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SMALL MEDIUM AND MICRO ENTERPRISES

SMALL MEDIUM AND MICRO ENTERPRISES. A SOUTH AFRICAN PERSPECTIVE. SOUTH AFRICA AT A GLANCE. Area 1,219, 090 km 2 Population 44,8m Currency 1 Rand = 100 cents Time GMT + 2 hrs Head of State: President Thabo M Mbeki 11 Official languages with English the business language

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SMALL MEDIUM AND MICRO ENTERPRISES

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  1. SMALL MEDIUM AND MICRO ENTERPRISES A SOUTH AFRICAN PERSPECTIVE

  2. SOUTH AFRICA AT A GLANCE • Area 1,219, 090 km2 • Population 44,8m • Currency 1 Rand = 100 cents • Time GMT + 2 hrs • Head of State: President Thabo M Mbeki • 11 Official languages with English the business language • Total GDP R1 523 bn (2005) (US$ 215 bn) • GDP per capita R31 850 (2005) (US$ 4 568) • Real GDP Growth 4.9% (2005) • Inflation (CPIX) 4.1% (annual 2005 average) • Exports Gold, minerals, diamonds, metals and metal products, food, automotive components • Main trading partners Germany, USA, China, Japan, France

  3. SOUTH AFRICA: AN EMERGING MARKET OF NOTE • SOUTH AFRICA TODAY IS ONE OF THE MOST SOPHISTICATED AND PROMISING EMERGING MARKETS GLOBALLY, MAINLY BECAUSE OF: • ABUNDANT NATURAL RESOURCES • EXCELLENT TRANSPORT AND LOGISTICAL INFRASTRUCURE • WORLD CLASS FINANCIAL SYSTEM • ECONOMIC STABILITY & SOUND MACRO-ECONOMIC MANAGEMENT. • COMPETITIVE SECTORS / INDUSTRIES • RELATIVELY LARGE LABOUR FORCE.

  4. SOUTH AFRICA FROM A GLOBAL PERSPECTIVE • South Africa is one of the most sophisticated and promising emerging markets, offering a unique combination of highly developed first world economic infrastructure with a vibrant emerging market economy. • South Africa is one of the world’s 26 industrialised nations. • The country is also regarded as the gateway to Africa. • South Africa has the largest economy on the African continent, accounting for approximately 25% of the continent’s GDP. • According to the World Bank, South Africa ranked 28th in the world for the ease of doing business in 2006. • The JSE Securities Exchange is Africa’s largest and most developed Securities Exchange and one of the world’s top 20 exchanges.

  5. SOUTH AFRICA FROM A GLOBAL PERSPECTIVE • South Africa remains the world’s top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium. • South Africa holds 80% of global manganese reserves, 72% of chrome, 88% of platinum-group metals (PGMs), 40% of gold and 27% of vanadium. • Unit labour costs in South Africa are significantly lower than those of many other emerging markets. • South Africa scored well in various categories according to the 2006 World Competitiveness Yearbook (61 countries ranked): • Ranked 6th in the world in terms of price stability; • Our fiscal policy was ranked in 11th place; • 24th position in terms of management practices (business efficiency); • 31st place in terms of attractiveness for foreign direct investment; and • SA has the lowest electricity costs for industrial clients.

  6. THE STATE OF SMALL BUSINESS PERFOMANCE • Small enterprise growth reached 7% growth rate. • Almost 40 000 new entrants annually. • 40% GDP Contribution. Main Contributing Sectors: • Construction, Transport, Telecommunications and financial services.

  7. IMPORTANCE OF SMME’S IN THE ECONOMY • ADVANCEMENT OF INFORMAL BUSINESS SECTORS. • SUSTAINABLE BUSINESS SECTORS • ALLOWS FOR PARTNERSHIPS BETWEEN GOVERNMENT AGENCIES AND THE PRIVATE SECTOR FOR ADDRESSING THE ECONOMIC CHALLENGES FACING THE COUNTRY.

  8. INSTITUTIONAL ARRANGEMENT • SMALL ENTERPRISE DEVELOPMENT AGENCY • KHULA ENTERPRISE FINANCE • SOUTH AFRICAN MICRO FINANCE APEX FUND • THE DTI INCENTIVES • INDUSTRIAL DEVELOPMENT COOPERATIONAND NATIONAL EMPOWERMENT FUND.

  9. SOUTH AFRICAN MICRO FINANCE APEX FUND (SAMAF) • Established to address poverty alleviation and provide sustained access to financial services for the poor. • Autonomous institutions that operate independent from government, provides for the following: • Access to affordable financial services • Institutional and client capacity building • Savings mobilization through co operations and other formations such as societies and stokvels.

  10. SEDA Special Programmes involve the following: • Manufacturing Advice and Marketing support services – and mentoring, Research, Market Linkages, Service provider partnership and development. • Business start up Service – Business registration, Business Planning and capacity building • Cooperative support • Facilitation of Access to finance • Technology demonstration Centers

  11. KHULA ENTEPRISE • Wholesale finance targeting retail finance intermediaries. • Credit indemnity schemes targeting commercial banks. • Partnership with the public sector on pilot projects to boost upcoming businesses.

  12. GOVERNMENT INCENTIVES • Cooperative incentive schemes (CIS) – Start up support for cooperatives. • Cooperative special project fund (CSPF) – New programme designed to support small to medium cooperatives with huge impact on employment. • None financial support – Capacity building for practitioners • Cooperatives pre – incorporation seminars / workshop for coop members.

  13. SMME RELATIONSHIP WITH BEE ( BLACK ECONOMIC EMPOWERMENT) • BEE DEFINED: An integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage , own and control the country’s economy as well as significant decreases in income inequalities.

  14. RELATIONSHIP BETWEEN SMME’S AND BEE • BEE-SMME’S – refers to those companies which are small, medium or macro with a turnover of up to 10 million rands per annum and which has more that 50% direct ownership and management by black people. • SMME’S are beneficiaries of BEE initiatives and they also contribute to the process.

  15. SHOPRITE CASE STUDY • Shop rite Holdings and the Department of trade and Industry’s Khula Enterprise Finance have signed a groundbreaking agreement . • Granting of retail franchise concessions. • Training , mentoring and support to black entrepreneurs. • Shoprite and Khula provide dual guidance in terms of training and mentoring the SMME’s. • Khula provides loans to concession holders to acquire equipment and furnish their stores. • Shoprite provides initial stock consignment to concession holders .

  16. RESULTS • Project is a success and has been declared a partnership that would be a model for future partnerships between government agencies and private sector for addressing some of the economic challenges facing the country. • Similar joint venture initiatives across different industries such as mining and petroleum.

  17. CONTACT CONTACT: MS SHIRLEY MAKHAYA MR THABO MAFOKO MR GOERGE BEZOUMATOV +7 (495) 5401177 E-MAIL : tradesa@econsa.ru

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