of formal businesses, although not many of them have diversified their operations. A B C 53 0 10 20 30 40 50 60 Less than a year One year and less than tw o years Tw o years and less than five years Five years and less than 10 years More than 10 years Length in years Figure 5.2: Number of years in business (%) Source: Survey results. 5.2.3 Geographical Spread More than 60% of the businesses have only one primary office where they operate from. Most of these offices are located in and around Upington. Enablis has more offices, but they are located in other provinces, resulting in only one operational office in the Northern Cape. Nocci, a facilitator of businesses and industries in the Northern Cape, is the only body with two offices in the district. With a growing member base they are probably well-positioned to provide mentor services. Although the two offices are located in one municipal area, the majority of the respondents indicated that they cover the whole district. In fact, they should be in the position to set up offices in other areas if needs expand. % 54 Figure 5.3: Available Offices (%) Source: Survey results. Figure 5.4: Representation (%) Source: Survey results. % % 55 0 5 10 15 20 25 30 35 40 Less than two Two employess and less than five More than five employees and less than 10 More than 10 employees Categories 5.2.4 Employment Profile Figure 5.5 indicates that the majority of the companies employed less than ten workers. Besides, some of the employees are employed on a contractual basis. The majority of the business owners as well as employees are still males. Figure 5.5: Employment Profile (%) Source: Survey results. 5.2.5 Sector Specific Services rendered by Service Providers The respondents had to indicate the sectors in which they operate as well as the services rendered by them. Sectors that stand out are finance and business services, with financial and business planning being the leading services offered. As can be expected in the area, the sector coming in second is agriculture. Figure 5.6 summarises the focus areas of the 16 respondents. Very few respondents are rendering services in the tourism and the information technology sectors. With the knowledge economy playing a more prominent role it would be beneficial to attract such companies to the area. % 56 Figure 5.6: Sectors in which Respondents operate Source: Survey results. In order to provide the SMME sector successfully, Seda relies on the support of its partners to render the services for which it is not equipped. This question was developed to determine the sector specific services that respondents can offer. The majority indicated that they can assist with skills training and as referral for SEDA clients. Business planning and financial planning was also identified as support that they can render. 57 0 1 2 3 4 5 6 7 8 9 S k ills Tr ai ni ng P r oduc t i v i t y I m pr ov em ent Re f e r r a l Ne t w o r k i n g B u si n e ss and Fi nanc i a l P l anni n g Range of Services Rendered Figure 5.7: Ways to assist Seda Source: Survey results. 5.2.6 Service currently offered by Respondents Seda committed itself to render the following basic services in each of its branches, viz. Business Registrations, Business Planning, Access to Markets, and Access to Finance, Cooperative Support, Small Enterprise Training and Mentoring as well as Access to Technology. Figure 5.8 shows what services respondents are providing and how often they do it. It is clear from the table that basic services like provision of telephonic support, business advice and planning are the leaders, with more than 70% of respondents indicating that they render these services. More specialised services like export advice, franchising, linking SMMEs with BEE partners as well as cooperative support are offered on a far lesser scale. Figure 5.8 suggests that respondents are strong in delivering basic services but seldom render specialised services. This should be regarded as a challenge for SEDA, seeing that several of these specialised services are normally sourced out to No. of responses 58 service providers. Thus, Figure 5.8 gives us a picture of what Seda should focus on in its efforts to develop service provider capacity in the district. Figure 5.8: Business Development Services Source: Survey results. 5.2.7 Linking Service Suppliers Global awareness implies the ?ability to draw resources from different countries and regions and serve markets across multiple cultures, appreciate cultural knowledge and cultural sensitivity? (Hellriegel, et al., 2004). Linkages, both local as well as international create an opportunity for role players to gain knowledge of best practices that can be implemented to deliver better and more relevant services. The purpose of this question was establishing just that. As shown in Figure 5.9, the majority of the respondents have only local linkages, with just three respondents actively maintaining international linkages. 59 Figure 5.9: Linkages (%) Source: Survey results. 