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

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Small, medium and micro-enterprises

There are an estimated three million small businesses in South Africa (this includes businesses of an informal nature).

The Department of Trade and Industry’s Small Business Programme ensures that all sector-development policies incorporate the development, growth and investment measures with regard to maximizing small business’ contribution to the total economy.

  • The Programmer’s initiatives focus on, among others,
  • cross-cutting and sectoral initiatives,
  • the introduction and review of small-business-specific incentives,
  • improved access to finance/capital,
  • improved access to information and advice, and
  • Promoting entrepreneurship among the youth and women.

Ntsika Enterprise Promotion Agency

Ntsika’s mission is to render non-financial support services to the SMME sector through a broad range of intermediaries, and to contribute substantially towards achieving equitable economic growth in South Africa.

During 2003/04, Ntsika implemented a comprehensive range of specialised, non-financial programmes in support of SMME’s, namely business-development support, programme design, research and information, chamber support, export readiness and business linkages.

Between 1996 and 2003, Ntsika supported a network of 1 299 service-providers, and trained 3 028 of their employees. With the Agency’s interventions and support programmes, 334 000 SMME’s were trained in business skills, counselled and advised during the same period.

In addition, 156 491 jobs were created and/or sustained owing to interventions extended since its inception. Some 3 142 business linkages were achieved, yielding over R400 million in turnovers for the SMME’s, confirmed by orders won with the support of professional Tender Advice Centres and Local Business Service Centres.

Ntsika has assisted numerous organisations, many achieving economic growth in turnover ranging from R4 million to R48 million during the three-year programme lifecycle. The Department of Trade and Industry tabled legislation amending the National Small Business Act, 1996 (Act 102 of 1996), and under the policy direction of the Department, Ntsika was strategically involved in a restructuring process that has led to a further alignment of its programmes.

The objective of this process is the implementation of support services in accordance with a set target of SMME’s (a minimum of 170 000 SMME’s to be supported between 2004 and 2007). This target will be increased gradually to ensure that the objective of Vision 2014 is achieved.

Transfers to Ntsika totaled R40 million in 2004/05, with an additional R67 million raised from donors and the private sector. By September 2004, the merger between Ntsika and the National Manufacturing Advisory Centre (NAMAC), which was announced in May 2004, was underway.

Khula Enterprise Finance

Khula is a wholesale agency which provides financial support for small businesses through intermediaries. Its financial products include loans, a national credit-guarantee scheme, grants, institutional capacity-building, equity funds and mentorship schemes. The achievements of Khula can be categorised into providing support to financial intermediaries as retail distribution networks, and direct services to SMME’s.

The Thuso Mentorship Network provides entrepreneurs with pre-loan business plans and post-loan support in the form of technical expertise management. During 2003/04, Khula provided more than 600 loan guarantees to the value of R180 million, disbursed loans worth R100 million, and allocated R20 million through its equity fund. It also set up three new retail finance institutions.

National Manufacturing Advisory Centre

Name’s role is to implement SMME support programmes on behalf of the Department of Trade and Industry, and promote and coordinate national and international linkages and value-adding activities.

NAMAC Trust’s target sector is intermediary beneficiary organisations delivering services to SMME’s. Products are developed, packaged and channelled through the programmes. NAMAC develops other relevant products and programmes for SMME support, which it delivers through its existing national networks of Manufacturing Advisory Centre (MAC) and Business Referral and Information Network (BRAIN) outlets.

Additional funding of R80 million saw the establishment of NAMAC offices in all provinces in South Africa; the extension of its BRAIN Network to 415 locations; increased support in the provision of franchise information; and the piloting of Growth Achieved by Integrated Networks, intensive hand-holding, one-stop shops, and the Forestry Industry and the Sector Education and Training Authority (SETA) and Chemical Industry Sector SETA.

Some of Name’s achievements include providing support to 7 087 enterprises, the creation of 4 440 new jobs in those enterprises, and ensuring that more than 62 634 jobs were sustained through the interventions of the Macs. By mid-2004, there were 17 Macs countrywide. The Small Enterprise and Human Development Programme, previously under the UN Overseas Project Services banner, is now incorporated into NAMAC, and is designed to complement the existing national small business development support machinery in South Africa, with the overall objective of localizing support and maximising outreach.