RESEARCH DIVISION
KHAYELITSHA SMALL BUSINESS PROJECT
Players in the Process of
Small-Business Support
Composite
FACT SHEET 04/2014
Small Business Academy, University of Stellenbosch Business School, Cape Town, South Africa
With a total population of more than 800 000 Khayelitsha has in excess of 80 000 small, informal and
micro-businesses. On a daily basis these small enterprises face a wide range of problems and challenges.
At the same time there are many different institutions, organisations, programmes and projects that try
to help entrepreneurs to tackle these issues or to prevent problems from arising. We can speak of these as
“players” in the process of small-business support.
Some of these players and their actions are very effective, while others may promise much but effect very
little. All too often entrepreneurs are not aware of support programmes or practical ways to use the support. For example, they may not be aware of training opportunities or the possibility to get a mentor to
advise them on their day-to-day problems.
CO N T E N T S
• The challenge
• Overview of the players • Relatives, friends, etc. • Private-sector players
• NGOs and parastatals
• Public-sector bodies
• The entrepreneur as key player
• Interaction of players
The diagram below tries to illustrate this interaction between small businesses in Khayelitsha who face
numerous needs and challenges as well as the diversity of support players and programmes. In many
ways this interaction shapes the business-development process in the area.
Needs and challenges
of SMMEs
in Khayelitsha
(Fact Sheet 03/2014)
The SMME
Development Process
in Khayelitsha
Players in the
support of SMMEs
focusing on
Khayelitsha
(Fact Sheet 04/14)
Detailed fact sheets on the different problem areas currently dominant in Khayelitsha and on the different
players as well as their approach/programmes in support of SMMEs are planned.
In this fact sheet, we present the broader picture, to make us aware of the range and diversity of
challenges. The diagram on page 2 shows the four main segments of support players, which interact
in the daily business process.
Supported by
1
The four segments of players in the process of small-business support
A
Relatives, friends and
community partners
1 Close family (incl. family
businesses)
2Relatives
3Friends
4 (Former) Colleagues
5Employees
6 (Fellow) Refugees
7 Co-op partners
8 Community contacts
B
C
NGOs and parastatals
Private-sector players
1 Business associations
2 Professional services
3 Financial institutions
4Franchisors
5 Corporate social responsibility
6 Corporate Base of the Pyramid
engagement
Players in the
process of
small-business
support
1 Educational bodies
2 Business Partners
3IDC
4Seda
5Mafisa/Sefa
6 NEF, NYDA
7DBSA
7 BEE-linked support
8Media
D
Public-sector players
1 The City of Cape Town:
Zoning, regulations, infrastructure, incubators, procurement, shopping centres
2 Provincial Government of the
Western Cape
3 National Government:
Department of Finance, the
DTI, sector departments,
Dept of Public Works
4 Foreign donor bodies
(e.g. DfiD, GIZ, US-Aid)
Each of these four segments will now be described briefly.
Supported by
2
ARelatives, friends and community partners
In discussions about the need for (more) support for small enterprises the focus usually
falls on public-sector action and non-profit
bodies. Little attention is usually given to the
wide range and often most valuable support
obtainable from an entrepreneur’s direct family
(parents, siblings, other relatives), close friends
(school friends, former struggle partners, church
partners), former colleagues and others in the
network of the entrepreneur.
The “support” may be in the form of advice or
BPrivate-sector players
Here we are looking at the role established
businesses can (and do) play in helping small
enterprises to tackle daily challenges and support them in their business process.
the sharing of related experiences, showing correct procedures or techniques, indicating good
contacts or just pointing out day-to-day problems and how to tackle them.
Some of such support may create new problems,
like the domination of older members of the family business or further pressures from personal
contacts. Yet, for many entrepreneurs (in particular those in the informal and survival business
sector) these contacts are often the most important training and support channels.
ments and other focused support (e.g. linked to
Black Economic Empowerment commitments).
In the most direct way this includes financial institutions who can (or should) provide different
types of finance for SMMEs or financial/marketing and personnel consultants who help firms
with their operational systems and give advice
(e.g. on tax incentives or labour-relations issues).
The question is, of course, whether SMMEs are
aware of the different services and are able to
afford them.