5.3 General Remarks From the range of responses it was clear that support and mentorship are important for the success of emerging businesses. The respondents also felt that government is moving in the right direction, but generally feel that local government does not do enough to promote small businesses in the region. There is a general willingness to work with Seda as partners in co-hosting seminars and skills training. Nocci and Enablis, who deal with small businesses on a larger scale also felt that such opportunity for cooperation exists. ABSA Bank indicated their willingness to develop service providers as well as the staff of Seda Siyanda. In order for respondents to create a sustainable livelihood out of the supply of support services, respondents feel that they have to focus on the main SMME constraints and at the same time focus on their own shortcomings. This could be done by working closely with Seda and sharing their knowledge base with Seda. This would at the same time increase general awareness about Seda and the products and services that it renders. Some of the respondents expressed a willingness to offer services (like agricultural support) to Seda Siyanda where it is 60 currently lacking. They also have a presence through their current operations, e.g. Nocci has two offices in the district, and should be able to render services without incurring costs by setting up new offices. Apart from these general findings, research evidence about the shortcomings of specific programmes, e.g. export advice, is critical for their eventual revision. Such an analysis could reveal, for example, whether the low delivery of a specific SMME support programme as indicated in Figure 5.8, is an indicator of its low relevance to SMMEs or whether support organisations do not have the necessary skills to render these services. The reasons why only few SMMEs support organisations render those services need to be explored. Finally, from the responses it is clear that, although there are limitations on the part of support organisations, there is significant opportunity to work closer together, since these bodies are willing to offer much more to Seda. This raises the question: How can Seda better involve support organisations to the benefit of mutual clients? This question is explored in the last section. 61 CHAPTER 6 TOWARDS A NEW STRATEGY FOR SEDA 6.1 Need for a new approach in rural areas In recommending measures to improve the promotion of small business support at a local level, with specific reference to the role that support organisations play, it is important to focus on what works. One of the key lessons that were learned over the years, was that despite considerable government investment for small business development, the government-led approach has been insufficient and often ineffective. However, when it is being led by the private sector, things seemed to happen for the better. This view is supported by the Committee of Donor Agencies for Small Enterprise Development that argues that support should be based on a private sector-led market economy framework (Committee for Donors, 2001). This implies, in the Siyanda context, that government should play a lesser role in providing small business support. Based on this, Seda should look at how it can best make use of support organisations like services providers, business chambers (Nocci, Nafcoc) as well as non-governmental organisations like Enablis. Seda should be building on private sector strengths by shifting the emphasis of direct entrepreneurship support from the Seda to competitive private-sector providers. Having buy-in and support from national, provincial and local agencies by no means guarantees success. Success, however, will be dependent on the value that the local business communities attach to the concept. Research and experience has shown that such initiatives become meaningless to the very communities they were meant to serve when service standards are poor, staff lack capacity, are insensitive to the needs of the clients or when products and services are limited to that which the staff are able to offer (most often only to micro and survivalist entrepreneurs) and, most important, if the organisational model is inappropriate. 62 Some of the following would be critical elements of an alternative strategy: ? Ensure that people who render small business support have business experience and really understand small enterprises. ? Ensure that sector programmes cover the specific objectives of the sector or industry and remain integrated and focused. ? Let the private sector participate and share the costs. The recommendations underlying this report do not address small business development issues on a macro level, but are geared towards activities on a micro or local level. Some of the responses are relevant on a broader basis, but the sample has been too narrowly limited to a district, that it would be dangerous to apply it to the whole of Seda. 6.2 Critical elements in an integrated partnership approach Accepting the need for a more cooperative, private-public partnership approach towards local SMME Support, we can now highlight a few of the critical elements of such an approach. 