South Africa’s Department of Small Business Development is “firmly on track” with its aim to create an enabling environment to establish new businesses and grow existing ones, even though it has encountered some “teething problems”.
Delivering a speech in the National Assembly on the budget vote for the department, Minister of Small Business Development Lindiwe Zulu said the department, only launched in 2014, has had some “teething problems”, but added that even “organisational design experts” agree three years is a relatively short time in which to establish a new organisation, especially a government department.
According to Zulu, the available budget is far below what is needed to deliver the department’s mandate, yet over the last financial year it was unable to spend all the resources allocated due to what she called “systemic reasons”.
She said the mainstreaming of programmes is ensuring that 50 per cent of the department’s products support enterprises in township areas.
Meanwhile, 50 per cent are focused on women-owned enterprises, 30 per cent on youth-owned enterprises, and 30 per cent on enterprises operating in rural areas. This year, the department is planning greater emphasis on youth-owned enterprises.
Zulu said in order to address what the World Bank has termed Africa’s “missing middle”, serious investment must be made in bridging the gap between big and small companies, as small business are the lifeblood of economic growth and development.
“I can now boldly assert that we have successfully placing small businesses and cooperatives firmly on the national agenda so that we bridge this divide between too big and too small,” she said.
“As a result of our efforts we now have this high level of awareness within government that is encouraging. It is so fulfilling and exciting as more and more ministers accept that small business development is a national priority and they unreservedly pledge the support of their departments. We have truly become advocates, defenders and supporters of the sector.”
Zulu said the focus globally is around sustainability of entrepreneurs rather than the number of startups introduced into an ecosystem, but South Africa wants to have the best of both worlds by deepening its efforts to get more people starting businesses while also running graduation and scaling-up programmes.
“We are working with thought leaders, academic and research institutions to enhance our understanding and the instruments to improve our entrepreneurial ecosystem,” she said.
The minister said the tax revenue collected from SMMEs is evidence that this sector is increasingly becoming a “force to be reckoned with”. This increase was evidence in four categories: Pay-As-You-Earn (PAYE), the contribution by SMMEs to the skills development levy, Corporate Income Tax (CIT), and Value Added Tax (VAT). The contribution of small businesses to the Unemployment Insurance Fund (UIF) also increased.
“The contribution of SMMEs to the economy continued to increase despite the increasingly difficult economic conditions,” Zulu said.
“Working together as the Small Business Development Portfolio comprising the Department, SEDA and SEFA including our social partners, we are determined to strengthen the small business sector to enable it to occupy its rightful place in the mainstream economy and to demonstrate that small business is the big business of the future, and working together we can indeed achieve more.”