The role of government support programmes in SMME development in South Africa
Date
2011-03-17
Authors
Archary, Byren, M.
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Abstract
The previous Minister of Finance, Mr Trevor Manuel, once stated that small
business represents an important vehicle to address the challenges of job
creation, economic growth and equity; given the appropriate enabling
environment, it can make an indelible mark on the South African economy.
This report set out to determine the role of government support programmes in
developing the SMME sector in South Africa.
To address this problem, the research was segmented into the following critical
questions:
· What is the prevailing opinion on the impact of government support
programmes thus far in promoting small business development?
· In the face of the prevailing enabling landscape, which factors continue to
influence the development of small businesses in South Africa?
This exploratory research used a qualitative approach to collect data. The
sample consisted of an official from a government department, four
representatives of small business support agencies and 31 small business
owners. In total the sample consisted of 36 participants.
Although a qualitative approach has been criticised for being anecdotal and
lacking both the means to reproduce and generalise the outcomes, multiple
data streams were used to ensure the integrity and reliability of the results.
Two interview schedules were developed and used during the semi-structured
interviews to collect the primary data. The first schedule was developed
specifically to solicit responses from government and small business support
agencies. The second schedule was used when interviewing small business
owners.
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To counter the threat of an illogical and poorly constructed interview schedule,
this research ran a pilot study as part of its verification exercise. The interview
schedule was sent to five policy beneficiaries (i.e. small business owners) for
comments and suggestions on improving it. These five small business owners
did not form part of the final sample.
Based on the balance of evidence, the market regarded the impact of the
government support programmes as ineffective and having done little to
develop and grow the sector. The prevailing opinion was that policy and
strategy seemed effective only in theory. Furthermore, support agencies were
regarded as ineffective and seen to be operating in isolation of each other and
government. Officials from these agencies were not adequately trained to
assist small business owners with queries and advice.
Equally discouraging, the research uncovered that historical factors limiting the
growth potential of small businesses persisted. This means, that although
government has promulgated several pieces of legislature such as the Small
Business Development Act and the Integrated Strategy on the Promotion of
Entrepreneurship and Small Enterprise to improve the small business
landscape, it has failed to address the basic problems of finance, training and
development needs, shortage of scare skills and improving business skills sets.
The role of government support programmes is therefore proving to be
ineffective because of several reasons:
· Poorly trained officials that offer ineffective advice and information to small
business owners;
· A lack of dynamic and sustainable marketing campaigns that draw public
attention towards the support programmes available;
· A lack of a central repository of information related to the small business
sector;
· Tedious and bureaucratic processes that offer neither acknowledgment of
receipt of applications nor notification of awards;
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· Small business support agencies working in isolation of government
programmes and at times offering contradicting information with regard to
the tender application processes;
Addressing these pitfalls and ensuring proper implementation and synergy
strategies will ameliorate the impact of government support programmes in
developing the small business sector in South Africa. This report concludes by
making some recommendations on how these pitfalls may be overcome.
Description
MBA - WBS
Keywords
Government support, SMME development