6.2.1 Strengthening the capacity of support organisations From a productivity and competitiveness perspective it is important that the skills level of support organisations are developed and maintained to ensure that they add value to the businesses of their clients. It is essential that those delivering support have the competence to deliver specific support, like advice giving and business training. It is also the legal mandate of Seda as described in the act to strengthen the capacity of service providers to support small enterprises. A questionnaire like the one that was developed for this study could be used as a tool to identify certain skills gaps of support organisations and service providers. It should identify what they are currently offering but also indicate what they cannot offer. This should lead to a service provider development strategy aimed to capacitate service providers where needed. In developing support organisations the focus should be on the following aspects of capacity strengthening: ? Organisational capacity: this relates to an organisation having a clear mandate 63 with vision, objectives and goals. This implies that the staff members of these organisations have a long-term commitment to the successful growth of their organisation. ? Managerial capacity: an organisation requires a legal and organisational structure that allows it to realise its vision, including appropriate management systems and procedures, along with staff with the necessary management capabilities. ? Technical capacity: an organisation should use the instruments or methods that allow it to realise its vision, and its staff should be able to use these instruments. This includes a capacity for further development of the programme, and to meet the changing needs of the clients. ? Financial capacity: this refers to an organisation's ability to obtain funding for the implementation and development of its programmes, through self-financing or external support, and to keep its costs at an acceptable level. Khula used to have a mentorship training programme in place that was delivered by the University of Cape Town. Such a programme might be utilised to build the capacity of newly accredited support organisations as well as service providers. Newly accredited support organisations should complete a mentorship programme ideally with an experienced service provider from a different province. This might ensure that support organisations expand their networks and gain knowledge and experience from trendsetters in leading provinces. It should also be considered to make it compulsory for support organisations to be accredited at other development organisations, like Khula and the Umsobomvu Youth Fund. By rendering services to other institutions their livelihood is secured and they gain valuable experience. That might also ensure that Seda is not solely responsible for the training of support organisations, with costs to be shared and the quality of support organisations steadily improving. Like Seda, other organisations should also invest in developing support organisations. Seda should also interact with support organisations to repackage their current offerings. Some of the services needed occasionally may not be affordable for Seda, which should continuously inform partner bodies, so that they can position 64 themselves to render these services. This also creates an opportunity for support organisations to improve or differentiate their current offerings. Should Seda succeed in building productive, competitive and innovative ?learning? support organisations, it can thereby create a new function for itself. Instead of delivering support services directly to SMMEs, Seda can use these support organisations and strengthen them by monitoring their work and providing them with new tools, new support strategies and up-to-date information on sector information. It would then become an ?SMME information centre? to support organisations. 6.2.2 Following a focused approach The key to building effective small business support lies in creating focused programmes. To achieve this, all services should be market driven and sector based. The large number of survivalist enterprises that are currently assisted, is the result of Seda wanting to be all things to all clients. Our research indicated that support organisations cannot render support in all areas. It is not clear whether this is as a result of clients not needing the service or support organisations not being capable in the specific fields. Additional research into this might shed more light on it, but it is important to present products that the client needs and not what ?planners? think they might need. Seda is currently trying to offer services in all areas, whereas the services should be trimmed down in order to enable them to develop specialist expertise. Many businesses require specialised expertise that will make them leaders in their specific fields and it is up to Seda to acknowledge it and deliver upon it. In this context the DA?s call for a ?one-stop shop? approach towards more effective SMME support is totally unrealistic, whereas the success of the former MACs proves the value of focused support. 