The contribution of small and medium enterprises towards economic development was the focal point at the beginning of a three-day gathering between business leaders, government and other stakeholders in Johannesburg yesterday.
The National SMME Policy Colloquium, hosted by the Industrial Development Corporation, focuses on SME issues including the need for greater access to funding. The role of the Small Business Ministry is also up for discussion with delegates deliberating the future of SME development, the mandate of the department, and its vision.
Executive director at Black Business Council, Danisa Baloyi, said that SMEs should be central to economic development of South Africa and thus, should be helped by all means necessary to achieve their objectives.
“We have to put our small businesses at the center of the world’s economy. Most European’s economies are small business driven. And China’s SMMEs contribute 50% to GDP and 75% employment whereas only 2% of our small businesses are exporting abroad,” Danisa said.
SMME Policy Colloquium
One of colloquium’s aims is to assist with the development of the Department of Small Business Development’s policy, and how to align its objectives with the National Development Plan.
In her address, the Minister of Small Business Development, Lindiwe Zulu, assured delegates that the colloquium would not be another talk shop, but that her department would take the proposals, suggestions and its outcomes very seriously.
“This colloquium carries the responsibility to lobby government. We need to have coordination of activities with businesses as government. We need to consider what the people say about unconducive legislation so that all the outcomes fit into the department’s and parliament’s systems,” Zulu said.
Funding challenges
With regards to the difficulty associated with accessing finance for SMEs, various proposals were made. These included ideas for a black-controlled public-private bank, and the need to address the poor levels of applications on the part of entrepreneurs. The need to relax financial institution’s stringent lending requirements was also among the suggestions.
“We need to ask how coming with a negative balance sheet affects the loan application. You need equity to start up a business, and development finance institutions need to cut out the red tape and give finance to SMEs,” said Clive Manci, vice-president of Business Unity South Africa (BUSA).
“What is required is a private bank owned by African people, with a business bank license, and government needs to put up guarantees especially towards those businesses that do work with it,” said Cas Coovadia, managing director of the Banking Association of South Africa.
Funding ideas
Sipho Marala, head of SME Wholesale Lending at Small Enterprise Finance Agency, said development finance institutions still needed to consider various factors including: their ability to repay loans, the skills level of entrepreneurs, and the value chains for SMEs.
“Banks need to invest in enterprise development because they are middle-men between businesses and clients as entrepreneurs have accounts with them,” he said.
Jeff Miller, a supervisor at a startup accelerator company Seed Engine, suggested that there needs to be a creation of angel networks and clever investment of pension and provident funds.
“Pension funds are a big investment purse, but they are not invested into SMEs, which could help nurture them,” he said.
