SMME DEVELOPMENT AND THE ROLE OF

LOCAL GOVERNMENT

Presented by: Dr Sandra Musengi-Ajulu

Presentation outline

Introductory remarks

What we can learn from other countries

Role of local government in facilitating SMME creation and growth

Concluding remarks

Introductory remarks

Source: Khrystyna Kushnir, Melina Laura Mirmulstein, and Rita Ramalho World Bank, 2010

Introductory remarks

SMME sector is a significant player in transforming economic development landscape and has significant financial and non-financial support

Why does South Africa have a low entrepreneurship rate? Entrepreneurial intentions rate Business enabling environment Competitiveness & Cost of doing business in South Africa as levers for

SMME and entrepreneurship development

Need to also recognise sector’s challenges: Access to finance Access to markets Regulatory constraints

Introductory remarks

Different types of entrepreneurship influences the design of the institutional framework to be designed Productive vs. unproductive forms of entrepreneurship

The institutional framework is usually representative of the country’s entrepreneurship ecosystem that comprises of: Government, culture, success stories, human capital, financial

capital, entrepreneurship organizations, education, infrastructure, economic clusters, networks, support services, early customers, leadership.

Most problematic factors for doing business in South Africa (2010-2011)

Source: The Africa Competitiveness Report 2011

What we can learn from other countries

Initiatives include promoting small business development by implementing entrepreneurship awareness programmes

Creating business linkages through City investment plans/initiatives

Providing advisory services to small business

Strong relationships with business formations

Strong service delivery leads to highly competitive Cities

City of Tshwane 2055 Preliminary game-changing conceptual framework

Source: Tshwane South Africa’s Capital 2055 Discussion Document, July 2012

Revisiting the role of local government in supporting SMME development wrt

Tshwane 2055

Ensure service delivery The most important role that the City has to play to promote its economic development agenda is

to provide deliver consistent, high quality services

Leverage mandate of City regulatory environment Respond to challenges by making use of by-laws to create demand and overcome broader City

challenges e.g. climate change

Focus on becoming a globally competitive City Globally competitive cities encourage social inclusiveness, attract business activity, and generate

possibilities for greater economic participation and job creation

Leverage City assets & economic opportunities Enabling of access to use of productive assets and other infrastructure owned by the City under

favourable conditions – investment in economic spaces (e.g. upgrading of less formalized economic spaces)

Revisiting the role of local government in supporting SMME development wrt

Tshwane 2055

Alignment to Gauteng City Region

Gauteng Provincial Government interventions in terms of GCR economic development: Removing obstacles and bottlenecks that impede the efficient operation of a networked

economy. Encouraging innovation, research and development and the knowledge economy. Increasing capacity and capabilities which in turn increases opportunities for increased

income. Strengthening localized factors of production and economic development to ensure

increased competitiveness and productivity. Ensuring optimal resource reallocation and sustainable resource usage.” (GEGDS, 2010:31)

National Development Plan 2030, New Growth Path

SADC, BRICS

Concluding remarks

Developmental state focus, considerations for CoT might be if emphasis should be on: Changes in income distribution or economic growth Stakeholder aspirations or leverage on real economic strengths Developmental projects or economic growth-related projects Competitiveness enhancement or equitable development Small business enablement or big business growth Targeted interventions aimed at creating economic development

opportunities for the poor or support for more promising enterprises or clusters that are potential drivers of economic growth

Balancing SMME development and promotion of entrepreneurship Amplify area-based economic development

Discussion