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Introduction to the Legal Environment of a Selected Business Sector (13936)

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Access to Finance

Access to finance has been widely considered to be a major constraint for the growth of SMME’s. In recognition of this constraint, the CSBP established an institutional support framework and introduced a system of subsidies and incentives to leverage greater private and non-governmental sector investment in the SMME sector. However, certain constraints have hampered the flow of funds to SMME’s. These include the lack of financial service providers in rural areas, the limited amount of small-scale and start-up equity being provided, the low level of involvement of commercial banks in the SMME sector, the lack of coordination between financial and non-financial service provision, as well as the limited outreach of micro enterprise finance institutions in the country. The limited number of financial products on the market is a further constraint. The almost complete lack of finance available to SMME’s in the loan ranges between R 10 000, 00 and R 50 000, 00 poses a significant challenge. The CSBP has begun a process of addressing these constraints.

The Business Referral and Information Network (BRAIN)

“Easy access to information” was identified in the White Paper on the National Strategy for the Development and Promotion of Small Business (1995) as one of the most important issues that required attention. The CSBP has made extensive progress with regard to the implementation of information for SMME’s. The centres are currently being piloted with a view to establishing centres on a country wide basis during the 1998/99 financial year.

Publications by the CSBP

The CSBP published the following publications during the 1997/98 financial year:

  • A “Guide to Exporting for SMME’s”. This booklet provides a comprehensive guide on exporting, including taking the SMME through the complete export cycle.
  • “Potential Small Business Partners Booklet” which provides a number of SMME Company profiles for overseas importers and potential joint venture partners 9 Provincial SMME Service Providers Directories
  • National SMME Service Providers Directory. This directory combines the provincial directories into a national reference directory. 
  • Various Succeed SA inserts on exporting and finance for SMME’s

Small Business Help Line and Your Own Business Television Programme

As a further means to providing SMME’s with information, the CSBP established the Small Business Helpline and supported the Your Own Business television Programme.

The National Small Business Regulatory Review

The White Paper details that inappropriate or unduly restrictive legislative and regulatory conditions are critical constraints to SMME’s entering business and can restrict their growth. Since government is responsible for the legislative and regulatory framework and its continued amendment, it is its role to ensure the appropriateness of these rules and regulations for the small business sector.

As a result, the CSBP has initiated the establishment of the National Small Business Regulatory Review. The review will be overseen by an Advisory Board that will advise government on the legal and regulatory framework that impact on small business development. The board comprises representatives of the public and private sector.

The Second National Conference on Small Business

Since the adoption of the White Paper in 1995, SMME support policies and programmes have largely been driven by national government and implementing agencies as well as provincial government. Due to the important role that local economic development can play in overall development and the necessity for SMME’s to thrive within their local economies, the CSBP began a process of involving local authorities in SMME development. The process was launched with a six month outreach programme that included consultations and information sessions with local government officials. This culminated with the hosting of the Second National Conference on Small Business which was held in Durban at the International Convention Centre from 3-7 November 1997.

The conference was co-hosted by the Department of Trade and Industry, in conjunction with the Department of Provincial Affairs and Constitutional Development, and the South African Local Government Association (SALGA). The conference was sponsored by the Royal Danish Government.

Financial loans provided by the Small Business Development

Corporation (SBDC)

During the period between 1 April 1997 to 31 March 1998, the SBDC granted 896 loans to the value R 304 640 000,00. A regional breakdown in terms of the SBDC defined regions shows that the largest number of loans was issued in Kwa-Zulu/Natal,
Free State and the Western Cape regions. Across all the regions, it
is evident that the SBDC has moved away from the micro-market, with average loan sizes and the business sizes increasing, in line with the policy decision taken by the Board of Directors.

Programmes under the Ntsika Enterprise Promotion Agency

  • Ntsika facilitates the provision of the following support programmes and services:
  • A network of Local Business Service Centres (LBSC’s) has been established to provide services such as business advice, counselling, training and mentorship on a local level.
  • Marketing and linkages through a network of Tender Advice Centres (TAC’s).
  • Access to technology including the establishment of Technopreneur Cocoons and Manufacturing Advisory Centres (MAC’s).
  • Targeted assistance programmes for rural women, the youth and disabled entrepreneurs.

The following provides a summary of the results of the programmes and services that have been facilitated by Ntsika:

  • Programme/Service
  • Numbers Assisted
  • Local Business Service Centres
  • Capacity Building of LBSC’s
  • Service delivered to SMME’s
  • Capacity of 70 service providers enhanced
  • Over 175 service providers trained
  • Over 12,000 entrepreneurs provided with services in areas such as business advice, counselling, training etc.

Programmes under the National Small Business Council (NSBC)

The NSBC is responsible for the following programmes:

The Chamber Development Programme which is designed to strengthen the capacity of business chambers. The programme will promote small business membership and representation within business chambers by building their capacity and encouraging a united voice for SMME’s within each town.