Outline

1. Given the role that SMMEs play in economic development, what can Africa do to improve their effectiveness? Hlonela Lupuwana Chief Executive Officer Small Enterprise Development Agency

2. Outline • The role played by SMMEs • Challenges facing SMMEs in Africa • Possible interventions • Seda projects addressing some of the identified challenges • Conclusion

3. Role played by SMMEs • All countries, both developed and developing acknowledge the value of SMMEs in economic development, job creation and poverty alleviation. • However, SMMEs with well-conceived business ideas have a chance of making an even more significant contribution to the development of countries • Although most SMMEs are necessity driven, there is a growing spirit of entrepreneurship within South Africa and the continent at large, leading to a greater number of opportunity-driven SMMEs. • The support of government is essential in maintaining and improving the contribution of SMMEs in socio-economic development.

4. Challenges facing SMMEs in Africa • Apart from the common challenges faced by SMMES globally,: • i.e lack of business and financial management skills. • inadequate access to finance, due to poor business plans and high risk perception. • Lack of access to business information.

5. Challenges facing SMMEs in Africa • SMMEs in Africa, face further challenges of which include the following: • Lack of timely access to up-to-date and appropriate technology • Inadequate information regarding support structures available to SMMEs • Lack of access to markets mostly with landlocked countries • Lack of intra-Africa trade due to high cost of import and export duties. • Cumbersome and manual customs procedures leading to corruption at border points (it takes 12.1 days on average to go through customs in the sub Saharan Africa ). • Climate change – especially given the over reliance of SMMEs on agriculture. • Transportation costs in landlocked African countries are 50 times higher while trade volumes in these countries are more than 50% lower in similar coastal countries. • Lack of adequate and reliable communication and energy infrastructure (World bank estimates that US$20 billion per year(in Africa) will be required to finance the development of trade-infrastructure

6. Possible interventions • Academic institutions should share research outputs with SMME to encourage innovation and play a more developmental role. • Policies should encourage development of local technology and use of local (continental) raw material and tools to reduce excessive reliance on overseas imports. • Innovation should be encouraged and incentivised throughout Africa. • Information sharing networks and workshops should be encouraged to improve access to information.

7. Possible interventions continued • Policy reform to create a conducive environment that will enable development and growth of SMMEs at regional and local level • Strengthening the supply side by ensuring that goods and services provided by SMMEs are of the highest standard. • Strengthening the demand side by encouraging government and private sector to procure goods and services from SMMEs. • Enhance the informal cross border trade as it plays a key role in poverty alleviation and women empowerment. • Develop human capacity and infrastructure to explore the potential of intra-regional trade.

8. Possible interventions continued • Trade facilitation initiatives should ensure that private sector pursue its business in a manner that is consistent with the “African Agenda” • Simplification of government tender processes • Collaborations with financial institutions to facilitate access to funding by SMMEs. • Vocational training for SMME and their staff • School curricula to include business and management related subject

9. Possible interventions continued • Tracking of SMME throughout its developmental stages (after care) • Stream lining of services provided to SMMEs by support institutions to avoid duplication • Sector based definition of SMMEs to ensure sector specific initiatives for their development and growth • Establishment of a reliable central database of SMMEs by sector and specifying if they are formal or informal (1st or 2nd economy).

10. Seda projects to address some of the identified challenges • Partnerships with commercial banks and development finance institutions to facilitate access to funding . • Partnership with Old Mutual Foundation and Masisisizane (grants and loans). • Capacity building for Business Advisors and Service Providers through our learning academy in collaboration with the University of the North West. • Seda Technology Programme (STP) – quality division , enterprise development unit and the conformity assessment unit.

11. Seda projects to address some of the identified challenges • Partnership with NSIC – rural technology (agro –processing tools) • Tshintsha project – graduate preparation for entrepreneurship. • Proposed follow up on clients 6 monthly – aftercare. • Partnership with SABRAE ito best practices exposure to our Business Advisors.

12. Conclusion • There is no disputing the value of SMMEs in the development of Africa, however our inability to trade with each other despite distance advantages, poses a serious threat . • SMMEs will not thrive without a conscious and continuous investment in training, and infrastructure. • The legal environment also needs to be continuously aligned to the needs of the SMMEs throughout Africa. • The South African ‘Africa-Agenda’ which means that socio economic development cannot take place without political peace and stability should ideally be at the hearts of every African policy maker.

13. Conclusion continued • Trade facilitation should ensure lasting economic relations instead of instant profit making at the expense of weaker countries. • Most of the proposals made in this presentation have already been implemented by some countries but intra-Africa trade, infrastructure and skills are still a challenge.

14. Sources • African Development Bank • World Bank • Africa Growth Agenda • dti Annual Review on SMME Development • Seda Surveys and Benchmarks on SMME Development

15. THANK YOU