Presentation: GovTech conference

Transcription

1 Department of Small Business Development Market opportunities for small Businesses Presentation: GovTech conference 31 OCTOBER 2017

2 PRESENTATION OUTLINE 1. Policy mandates of the SBD Portfolio 2. Nine Point Plan Aspirations 3. What are the challenges for Market access 4. Enterprise Ecosystem Considerations 5. Market Opportunities for SMMEs and Cooperatives 6. Technology as an enabler for enterprise growth 7. Support Instruments 8. Concluding Remarks 2

3 POLICY MANDATES OF THE SBD PORTFOLIO Constitutional and Legislative Mandates outlined. Specifically, the NDP sets specific goals for the small business sector, specifically: 1. To enhance economic growth through SMMEs as assessed through an increased contribution by the sector to GDP; 2. To create 90% of South Africa s 11 million needed jobs by 2030 through the SMME sector, and so contribute to reducing the unemployment rate to; and 3. To reduce the cost of regulatory compliance and promote ease of doing business for SMMEs; and ensure policy coherence through partnerships among key societal players, business and government. Carried forward by MTSF: Outcome 4: Decent Employment through Inclusive Economic Growth: 4.2.2: Measure and reduce delays and unnecessary red tape around authorisations and related issues that hinder or might foster investment and employment (in the SMME and Co-ops space) : Township and rural economies supported and report on the impact in terms of the number of business supported, value of the grant approved and geographic location of the supported businesses. 3

4 POLICY MANDATES OF THE SBD PORTFOLIO (CONT.) 4.3.3: Programmes to ensure increased access to employment and entrepreneurship for black women and youth in the context of stronger support for emerging and smaller enterprises overall : Provide coaching, incubation, intensive support and financing to sustain existing small businesses and co-operatives, as well as expand the sector. MTSF Outcome 7: Vibrant, equitable, sustainable rural communities: 7.6.1: Promote sustainable rural enterprises and industries in areas with economic development potential. It is noted that the Portfolio supports various other MTSF outcomes indirectly or in a secondary capacity, which work will continue. However this does not impact directly on the mandate or strategic posture of the Portfolio. 4

5 2015: Nine-Point Plan Aspirations GROWTH TARGET: Annual increase in the contribution to GP from (Current) 42% to 45% in 2019 JOBS: Current 7.33m. 2019: 8.69m CURRENT STATUS (NOV-15) 2019 TARGET CHALLENGES KEY INTERVENTIONS Absolute Contribution of SMMEs to GDP: R1.77tr No. of Active SMMEs & /Start-up Rate: 2.1m/13% Total jobs in SMMEs: 7.33m Absolute Contribution of SMMEs to GDP: R2.10tr No. of Active SMMEs & Start-up Rate 2.5m/16% Total jobs in SMMEs: 8.69m 1. Capacity to meet demand 2. Funding not developmental 3.Limited market access 4. Targeted support for sectors 5. Absence of informal sector policies 1. Policy, Legislative & Regulatory review (including Red Tape Reduction) 2. Public Procurement 3. Access to Finance and Non-Financial Support 4. Building market access 5. Township and Rural Enterprises strategy 5

6 WHAT ARE THE CHALLENGES FOR MARKET ACCESS Three broad categories found in various study sources: Management abilities Entrepreneurial capability Operations logistics The first two factors comprise the so-called managerial skills, which reflect the entrepreneur preparedness to interact with the market where they can engage their competence to properly conduct business. 6

7 WHAT ARE THE CHALLENGES FOR MARKET ACCESS (CONT.) When market access mechanisms are analysed, certain difficulties come to light: 1. Difficulty in accessing the market information - This is characterised by the entrepreneur s lack of awareness of sources of information. The reasons may be that this information is not consolidated and organised in such a manner as to facilitate quick access and the absence of a specific information related to enterprises information for their products and services needs 2. Ignorance of the market - Most SMMEs are not aware of the market in which they are operating, their main competitors and the niches that could be transformed into business opportunities. To some extent they may not be informed about market tendencies and trends 3. Inappropriateness of the products for meeting the needs of the market - SMMEs at times find it hard to adapt their products to market needs. At times specifications, technical norms, quality, packaging etc 7

8 WHAT ARE THE CHALLENGES FOR MARKET ACCESS (CONT.) When market access mechanisms are analysed, certain difficulties come to light: 1. Difficulties in accessing government procurement opportunities - This is caused by excessive red-tape as well as obstacles to SMMEs especially the lower rang to become government suppliers. When they do sell, they lack the financial capacity to put up with the habitual delays in payment by government bodies 2. Difficulties in accessing international markets - In principle, the search for international markets represents a natural expansion for a company that is already has relatively consolidated position in the domestic market. International market access is a natural evolution from a local market reach to regional and then international. Involvement in the international marketplace is the most advanced stage of this evolutionary process 8

9 ECOSYSTEM CONSIDERATIONS This intervention alone will not solve all the challenges that are faced by SMMEs but the whole ecosystem 9