6.2.3 Building awareness and sharing of information Current awareness of Seda is limited by the lack of a presence in all of the local municipalities. In the absence of Enterprise Information Centres other catalysts will 65 have to be used. Co-branding with support organisations, co-hosting events and seminars may lead towards greater awareness, where all the organisations can gain. Clients will become aware of the different roles that support organisations play as well as the services that are on offer to them from the range of support organisations. Business chambers like Nocci, have a large member base who look towards Seda as well as other potential service providers. By co-hosting events with them, clients will become aware of Seda and the products on offer and Seda can attract good mentors that can guide survivalists to become opportunity clients. These contacts will also create opportunities for support organisations to network more actively with other role-players, thus leading to further business linkages. 6.2.4 Access to physical infrastructure Entrepreneurs in Siyanda need infrastructure facilities to become competitive and cost effective in their operations. Access to affordable infrastructure such as water, electricity, premises, transportation and roads, provided directly by local government is important for the promotion of entrepreneurship and the success of small businesses. More investment is needed in key areas such as energy, transportation and communications. Attention should specially be given to sustainably managed infrastructure, the lowering of energy, transport and communication charges (including international telephone and internet usage), while improving the reliability of these services. Expanding public-private partnerships and attracting FDI for basic infrastructure facilities and for the establishment of industrial parks (and, if viable, incubators) for SMMEs are other options that should be considered. Since local governments are not keen on creating SMME-focused infrastructure facilities, Seda might have to take a more active role in efforts to create clusters or SMME-hubs for small businesses. SBDC used to create such facilities, which were used successfully by SMMEs. By partnering with other stakeholders like banks and big corporates like De Beers and Kumba, Technology Hubs or Small Business Centres could also be established. 66 Private companies would thus take a personal interest in emerging businesses and might commit themselves towards increased procurement from SMMEs. Should small businesses need specialised support in a particular field (like mining), this might be readily available. Such cost sharing would ultimately release some funding for Seda, which it might apply somewhere else. 6.2.5 Survivalist vs. Opportunity Entrepreneurs Seda?s primary role is to promote entrepreneurship and assist small businesses to grow into competitive profitable enterprises. When most of its clients are survivalist enterprises, the focus actually shifts to poverty alleviation instead of wealth creation. Such a shift of priorities sends the wrong messages about business development and detracts the organisation from the goal of wealth creation. Fast-tracking of the implementation of the Apex Fund to relief poverty is dearly needed. This relieves the pressure of dealing with survivalists and creates more opportunities for advisors to focus on entrepreneurs that are in business for the sake of business. This process can be further enhanced by concerted efforts on life-skills and technical training to prepare survivalists for formal businesses. Providing incentives for large companies to subcontract to smaller businesses and promoting emerging entrepreneurs could do much to help. This might even be extended to the point where large supplier firms could provide management/technical support to micro/small firm clients who are purchasers of their equipment, materials and services, and training support in business management for those same firms. Lastly, we can publicise and celebrate black and white South Africans who have become successful entrepreneurs through their own resourcefulness and against the odds. This process could also be channelled through trusted support organisations to be more effective. 67 6.3 Potential obstacles in the strategies transformation Small business development in South Africa is currently not solely centered on wealth creation, seeing that it is also supposed to relieve poverty ? making this a politically-sensitive issue. Any strategy that is implemented will be debated and the one that is politically correct and not necessarily the best practice will ultimately be implemented. Government is currently the custodian of small business development. Whether that should continue to the same extent, is debatable. Many more stakeholders can and should be actively involved as was previously indicated. In fact, this message is the core theme of this report. Small and large support organisations such as tertiary training institutions, big businesses, business chambers, trade associations and even smaller boutique companies should be involved. There should, however, be an integrated and focused approach. By developing and supporting new service providers or support organizations, there is always the potential threat that they may outshine existing organisations. When resources, especially financial resources are scarce, the tendency is there to protect one?s turf. The Red Door in the Western Cape and the Gauteng Enterprise Propellor are funded by their respective provincial governments. In order to fast track Seda?s roll-out programme and support the continuous implementation of supporting programmes, Seda will have to approach local governments for financial support. Whether these other organisations are actually in support of Seda, is another question; they may, in fact, also perceive Seda as a threat to their existence. Thus, instead of supporting each other, these bodies may challenge each other for a slice of these resources. One can only hope that the respective leaders are mature enough to ultimately realise that it will be better to support each other in achieving the common objective of creating small enterprises that can compete successfully domestically and internationally. These questions need answers if Seda is to evolve and to maximise its potential as a delivery mechanism for support to small and medium enterprises. 