SMME Model for Economic Development

South Africa has been facing the double challenge of integrating into global markets as a competitive economy and of overcoming the internal problems created and constantly reinforced by the previous regime. To realize the objective of economic growth through competitiveness on the one hand and employment generation and income distribution on the other, the small business sector assumes a critical role. In order to be conducive to economic growth and employment creation, small business development has to be integrated into national industrial policies. The White Paper on the National Strategy for the development and promotion of Small Business in South Africa (1995) was an initial attempt to create an enabling environment for the creation of small, medium and micro enterprises. During the past few years the Department of Trade and Industry and its agency have undertaken a number of studies to assess the progress made in the Small, Medium and Micro Enterprise (SMME) sector. Reviews generally indicate that the SMME policy has not had the desired impact i.e. the creation of an environment conducive for a self-sustainable SMME sector. Amongst other things, one reason for such failure can be identified in the fact that despite the existence of the White Paper, the actions implemented have lacked a coherent and integrated approach resulting in the creation of several support structures for SMME, often not liked by one another and in competition with one another. This is particular evident at provincial level where in the years between the 1996-2001, with the support of national and provincial departments as well with the support of the private sector, a plethora of SMME server providers have been created, not taking in consideration the services already provided by existing Non Governmental Organisations (NGO).1 This situation has lead to poor performances by the service providers with the end result that those who were suppose to receive assistance were often left without the necessary support. The DEAT acknowledged this shortfall and took the conscientious decision to restructure its approach toward SMME development. The objective of this document is to provide a working text to inform/guide the relevant stakeholders in the process of designing such new environment. The document is the result of a consultation process that saw a first draft being circulated amongst the relevant stakeholders in April 2003. This was followed by a presentation of the model at a provincial workshop held in Kimberley in June 2003, after which inputs were received and consultations undertaken with both national and provincial stakeholders.