Page 1 - 201908G20Entrepreneurship Newsletter

Entrepreneurship Research Center on G20 Economies VOL.10 August 2019

South Africa Announces a String of New Initiatives to Boost Small Business Support

of Small Business Development , the Department of Science and
Technology and administered by Small Enterprise Finance Agency
(Sefa) — has a budget of R1 billion (~ $65 million) for the 2019/20
year and aims to finance at least 100 000 young entrepreneurs,
targeting particularly black-owned businesses in townships and
rural areas while applicants must have the potential to create
at least 10 jobs to tap the funding. The National Treasury's 2019
Budget Review notes that R3.2 billion (~ $210 million) has been
set aside over the next three years for the Fund, which it will
lend to small business intermediaries, such as fund managers
and incubators. These intermediaries will fund and support
ideation and start-up companies, and small businesses focusing
on innovation. Sefa would collaborate with the Ministry of Small
The Minister of Small Business Development Khumbudzo Business Development and other government entities, the private
Ntshavheni has announced a string of new initiatives, in what sector in utilizing their grant or incentive offerings to develop a
could be a major step to improving the government's up till now blended funding model that will directly benefit small businesses
lack luster small business support. across its funding facilities over the next three years. The blended
Ntshavheni said her department would set up an index "within six finance model will be tested initially through the fund, before
months" to track the health of firms and measure the impact of consideration is made to extend it to the government's other small
the government's small business support. Alongside the index, business financing agencies and products, or not,
the department will among other things also set up a database of Small Enterprise Development Agency (Seda) — which currently
firms and a one-stop platform which small businesses can use has a network of 58 incubators— will set up more than eight
to better access government support. The small business and incubation centers in the rural and underserviced provinces
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co-operatives database that the department plans to set up will and increase the period that firms are sponsored by Seda for
categorize firms by sector, geographic location, size, and product incubation, from the current three years to up to five years. In
or service. The department also wants to set up a one-stop addition, the agency will adopt a standard incubator model based
platform for businesses to access both financial and non-financial on best practice that will form the minimum framework for
support. This will include a walk-in option and online accesses. incubation in South Africa. The department has over the last four
The platform will link to the department's planned small business years established 13 Centers for Entrepreneurship and Rapid
database, to allow the department to track the performance of Incubation in Technical and Vocational Education and Training
small firms that receives government support. Ntshavheni said (TVET) colleges through partnerships with the departments of
her department plans to work with The National Treasury to science and technology and higher education and training. In
ensure that other existing government databases on firms are the current financial year, these centers will be upgraded to full
integrated into the planned small business one. incubators in order to provide business incubation services for
And the Small Business and Innovation Fund will be established enterprises in townships and rural areas where they are located.
to provide the small businesses, startups and innovators access A further nine centers with full incubation services will be
to matched grant funding with a repayable Sefa loan. The grant established in various provinces. The department also wants to
portion will be up to a maximum of R2.5 million (~ $160,000 ) per help the private sector to establish incubators in rural areas and
enterprise. The Fund — which is run jointly by the Departments townships.