68 LIST OF SOURCES Accelerated and Shared Growth Initiative for South Africa. 2006. Annual Report, Pretoria: Government Printers. African National Congress. 1994. The Reconstruction and Development Programme. A Policy framework. Johannesburg: Umanyano Publications. Berry, A., Von Blottnitz, M., Cassim, C., Kesper, A., Rajaratnam, B., & Van Seventer, D.E. 2002. The Economic of SMMEs in SA. TIPS. Centre for Development and Enterprise. 2004. Key to Growth: Supporting SA?s Emerging Entrepreneurs. Research Report no. 12. CDE. 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Available http://www.gdnet.org/pdf2/gdn_library/global_research_projects/macro_low_income/ Khamfula.pdf. 69 Maas, G. & Herrington, M. 2007. Global Entrepreneurship Monitor: South Africa Executive Report: 2006. UCT Graduate School of Business. Cape Town. Mbeki, T. 2006. State of the Nation Address of the President of South Africa, Thabo Mbeki: Joint Sitting of Parliament. 3 February. Pretoria: Government Communication and Information System. Available at http://www.info.gov.za/speeches/2006/06020310531001.htm. Mlambo-Ngcuka, P. 2006. A Catalyst for Accelerated and Shared Growth ? South Africa (AsgiSA). Background Document, Media Briefing held on 6 February 2006. Available at http://www.pmg.org.za/bills/060206asgisummary.htm. Ntsika Enterprise Promotion Agency. 1997. ?The State of Small Business in South Africa.? Pretoria. Ntsika Enterprise Promotion Agency. 1998. ?The State of Small Business in South Africa.? Pretoria. 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Washington. 72 ANNEXURE A Project Research Questionnaire Interaction between Seda and other small-business organisations as forerunner to an integrated service delivery Mr Christiaan Fortuin, who is a Seda employee at the Seda Siyanda office in the Northern Cape, and Professor Wolfgang Thomas (Chris? supervisor) from the University of Stellenbosch Graduate School of Business (USB) are conducting a research project on the above topic. This project is a component of the Masters in Development Finance degree pursued by Christiaan Fortuin. The primary aim of this study is to establish how Seda can interact with potential partners established in this field, and how a denser network of support organisations can be established. The ultimate objective of the project is to help Seda improve its assistance to clients. If you have any queries please do not hesitate to contact Professor Thomas on 082 770 9694. Thank you for taking the time to complete this questionnaire. Your assistance is highly appreciated. Regards C. J. Fortuin (Student number: 12471682) Authorised by Prof. W. H. Thomas 73 July 2007 Dear Madam/Sir, please note that the information you provide will only be used for the purpose of this research, and all responses will be kept strictly confidential. Contact information Province Northern Cape District Siyanda District Contact person _________________________________________ Name of business/organisation ________________________________________ Position in organisation _________________________________________ Telephone numbers _________________________________________ _________________________________________ e-mail address _________________________________________ Date _________________________________________ 74 Questions 1 Does your organisation/business focus on SMME development? ? Yes ? Only partially ? Not really 2 When was the business/organisation established? ____________________ 3 Describe the primary nature of your business ________________________ 4 List some of the services that you provide ___________________________ ____________________________________________________________ 5 How many employees do you have? _______________________________ 6.1 How many offices do you have? __________________________________ 6.2 Are you represented throughout the district? _________________________ 7 Do you have dedicated staff responsible for SMME support? ____________ 8 Do you have information facilities at your local offices (information centre, call centre, etc.)