By Linda Mngomezulu
In engaging the media on the Small Enterprise Development Agency’s (Seda) efforts to support and develop SMMEs in South Africa, we’re constantly asked why the plethora of SMME support organisations doesn’t merge into one unified entity, offering the full range of support interventions under one roof.
The truth is, Seda already represents a merger of similarly focused organisations, with the express purpose of creating a one stop-shop for SMMEs that reduces duplicated efforts therefore improving service delivery. Although the theory of merging current support agencies has merit, it’s important to examine the roles these institutions play in servicing the needs of SMMEs.
Seda was formed through the merger of the previous SMME support institutions Ntsika Enterprise Promotion Agency; National Manufacturing Advisory Council (NAMAC); Community Public Private Partnership Programme (CPPP); and the Seda Technology Programme (STP), which comprised the Godisa Trust, National Technology Transfer Programme (NTTC) and the SMME support activities of the SA Quality Institute.
It was established as an agency of the Department of Trade and Industry (dti) and created as a national entity mandated to lead the implementation of an integrated strategy on the promotion of entrepreneurship and small enterprises.
This entails “providing increased financial and technical support services; creating demand for small enterprise products and services; and reducing small enterprise regulatory constraints.” So essentially, Seda is expected to strengthen and co-ordinate a national network of small business development efforts to unlock the potential of entrepreneurs.
The fact that there are all these additional SMME support institutions in the country demonstrates the frantic effort to enhance a sector that is seen as possessing the potential to create decent jobs and sustain economic growth.
Countries like India and Brazil that have shown success in entrepreneur development have a single support agency for small business. Although, South Africa’s historic conditions differ greatly from those of these countries so efforts in this regard cannot necessarily be expected to deliver the same results.
While South Africa has yet to explore the possibility or such a single entity, it originally adopted a shared competency approach, where various agencies were able to service SMMEs on a number of fronts.
So Seda, for example, offers a comprehensive range of small business support products and services designed to assist SMMEs in every phase of development, from pre start-ups to export-ready businesses. These services include business planning; small enterprise training and mentoring; access to markets; facilitation of access to finance; business registrations; support for co-operatives; and access to technology. Although we don’t specifically offer small enterprise funding, our technical diagnoses of businesses assist in preparing these enterprises for financial loans.
Other support agencies such as Khula Enterprise Finance are more focused on improving entrepreneurs’ access to finance, while still others like the National Youth Development Agency (NYDA) specifically target one group – the youth – with both support services and funding.
So each institution is currently filling a gap in the market. While there is some overlap in service offerings, particularly when it comes to general SMME support, Seda has – to a large extent – reduced confusion around this through working in tandem with these agencies at national, provincial and municipal level to position Seda as the first port of call for general SMME support.
This of course begs the question – why not merge these entities and eradicate such overlapping altogether? In answering this, one needs to consider both the benefits and pitfalls of such a move.
Small business development remains an issue of national importance due to historic and current disparities both within this sector and society as a whole. So on the plus side, South Africa would benefit immensely from an integrated approach, as this would show a complete picture of small business in the country and highlight specific areas for improvement. But on the down side, a hiccup in the engine of a single agency could have a detrimental knock-on effect within the greater entity.
As opposed to a straight out merger, another approach would be to incorporate certain entities so that more substantial service offerings could be realised. So for example, there’s the suggestion that Khula is incorporated – not merged – into Seda to provide much-needed financial capacity to further reduce SMME failure.
That said, we have been informed by the dti that a process is underway to review the state’s SMME support in order to assist in streamlining intervention institutions and programmes. While we wait for the outcome of that process, we will continue to increase SMME support coordination and integration as building blocks towards any end state. For example, we will soon embark on a joint entrepreneurship campaign with Khula that will be rolled to communities across the country.
Ultimately, each of these institutions has a responsibility to ensure it adds value to the SMME sector, whether operating individually or through an incorporated approach. Impact should take centre stage and anyone failing to achieve meaningful or strategic impact should cease to exist.
Linda Mngomezulu is chairperson of the Small Enterprise Development Agency (Seda).
ISSUED BY The Small Enterprise Development Agency
MEDIA CONTACT Lindokuhle Nkomonde – Manager: Corporate Communications and Media Relations
TEL 012 441 1210
Date Wednesday, 09 February 2011