The role of government support programmes in SMME development in South Africa

The previous Minister of Finance, Mr Trevor Manuel, once stated that smallbusiness represents an important vehicle to address the challenges of jobcreation, economic growth and equity; given the appropriate enablingenvironment, it can make an indelible mark on the South African economy.This report set out to determine the role of government support programmes indeveloping the SMME sector in South Africa.To address this problem, the research was segmented into the following criticalquestions:· What is the prevailing opinion on the impact of government supportprogrammes thus far in promoting small business development?· In the face of the prevailing enabling landscape, which factors continue toinfluence the development of small businesses in South Africa?This exploratory research used a qualitative approach to collect data. Thesample consisted of an official from a government department, fourrepresentatives of small business support agencies and 31 small businessowners. In total the sample consisted of 36 participants.Although a qualitative approach has been criticised for being anecdotal andlacking both the means to reproduce and generalise the outcomes, multipledata streams were used to ensure the integrity and reliability of the results.Two interview schedules were developed and used during the semi-structuredinterviews to collect the primary data. The first schedule was developedspecifically to solicit responses from government and small business supportagencies. The second schedule was used when interviewing small businessowners.iiiTo counter the threat of an illogical and poorly constructed interview schedule,this research ran a pilot study as part of its verification exercise. The interviewschedule was sent to five policy beneficiaries (i.e. small business owners) forcomments and suggestions on improving it. These five small business ownersdid not form part of the final sample.Based on the balance of evidence, the market regarded the impact of thegovernment support programmes as ineffective and having done little todevelop and grow the sector. The prevailing opinion was that policy andstrategy seemed effective only in theory. Furthermore, support agencies wereregarded as ineffective and seen to be operating in isolation of each other andgovernment. Officials from these agencies were not adequately trained toassist small business owners with queries and advice.Equally discouraging, the research uncovered that historical factors limiting thegrowth potential of small businesses persisted. This means, that althoughgovernment has promulgated several pieces of legislature such as the SmallBusiness Development Act and the Integrated Strategy on the Promotion ofEntrepreneurship and Small Enterprise to improve the small businesslandscape, it has failed to address the basic problems of finance, training anddevelopment needs, shortage of scare skills and improving business skills sets.The role of government support programmes is therefore proving to beineffective because of several reasons:· Poorly trained officials that offer ineffective advice and information to smallbusiness owners;· A lack of dynamic and sustainable marketing campaigns that draw publicattention towards the support programmes available;· A lack of a central repository of information related to the small businesssector;· Tedious and bureaucratic processes that offer neither acknowledgment ofreceipt of applications nor notification of awards;iv· Small business support agencies working in isolation of governmentprogrammes and at times offering contradicting information with regard tothe tender application processes;Addressing these pitfalls and ensuring proper implementation and synergystrategies will ameliorate the impact of government support programmes indeveloping the small business sector in South Africa. This report concludes bymaking some recommendations on how these pitfalls may be overcome.