SMALL MEDIUM AND MICRO ENTERPRISES

A SOUTH AFRICAN PERSPECTIVE

SOUTH AFRICA AT A GLANCE

• Area 1,219, 090 km2

• Population 44,8m

• Currency 1 Rand = 100 cents

• Time GMT + 2 hrs

• Head of State: President Thabo M Mbeki

• 11 Official languages with English the business language

• Total GDP R1 523 bn (2005) (US$ 215 bn)

• GDP per capita R31 850 (2005) (US$ 4 568)

• Real GDP Growth 4.9% (2005)

• Inflation (CPIX) 4.1% (annual 2005 average)

• Exports Gold, minerals, diamonds, metals and metal products, food, automotive

components

• Main trading partners Germany, USA, China, Japan, France

SOUTH AFRICA: AN EMERGING MARKET OF NOTE

• SOUTH AFRICA TODAY IS ONE OF THE MOST SOPHISTICATED AND PROMISING EMERGING MARKETS GLOBALLY, MAINLY BECAUSE OF:

• ABUNDANT NATURAL RESOURCES

• EXCELLENT TRANSPORT AND LOGISTICAL INFRASTRUCURE

• WORLD CLASS FINANCIAL SYSTEM

• ECONOMIC STABILITY & SOUND MACRO-ECONOMIC MANAGEMENT.

• COMPETITIVE SECTORS / INDUSTRIES• RELATIVELY LARGE LABOUR FORCE.

SOUTH AFRICA FROM A GLOBAL PERSPECTIVE

• South Africa is one of the most sophisticated and promising emerging markets, offering a unique combination of highly developed first world economic infrastructure with a vibrant emerging market economy.

• South Africa is one of the world’s 26 industrialised nations.• The country is also regarded as the gateway to Africa.• South Africa has the largest economy on the African continent,

accounting for approximately 25% of the continent’s GDP. • According to the World Bank, South Africa ranked 28th in the world

for the ease of doing business in 2006.• The JSE Securities Exchange is Africa’s largest and most

developed Securities Exchange and one of the world’s top 20 exchanges.

SOUTH AFRICA FROM A GLOBAL PERSPECTIVE

• South Africa remains the world’s top producer of minerals such as gold, platinum, rhodium, chrome, manganese and vanadium.

• South Africa holds 80% of global manganese reserves, 72% of chrome, 88% of platinum-group metals (PGMs), 40% of gold and 27% of vanadium.

• Unit labour costs in South Africa are significantly lower than those of many other emerging markets.

• South Africa scored well in various categories according to the 2006 World Competitiveness Yearbook (61 countries ranked):

Ranked 6th in the world in terms of price stability; Our fiscal policy was ranked in 11th place; 24th position in terms of management practices (business efficiency); 31st place in terms of attractiveness for foreign direct investment; and SA has the lowest electricity costs for industrial clients.

THE STATE OF SMALL BUSINESS PERFOMANCE

• Small enterprise growth reached 7% growth rate.

• Almost 40 000 new entrants annually.• 40% GDP Contribution.

Main Contributing Sectors:• Construction, Transport,

Telecommunications and financial services.

IMPORTANCE OF SMME’S IN THE ECONOMY

• ADVANCEMENT OF INFORMAL BUSINESS SECTORS.

• SUSTAINABLE BUSINESS SECTORS

• ALLOWS FOR PARTNERSHIPS BETWEEN GOVERNMENT AGENCIES AND THE PRIVATE SECTOR FOR ADDRESSING THE ECONOMIC CHALLENGES FACING THE COUNTRY.

INSTITUTIONAL ARRANGEMENT

• SMALL ENTERPRISE DEVELOPMENT AGENCY

• KHULA ENTERPRISE FINANCE

• SOUTH AFRICAN MICRO FINANCE APEX FUND

• THE DTI INCENTIVES

• INDUSTRIAL DEVELOPMENT COOPERATIONAND NATIONAL EMPOWERMENT FUND.

SOUTH AFRICAN MICRO FINANCE APEX FUND (SAMAF)

• Established to address poverty alleviation and provide sustained access to financial services for the poor.

• Autonomous institutions that operate independent from government, provides for the following:

• Access to affordable financial services• Institutional and client capacity building• Savings mobilization through co operations and

other formations such as societies and stokvels.

SEDA

Special Programmes involve the following:

• Manufacturing Advice and Marketing support services – and mentoring, Research, Market Linkages, Service provider partnership and development.

• Business start up Service – Business registration, Business Planning and capacity building

• Cooperative support• Facilitation of Access to finance• Technology demonstration Centers

KHULA ENTEPRISE

• Wholesale finance targeting retail finance intermediaries.

• Credit indemnity schemes targeting commercial banks.

• Partnership with the public sector on pilot projects to boost upcoming businesses.

GOVERNMENT INCENTIVES

• Cooperative incentive schemes (CIS) – Start up support for cooperatives.

• Cooperative special project fund (CSPF) – New programme designed to support small to medium cooperatives with huge impact on employment.

• None financial support – Capacity building for practitioners

• Cooperatives pre – incorporation seminars / workshop for coop members.

SMME RELATIONSHIP WITH BEE ( BLACK

ECONOMIC EMPOWERMENT)

• BEE DEFINED: An integrated and coherent socio-economic process that directly contributes to the economic transformation of South Africa and brings about significant increases in the numbers of black people that manage , own and control the country’s economy as well as significant decreases in income inequalities.

RELATIONSHIP BETWEEN SMME’S AND BEE

• BEE-SMME’S – refers to those companies which are small, medium or macro with a turnover of up to 10 million rands per annum and which has more that 50% direct ownership and management by black people.

• SMME’S are beneficiaries of BEE initiatives and they also contribute to the process.

SHOPRITE CASE STUDY

• Shop rite Holdings and the Department of trade and Industry’s Khula Enterprise Finance have signed a groundbreaking agreement .

• Granting of retail franchise concessions.• Training , mentoring and support to black entrepreneurs.• Shoprite and Khula provide dual guidance in terms of

training and mentoring the SMME’s.• Khula provides loans to concession holders to acquire

equipment and furnish their stores.• Shoprite provides initial stock consignment to concession

holders .

RESULTS

• Project is a success and has been declared a partnership that would be a model for future partnerships between government agencies and private sector for addressing some of the economic challenges facing the country.

• Similar joint venture initiatives across different industries such as mining and petroleum.

CONTACT

CONTACT: MS SHIRLEY MAKHAYA MR THABO MAFOKO MR GOERGE BEZOUMATOV

+7 (495) 5401177

E-MAIL : tradesa@econsa.ru