The National Strategy for the Development of Small Business and the National Small Business Act: South Africa
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As large enterprises have restructured and downsized small, medium and micro enterprises (SMMEs) have come to play an increasingly important role in South Africa's economy and development. The sector has grown significantly. In 1996, around 19% of those employed were in the informal sector of the economy. By 1999 this had risen to 26%. The government has therefore targeted the SMME sector as an economic empowerment vehicle for previously disadvantaged people.
As a result, SMMEs have received significant attention and investment, ranging from the establishment of state-initiated projects to supportive legislation, a variety of funding institutions and government incentives through the Department of Trade and Industry (DTI). The National Small Business Act, passed in 1996, helped to establish many of the supportive structures now in place. [1]
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Background
A strategy was outlined in a White paper by the Department of Trade and Industry (the lead department for SMME development) entitled: “A National Strategy for the Development of Small Business in South Africa (May 1995)”. A year later, the National Small Business Act was passed by Parliament, which provided for the institutions to implement this strategy. The government’s national small business strategy seeks to address the following common problems faced by SMMEs:
- An unfavorable legal environment
- Lack of access to markets and procurement
- Lack of access to finance and credit
- Low skills levels
- Lack of access to information
- Shortage of effective supportive institutions
Intended outcomes of the small business strategy The White paper and Act sets out the objectives of our SMME development policy as:
- Alleviating poverty, by making it possible for poor people to generate income to meet basic needs;
- Reducing poverty through employment creation;
- Redistribution of wealth, income and opportunities; and
- Contributing to economic growth, by improving innovation and thus competitiveness.
The national small business development strategy also seeks to strengthen cohesion amongst small enterprises and to level the playing field between big and small business. [2]
The National Strategy for the Development of Small Business
The White Paper on National Strategy for the Development and Promotion of Small Business in South Africa (tabled in Parliament on 20 March 1995) is published by the Department Trade and Industry for general information. (…) Small, medium and micro-enterprises (SMMEs) represent an important vehicle to address the challenges of job creation, economic growth and equity in our country. Throughout the world one finds that SMMEs are playing a critical role in absorbing labour, penetrating new markets and generally expanding economies in creative and innovative ways. (…) The White Paper represents government's thinking about what it can contribute to the process of stimulating small, medium and micro-enterprises. We believe that the real engine of sustainable and equitable growth in this country is the private sector. We are committed to doing all that we can to help create an environment in which businesses can get on with their job. We believe in the principle of working together with our partners in the private sector - big and small businesses - in realising our hopes and aspirations for this economy. We are under no illusion that we have all the answers to the problems of growth and redistribution in this country. Indeed, we are bound to make errors of judgement in the next few years. But we hope that our commitment to ongoing and serious consultation with all the major stakeholders will ensure that we are guided in the right direction.
The National Small Business Act
To provide for the establishment of the National Small Business Council and the Ntsika Enterprise Promotion Agency; and to provide guidelines for organs of state in order to promote small business in the Republic; and to provide for matters incidental thereto. (…)
CHAPTER 2: National Small Business Council
Establishment of National Small Business Council 2. The National Small Business Council is hereby established as a juristic person. Functions of Council
3. (1) The functions of the Council are to- (a) represent and promote the interests of small business, with emphasis on those entities contemplated in the National Small Business Support Strategy; and (b) advise the national, provincial and local spheres of government on social and economic policy that promotes the development of small business; (2) The Council may exercise such powers and must perform such duties as are reasonably necessary for or incidental to the performance of the functions mentioned in subsection (1). (3) The Council must perform its functions in accordance with this Act and its constitution.
CHAPTER 3: Ntsika Enterprise Promotion Agency
Establishment of Ntsika Enterprise Promotion Agency 9. The Ntsika Enterprise Promotion Agency is hereby established as a juristic person. Functions of Agency 10. (1) The main functions of the Agency are- (a) to expand, coordinate and monitor the provision of training, advice, counselling and any other non-financial services to small business in accordance with the National Small Business Support Strategy; (b) to provide financial support to service providers that provide the services contemplated in paragraph (a); (c) to consult with any organ of government, the Council or a service provider in order to- (i) facilitate the provision of business advice and counselling services to small business; (ii) facilitate access by small business to raw material and other products; (iii) facilitate international and national market access for products and services of small business; and (iv) generally, strengthen the capacity of (aa) service providers to support small business; and (bb) small business to compete successfully in the economy; and (d) to formulate and coordinate a national programme of policy research, collection and dissemination of information concerning small business. (2) Other functions of the Agency are- (a) to investigate, at the request of the Director-General, the effect of existing and proposed legislation on small business, and to report to the Director-General thereon; (b) to provide information and analysis on the implementation of the National Small Business Support Strategy to organs of government- (c) to make recommendations to organs of government on existing and proposed policy affecting small business; and (d) to improve the general understanding of the public regarding small business' contribution to the South African economic growth, job creation and welfare. (3) The Agency must perform its functions in accordance with this Act and its constitution.
