Contributing to SA’s small business ecosystem, from policy to platforms

Small business is key to South Africa’s future. The National Development Plan envisages SMMEs providing more than 60% of new employment by 2030, and with unemployment at record highs, supporting pathways to sustainable entrepreneurship is a key Government priority. This is a time of unprecedented challenges for small, micro and medium enterprises – SMMEs for short — and those who support them, inside and outside Government. Aside from the deep, negative impact of Covid-19, SMMEs face other challenges that Government and the private sector are working hard to address.

Against the background of our post-apartheid legacy, best symbolised by the stark contrasts between townships and Metro CBDs, many SMMEs still lack business and financial skills, and still struggle to access finance, mentorship and markets. Research shows South Africa a relatively low-level entrepreneurial culture and skills, with a fragmented support system. It’s also difficult for small businesses to access corporate supply chains — and stay there long enough to grow their revenues.

Ecosystem Development for Small Enterprise (EDSE) is a 5-year European Union-funded programme that works with the Department of Small Business Development and its agencies, Seda and Sefa, to help address these challenges. The programme also works across the entire ecosystem, with the private sector, entrepreneur support organisations and other international co-operation partners. It is implemented by a consortium led by the Palladium Group.

Through EDSE, the European Union has contributed R150-m to a new Sefa Enterprise and Supplier Development Fund, which will significantly increase the availability of funding for growing black-owned businesses. The programme has also contributed significant funding to the new DSBD Youth Challenge Fund, designed to support youth-led startups and growing businesses in the technology, manufacturing, creative and other sectors.

Further EU funding has been committed to Sefa for use in a new innovative blended finance fund. The programme also works with DSBD and Sefa on creating an enabling environment for improved micro-finance capacity in SA.

An effective policy environment is key to enabling and strengthening SMME development in South Africa, and the EDSE programme has actively supported policy debate and development via scores of round table and other events, policy briefs and reports.  It has also supported the development of the new National Integrated Small Enterprise Development MasterPlan – a major strategic framework for developing a true ecosystem approach to SMME development, involving all the key role-players in the public and private sectors as well as civil society.

EDSE plays a key role in policy dialogues. These are broad stakeholder events where some of the key challenges in SMME development, and possible responses to these challenges, are debated and discussed. This inclusive, consultative process is key to understanding and developing real solutions in the township economy, in access to finance and in addressing our huge youth unemployment crisis – among others.

Agriculture is a priority sector for small business and EDSE works closely with the Department of Agriculture, Land Reform and Rural Development (DALRRD. Compliance with local, regional and international food standards is a key enabler for small enterprise growth in this sector, and EDSE’s compliance support capacity-building programme is creating new processes and practices to enable broader compliance.

EDSE also supports DALRRD in the development of a Livestock Information Tracking System, to protect and monitor the livestock assets of small enterprises using RFID technology, linked to a national database. Work is also being done on improving SMME opportunities in SA’s very sizeable beef value chain, while also building ecosystem support for the Agro-processing Masterplan and its relevance to small business.

Many small businesses and aspiring entrepreneurs look to the Small Enterprise Development Agency (Seda) for mentorship, training and incubation that is affordable and accessible. EDSE has supported the rollout of new digital hubs in rural areas and townships and partnered Seda in bringing digital and 4IR skills from more than 40 local and international experts to support commercialisation skills for more than 500 entrepreneurs.

EDSE is working with DSBD and Seda to develop new digital platforms that will help create a national SMME database, deliver support digitally to more entrepreneurs, and make more business opportunities visible to SMMEs in every sector. Already several thousand women entrepreneurs are benefitting via Seda from the digital SheTrades platform. Seda is on a journey to become an ecosystem enabler and facilitator, supporting improved coordination and capacity-building for the sector, and working with corporates and government on deepening SMME participation in supply chains.

Underpinning all these initiatives is a strong green, gender and youth mainstreaming drive, to support the economic inclusion of more women and young entrepreneurs, and awareness and adoption of the Sustainable Development Goals.

The EU’s support for small business competitiveness and development, through the EDSE programme, is a key part of the EU’s economic development partnership with South Africa. South Africa is one of only 10 EU strategic partners, and the only one in Africa. The EU is also South Africa’s biggest trading partner, so supporting a vibrant small business ecosystem within an enabling and growth-centred environment makes sense. Taken together, these strategic EU-supported initiatives contribute to the entrepreneurial ecosystem working better for the benefit of all South Africans.

  • Martin Feinstein is a Key Expert for SMME Development with the EDSE programme Technical Assistance Team.