Small firms ‘play key role in job creation’

17 September 2012

Small businesses have a key role to play in providing opportunities and creating new jobs in emerging economies, Trade and Industry Minister Rob Davies said on Sunday.

Speaking at the International Small Business Congress at Johannesburg’s Sandton Convention Centre, Davies said South Africa needed to develop a more symbiotic relationship between big companies and small suppliers.

In South Africa, small businesses had good potential when it came to job creation, as the cost to create one job in a small firm was less than it was to create a job at a big firm, as large businesses were more capital-intensive.

However, he said the country needed to raise the skills level of business owners so that firms didn’t simply stumble along, and that their creative ideas could be turned into job-creating enterprises.

Small business support

The Small Business Development Act of 1996 led to the setting up of several institutions to support small business in South Africa, including Ntsika – which in 2004 became the Small Enterprise Development Agency – and Khula Enterprise Finance.

This year, the government rationalised a number of small business finance agencies, including Khula, into a single entity, the Small Enterprise Finance Agency, with the aim of moving towards a single window through which firms could access small business funding.

Davies said the government had also chosen to focus more on incubation, but that compared to other emerging economies, South Africa had too few incubators – at just 32 under the Small Enterprise Development Agency (Seda), compared to hundreds in similar other emerging economies.

Seda plans to roll out several more incubators in the next few years.

The department this month also put in place the incubator support programme – a cost-sharing funding programme to support the setting up of incubation programmes, and applications for the grant incentive would open on October 26, said Davies.

State ‘should enable, but not interfere’

Also addressing the conference on Sunday, guest speaker David Irwin said the state should play the role as an enabler of economic success, but should otherwise not interfere in a country’s small business sector.

Irwin, currently a partner of Irwin Grayson Associates in the UK, previously set up the UK’s first small business support agency and steered the UK’s Small Business Service, which addressed government support for small firms.

Irwin said governments should craft regulations that were both fair and seen to be fair, and that were consistent – and not have one department penning laws that were contradictory to others.

He pointed out that his “Think Small First” initiative, introduced in the UK’s Small Business Service, had led to the adoption by the EU of a European Small Business Act, which included a provision that European governments consider the implication of any laws crafted would have on small firms before passing them.