10 MARKET OPPORTUNITIES FOR SMMES AND COOPERATIVES One of the identified DSBD activity is doing sector analysis in order to identify specific sectors where SMMEs and Cooperatives operate. Sector analysis will assist in doing market overview per sector Doing market definition and where possible market research This may also assist the department to develop specific market access strategies per sector identified The above will assist in strategic positioning taking an enterprise, a brand or its products to a specified position in the market The Seda incubation programme provides for some of these already 10

11 MARKET OPPORTUNITIES FOR SMMES AND COOPERATIVES (CONT.) Steps to improve market access for targeted groups of small enterprise have been prominent on the agenda since the 1995 White Paper There have been significant developments since then with enactment of laws that seek to provide opportunities for vulnerable groups in both private and the public sector The international relations and regional organisations that were established also provided for some opportunities for competent enterprises to play in he international market value chains That being said, market opportunities for small businesses can be categorised as follows: Public Sector Procurement Private sector value chains Export led market opportunities 11

12 MARKET OPPORTUNITIES FOR SMMES AND COOPERATIVES (CONT.) Public Sector procurement: As part of its commitment, government has pronounced a 30% procurement opportunities for small businesses in the public sector. Based on the above, a targeted procurement programme is being implemented through the regulations adopted by the National Treasury and have been effective since April The implementation of the public procurement programme, especially the set-asides policy, has opened market opportunities for small enterprises to ensure their growth and thus increased contribution to the Growth Domestic Product, sustainable livelihoods and creation of job opportunities Implementation of the transversal agreements being negotiated with other government departments and SOCs bring to the fore another layer of opportunities for small enterprises. There still some few tedious challenges for enterprises that supply the public sector market such as the awareness for registration in the Central Supplier Database, tax compliance issues and issues of managing quality The DSBD agencies are seized with these challenges and are addressing them 12

13 MARKET OPPORTUNITIES FOR SMMES AND COOPERATIVES (CONT.) Private Sector Value Chains: A supplier development programme leveraging on the new BBBEE codes of good practice issued by the Department of Trade and Industry is being implemented by the Small Enterprise Development Agency (Seda) This programme is being implemented through a partnership arrangement with various business corporations Identification of opportunities for SMMEs within the value chains of the designated sectors is also one opportunity and is being implemented through the dti designated sector work; High impact programmes linked to State Infrastructure Programme; and various emerging opportunities emanating from the State Owned Enterprises 13

14 MARKET OPPORTUNITIES FOR SMMES AND COOPERATIVES (CONT.) Export-Led Market Opportunities The department of Trade and Industry organizes Trade Missions around the world wherein SMMEs are also participating The DSBD also has its own international partnerships that present opportunities for small businesses and cooperatives to showcase their products The aim of the missions is to visit potential customers or partners that can be arranged through Business to Business linkages These missions expose entrepreneurs to a market experiences and thus contributing to greater maturity However, trade missions such as participating in trade fairs and business rounds, require careful preparation and selection of enterprises with potential not only to take advantage of the available international market opportunities but also competencies to deliver products of quality and needed quantity 14

15 TECHNOLOGY AS AN ENABLER FOR ENTERPRISE GROWTH Key elements in innovation are known to be inclusive of research, development and the application of new technologies. Firms must make an organisational effort by adapting their methods of production, management and distribution, in order to incorporate such innovation elements. Technology policy should be able to propose mechanisms for initiating new solutions to industrial competitiveness problems, and encourage the promotion of the culture of innovation, technology absorption, global collaboration and knowledge sharing. The Seda Technology Programme assist enterprises to enhance their competitiveness through technology solutions and appropriate SMME technological infrastructure The Technology Innovation Agency has partnered with Seda to provide solutions related to commercialisations Exploration of the online ecosystem with various partners Provision of e-learning platforms especialy for enterprises who are unable to attend classroom type training opportunities 15

16 SUPPORT INSTRUMENTS Funding Channels: Sefa has developed a bridging finance facility for those enterprises that get contracts in both the public and private sector. The facility assist enterprises with capital to commence with servicing of the contracts. Seda manages the Supplier Development Programme to enhance capacity and capabilities of the suppliers linked to business corporations The incubation programme to enhance productive capacities and capabilities of the Small suppliers DSBD and the dti manage the suit of incentives that assist in both domestic and international market platforms- these assist to subsidise the costs of SMMEs and cooperatives that participate in both local and international business fairs Export Councils also assist enterprises to navigate the international trade space 16

17 CONCLUDING REMARKS Market access is one of the most important component for SMMES growth Enterprise competitiveness is key for access to market opportunities The competitiveness to happen technology is the most important enabler across enterprise growth trajectory Adaptation of enterprises given the technology development need to become one of the critical interventions of business development support The enterprise development ecosystem must therefore infuse technological needs of the enterprise across the value chain from start-up up to maturity 17

18 MARKET ACCESS Thanks 18