We can also refer to the role of business associations or chambers of commerce and industry as
bodies which (should) try to help small-business
members to be more aware of support programmes and to actually help organise support
schemes. On the other hand, franchises can also
be seen as a system where the franchisor may
help the franchisee to tackle effectively everyday business problems. Similarly, private training
institutions can play a major role in transferring
business skills to SMME trainees.
On the other side there are many larger companies that (as part of their corporate social
responsibility or for other reasons) are willing to
assist SMMEs with (some of ) their tasks through
preferential procurement, mentoring arrange-
Finally, we can view the media (TV, radio, newspapers, social media and the internet) as increasingly significant channels for the dissemination
of information, advice and training related to
SMMEs.
C NGOs and parastatals
The first category in this field of NGOs or nonprofit organisations relates to the education
and training bodies or programmes focusing
on the needs of small enterprises. This includes
training in business finance, general management, labour relations, marketing and other
(sector-focused) topics. The supply comes from
different educational institutions, both inside
and outside Khayelitsha, including correspondence- and ICT-related training and universities.
A few specialised public bodies like the Industri-
Supported by
al Development Corporation (IDC), the Development Bank of Southern Africa (DBSA), Business
Partners and the new Small Enterprise Finance
Agency (Sefa) supply funding for particular
programmes. Seda, on the other hand, focuses
on information, advice and other “soft services”
for SMMEs, with an office in Khayelitsha. Other
bodies, like the National Youth Development
Agency (NYDA) and the National Empowerment
Fund (NEF) also offer support (including finance)
schemes relevant for Khayelitsha entrepreneurs.
3
DPublic-sector bodies
Here we can distinguish between the three
levels of government. At the municipal level the
City of Cape Town (CoCT) is primarily responsible for the business infrastructure and related
regulations and registrations. At the centralgovernment level the Department of Trade and
Industry co-ordinates many (small-)business
related support programmes, while other
departments cover sector-focused support (e.g.
fisheries, agriculture, public works).
The Provincial Government of the Western Cape
also channels some support for SMMEs and helps
to co-ordinate municipal efforts in this field.
Complementing these public-sector efforts a
few foreign-donor programmes are focusing on
the small-business sector, with the German GIZ
support [via the Violence Prevention through
Urban Upgrading (VPUU)] directly benefiting
Khayelitsha.
The entrepreneur as the key player in tackling challenges
While this fact sheet (and others evolving from this one) focuses on the diversity of support players or
partners from which an entrepreneur can get help, we should not forget the critical role that the business
owner/leader/manager has to play in tackling day-to-day challenges. Learning from own mistakes, exploring opportunities, developing own strategies … and many other efforts are crucial in this process. This
includes the willingness and determination of entrepreneurs to utilise external support.
Interaction of the Players: The ultimate Challenge
Comparing the range of problems and challenges confronting SMMEs (in Khayelitsha) and the diversity of
players who are (or could be) involved in support action or programmes we are confronted with a paradox.
• Listening to the complaints of SMMEs one has to conclude that there is far too little support available for
SMMEs in Khayelitsha, yet
• looking at the wide range of players (and the programmes and action introduced by them) one expects
that most of the needs are actually addressed.
In part this paradox can be explained by the vast number of SMMEs active in the area (we spoke about
80 000, including all size categories). What may, however, be even more important is the fact that
• most SMMEs are not really aware of this diversity of support players and programmes,
• there is little proactive interaction and co-operation between the different players, thus limiting the
spread and impact of joint and co-ordinated support efforts.
Such interaction cannot be “engineered” or directed in a top-down way (via the levels of government).
It has to evolve and grow in a bottom-up way through closer interaction of all four categories of players
identified earlier. These players have to become more aware of the diversity of issues, problems and challenges, of the role of each player in the process and of ways to co-operate with each other and gradually
expand the support process.
The Khayelitsha Small-Business Project forms part of the activities of the Small Business Academy (SBA)
at the University of Stellenbosch Business School (USB).
The project profiles problems faced by small enterprises in Khayelitsha and also existing support bodies and programmes.
For more details and other fact sheets, see www.usb.ac.za/sba.
For feedback on this document or further information, contact Prof WH Thomas at [email protected] or on 082 770 9694.
Supported by
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