This resolution was taken following an acknowledgement by participants that for economic development to take place, the support for the SMME sector is a much needed intervention.
Participants were also aware of estimations that 7 out of every 12 new South African small businesses fail.
For instance, the Global Entrepreneurship Monitor reports of 2001, 2002 and 2003, that compared SA to about 37 countries, claim the following:
- Men are twice more likely than women to be engaged in an entrepreneurial venture.
- 1 in 10 adults in a metropolitan area is engaged in an entrepreneurial venture, compared with 1 in 22 in small towns and only 1 in 56 in rural areas.
- 1 in 22 black adults are engaged in an entrepreneurial venture, compared with 1 in 12 coloured adults, and 1 in 10 Indian and white adults.
Furthermore, the Ntsika Enterprise Promotion Agency completed a study in 2002, which stated that there are approximately 144 594 SMMEs functioning in the Western Cape. This number does not include businesses operating in the informal sector.
The Ntsika study further noted that SMMEs operating in the Province comprised 5,4% of the total number of enterprises in the Western Cape.
The study also showed that SMMEs accounted for more than 50% of turnover in all sectors. This trend was particularly significant in the agriculture, construction, trade and transport sectors. These findings confirm that the SMME sector is critically important and needs nurturing.
Minister Brown said: "The harrowing picture painted by the Global Entrepreneur Monitor report, together with the Ntsika study underlines Government's decision to commit a lifeline to the value of R50 Million to the Western Cape's SMMEs".
1. The Enterprise Incubation Programme:
R1, 5 Million of the money will go to the Enterprise Incubation Programme. When the Programme was first initiated in April 2004, it was intended that 100 businesses would be selected for mentoring and support.
Minister Brown said: "It is my pleasure to announce that we are able to expand the programme to include 118 businesses from across the Province. The Provincial Government of the Western Cape will spend R1, 5 million over the next two months for these businesses to be mentored and supported".
When the programme was announced in April, one of the targets was that 30% of the businesses chosen must be fully or partially owned by women.
Minister Brown added: "This target has been exceeded, as 32,2% of the businesses selected are owned by women. We have also cast the net wider and as a result 25% of the businesses are owned by youth entrepreneurs, while 2,5 % belong to disabled owners. Most importantly though is the fact that 17% of the businesses come from rural areas of the Western Cape, which will ensure greater participation across the geographic spread of the Province".
The Department of Economic Development and Tourism is currently in the process of appointing the National Productivity Institute (NPI) to analyse each selected enterprise. A report with recommendations of the needs of each individual business, and the clustering of these needs for easier assistance will be compiled over a period of two months.
Each enterprise will have a business mentor to advise and assist the entrepreneur, thereby ensuring actual skills transfer and active participation between the mentors and mentees.
Minister Brown said: "The incubator programme is a pilot project and we are sure of its success in propelling economic development to unprecedented levels in the Western Cape".
As part of the promise by Premier Ebrahim Rasool to support the SMME sector, other projects that have been introduced are:
2. The Red Finance Fund:
The Department of Economic Development and Tourism has raised R35 million for the Red Finance Fund to capitalise a loans scheme for SMMEs. The Red Finance Fund will provide finance to SMMEs who do not meet the standard criteria for loans from mainstream banks and financial institutions. A target has been set of raising at least R50 million a year over the next three years in order to fill the gap.
3. Agri-Business Fund:
The Department of Economic Development and Tourism has allocated R10 million for small Agri-Business projects throughout the Western Cape. The successful Hydroponics Plant scheme in Beaufort West is used as a model for the projects that have chosen. These agri-businesses are spread throughout the Province.
The Department of Economic Development and Tourism has allocated R4 Million for the ITESP. The Development Bank of Southern Africa (DBSA) has allocated a further R1, 85 Million to the project. ITESP provides integrated support to tourism SMMEs, including access to capital, skills and markets.