? ______________________________ 9.1 Does your organisation focus on specific sectors? ____________________ 9.2 List the sectors in which your small-business clients predominantly operate ____________________________________________________________ 10 What are the main needs of your small-business clients? _______________ ____________________________________________________________ 11 What support programmes do you have in place to help develop existing or new businesses? __________________________________________________ ____________________________________________________________ ____________________________________________________________ 12 Are you aware of the local Seda office and the services it renders to small enterprises? __________________________________________________ ____________________________________________________________ 13 Do you regard Seda as a threat to your business/organisation, or has Seda created new opportunities for you? (Please explain your answer.) ________ ____________________________________________________________ ____________________________________________________________ 14 In what way could Seda be of help or benefit to your task in the SMME-support field? ________________________________________________________ ____________________________________________________________ ____________________________________________________________ 75 15 In what way could you assist Seda in its role in this region? _____________ ____________________________________________________________ ____________________________________________________________ 16 How could we strengthen co-operation between our organisations? _______ ____________________________________________________________ ____________________________________________________________ 17 Are there any contracts (MoU, SLA, etc.) or other relationships between your organisation and Seda? _________________________________________ ____________________________________________________________ ____________________________________________________________ 18 What steps should local authorities in this area take to accelerate SMME development? _________________________________________________ ____________________________________________________________ 19 What steps should the provincial government take to strengthen SMME development in this region? ______________________________________ ____________________________________________________________ ____________________________________________________________ Assessing the capacity of your organisation (tick where applicable) 20 Area scope of your services 20.1 Covering the district level ? more than two municipalities ..................... ? 20.2 Limited to one municipal area ............................................................... ? 20.3 Local delivery only (in part of a municipal area) .................................... ? 21 Business-development services included Often Some- Never times 21.1 Supply of printed and/or web-based information .......... ? ? ? 21.2 Telephonic advice ........................................................ ? ? ? 21.3 One-on-one business advice and counselling .............. ? ? ? 21.4 Help in the preparation of business plans .................... ? ? ? 21.5 Referrals to experienced business counsellors or specialised advice-givers ............................................. ? ? ? 76 21.6 Group-advice sessions ................................................. ? ? ? 21.7 Basic business-skills training ........................................ ? ? ? 21.8 Tender information and/or advice ................................. ? ? ? 21.9 Franchise information and/or advice ............................ ? ? ? 21.10 Export advice and/or preparation ................................. ? ? ? 21.11 Facilitating the registration of (small) businesses ......... ? ? ? 21.12 Assisting with the search for business finance ............. ? ? ? 21.13 Facilitating the search for BEE partners ....................... ? ? ? 21.14 Assisting small-business suppliers to meet outsourcing conditions ..................................................................... ? ? ? 21.15 Assist SMMEs with tax issues (including amnesty) ...... ? ? ? 21.16 Assist SMMEs with human-resources issues or conflicts ? ? ? 21.17 Assist SMMEs with legal issues ................................... ? ? ? 21.18 Helping SMMEs to find business premises .................. ? ? ? 21.19 Link SMMEs with local business associations, chambers or sector associations ....................................................... ? ? ? 21.20 Help small enterprises link up with local or regional co-operatives ................................................................ ? ? ? 22 Current link with Seda 22.1 None ...................................................................................................... ? 22.2 We are aware of Seda but have hardly any contact or referrals ............ ? 22.3 We are an EIC (enterprise-information centre) supported by Seda ....... ? 22.4 We have a memorandum of understanding or a service-level agreement with Seda .............................................................................................. ? 22.5 We are in the process of negotiating closer co-operation with Seda ..... ? 22.6 No links to date, but we would like to know more about Seda ............... ? 77 23 What other organisations are you closely linked to? (e.g. chambers, church groups, educational bodies, franchisers, Rotaries) 23.1 At local and municipal levels ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ 23.2 At district and provincial levels ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ 23.3 At national and sectoral levels ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ 23.4 Internationally ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ?