Seek Government Help as the First Step to Growth
Lambasting government has become such a national pastime in South Africa, that people are frequently unaware just how much government support exists for small businesses in terms of subsidies to employ youth, and broader consulting services available from the Department of Trade and Industry.
The automotive manufacturing sector is one of the largest manufacturing sectors in South Africa, contributing between 6.5% and 8% of the country’s GDP (last year 7.7%) and also supports one of the largest franchising sectors, whether parts, fuel or servicing.
The Retail Manufacturing Industry body SAMBRA (SA Motor Body Repair Association) recently hosted an enterprise and supplier development conference at Emperors Palace, at which speaker Dionne Kerr, CEO: Siyakha Implementation Partners, explored this theme: “ There is a plethora of government funding available to grow our market rather than somebody else’s – we should use it.”
Subsidised youth funding
Funding is readily available in South Africa: the Youth Employment Service (YES) says it will provide employees for free to SMEs. [YES focuses on previously disadvantaged youth between the ages 18 and 35 by providing work experience for one year, giving young people a chance to demonstrate their abilities, establish their work ethic and prove their worth.] SETAs (sector education and training authorities) and the National Skills Fund provide incentives to train and employ people.
In March 2018, President Cyril Ramaphosa launched YES, a business-led collaboration with government and labour which aims to empower one million young South Africans by offering paid quality work opportunities over the next few years. It is also a great way to market one’s franchise in a positive light, give unemployed youth an opportunity and access affordable labour while assessing their work ethic to establish whether they might make a good permanent employee.
DTI support for SME development
“Government is so accessible if you use them – yet most people will rather use consultants, when government (in the form of the DTI) is available to help them,” says Kerr.
Government has established several institutions mandated to deliver a wide range of key services, including both financial and non-financial support services, to small enterprises.
Government institutions that offer support to SMEs include the following:
- Small Enterprise Development Agency (seda);
- Small Enterprise Finance Agency (SEFA);
- National Empowerment Fund (NEF);
- Industrial Development Corporation (IDC);
- National Youth Development Agency (NYDA);
- Land Bank;
- Mafisa; and
- Provincial agencies
For instance, the Growth Fund aims to catalyse funding for SMEs and has been enabled through contributions by the National Treasury’s Jobs Fund, the Technology Innovation Agency (TIA), and the Western Cape Department of Economic Development and Tourism (DEDAT).
SMEs that meet the criteria for funding, can apply online, and are taken through a diligent process of selection and support, whereafter successful applicants contract for a three-year intervention and disbursement plan.
“I argue that government is doing enough, but are we doing our bit?”
Kerr noted at the conference that even though she is herself a consultant, when small businesses seek her assistance her first suggestion is that they should rather look to the DTI as their first option.
“We need to use this downturn to rethink our model as to how we can become more competitive. Do it by thinking outside the box and using government services – hire five apprentices and let government (YES) pay for them. SMEs can be job creators for those youth by using government subsidies.”