NEW SMME MINISTRY- Unsolicited Advice on what is meant with SUPPORT for the SMME Sector!


Radical economic development, is not only a vertical reality but must assume an untapped but dormant horizontal consciousness –

The establishment of the new SMME Ministry is a welcomed initiative on the part of the leading party and government in SA. Yet this ministry or its establishment does not present us with fewer challenges of complexity and intricacy unfolding in conflicting presence and scenarios of reality. It is the confirmed assumption that the hope of radical economic revival and ongoing development is located in the establishment of many more small to medium enterprises.

Permit me to lean on my theological crutch and paradigm of the CROSS of Calvary (always a help) in defining our economic development in both vertical and horizontal definitions. If the development of corporates and multinationals represents our vertical reality than SMME development must constitute our horizontal paradigm.

Whilst we have been consumed with this silo-sense of vertical growth over the greater part of the 20 years of democracy we have neglected this horizontal context and growth the same I am persuaded is what the 5th Administration articulates as progressive and radical economic transformation. This horizontal (SMME) development is what this epoch demands of all of us.

Maybe we will learn that our obsession with a silo-vertical growth was never possible devoid of a horizontal premise. The premise of the horizontal reality for economic development articulates a sense of sacrifice in which the individual needs and wants imbibes that of the community. It asks of all of us to rethink what we can do to help one another and by so doing help our country. It will mean we demand less while we give more, more to realise SMME development.

Research from diverse sources has shown that the SMME sector if duly defined and structured remains the leader in job creation particularly in a season when multinationals are dying in job creation.

The intersection of the vertical and horizontal paradigms need not be hostile, nor revolting in anti-climax but it can portend a very plausible self-fulfilling and pregnant with opportunity context where our congruence teach us more is not more if it has only the individual at the epicentre.

Thus the CROSS holds for us a reality that instructs a consciousness of life not only at a religious intersection but in a holistic sense inclusive a relevant business context the same a key for our collective future. So we firstly must welcome the initiative whilst we ask what will be the mandate, policy framework and programmes of such a ministry.

It is with the latter that we will run our heads into the thickets because these are more complex in contesting privilege and claim and experience. I move from the departure point that contrary to a plethora of expectations accidently invoked on this new ministry, its overarching and most critical role will be best understood in SUPPORT of SMME’s . It really cannot but support this economic sector. Hence I will look at some aspects of this support to argue what this ministry should concern itself with.

Thus the SMME ministry in an existence and separate to others inculcates support, development, enabling, nurturing and growth of the SMME or entrepreneurial culture of business creation in SA. It is worthwhile to unpacking this SUPPORT at least from my prism. It imbibes a number of critical areas. 1. Financial Support

There is a general misconception that support for SMME or entrepreneurial initiatives automatically translate to financial support. This misconception has for an elongated period of time in our democracy proven its coexistence as fundamentally undeniable, for it often manifests in various forms across the economic divide of what ensembles entrepreneurship.

The potential spazza-shop owner no different to the person intend on developing a new airlines in SA assume government must help them financially.

The challenge is Government do not help financially in the clinical sense as a bank do, but has entities and agencies adjacent to it that may prove useful. Unfortunately these agencies are often governed by ordinary (capitalist) banking rules and policies which compromise the efficacy of this help.

Secondly, that financial help is needed is beside the question to varying degrees ranging from as low as R500 for some to R50m for other, yet we cannot argue that as the fundamental aspect of getting a successful business started. Neither can we absolve a true entrepreneur his responsibility of establishing and growing his business idea.

If we would look at Botswana, we will see how friendly government has become in providing support at a financial level to the SMME context. It will harm no one to ask what Botswana did and how they make it work if it works in this sense. You may off course argue Botswana is a population of over a 1 million when we have 52 million, yet I think there are some lessons to be learnt.

  • I see the task of the SMME Ministry to firstly begin an honest debate and open communications even education of this misconception of government’s role to be the one who supply finance or start – up capital.
  • Secondly it will need to point entrepreneurs and SMME’s to the agencies that have been established with the explicit mandate of help at this level.
  • Thirdly it will need to ensure these entities which often resort under sister Ministries are jacked up to answer this response in a meaningful way different to same-old business we have seen in the last 20 years.

How the ministry will navigate through the landmines of expectation vis-à-vis fact is left to the skilful mind of its Minister who is a communications specialist.

2. Training & Development Support

The subject of training and development will remain a critical aspect of SMME development for its natural relevance. Having worked and consulted in the SMME environment for a sustained time, the reality dictates that our training and development vortex is rather segmented, scattered and at times incommunicable.

The work of SEDA (the result of amalgamated restructuring of a cohort of former government agencies (Khula Finance etc.) that in my assessment worked in silo’s and proved really the obstruction of SMME development) and the SETA’s etc., must be commended yet we have not captured the essence of our training and development epicentre to argue we have found the answer to developing sustainable enterprises.

The fragmentation of roles and often unrecognised congruence of critical aspects defining training and support for SMME as a praxis in South Africa argue that we have a long way to go.

McClelland the Harvard educated behavioural scientist who is celebrated for giving us what is deemed in entrepreneurial sense the 21 Personal Traits of an entrepreneur helps us to reflect on some of these as it relates to Africa. In Africa it was found that Commitment to Work Contract, Financial Management and Governance remain from Cape to Cairo the obvious collective challenge of African entrepreneurs. It would appear that if we have come to experience and know of this to be true we would have honed our training and development of our SMME drivers with a consciousness of this prevailing reality. Proving dismissive of this in claim of a false African patriotism helps no one not least the SMME sector.

  • The Ministry will have to find a sustainable mechanism, I reiterate sustainable to make the training and development component count. Entrepreneurs and business managers no different to their counterparts in corporates and multinationals need ongoing training, the SMME sector attest this reality in stark and bold sense.
  • The ministry must find partnerships with entities to ensure a culture of continuous development and training in measured sense is realised. This may mean all contracts awarded to SMME’s must contain as a standard the commitment to attend periodic training interventions in line with the desired aim of successful businesses.
  • It is my view that perhaps Government’s strongest help for the SMME sector can be contained in this aspect provided it is structured, coordinated and contains the correct mix of partners to deliver on such. We have yet to see the measurable and monitored success of the training & development imperative of our SMME sector.
  • The ministry will have to swiftly flagship this aspect as their rise and fall.

3. Opportunity Sourcing Support

Opportunity Sourcing a critical aspect of SMME or entrepreneurship development is another misunderstood aspect in the ambit of SMME development. For some it is an owed claim in entitlement that Government owes them to give them opportunities to advance their business. While there may be some truth in this claim, the reality dictates that entrepreneurs must find their own mechanisms and means to source opportunities for their business development and growth.

  • The role of Government remains that of enabling; enabling would define the plateau of policy development for economic sectors whilst engaging these sectors with a consciousness of the SMME context as confirmed reality.
  • Government through its many bilateral agreements with sister nations evidenced in SADC, AU and beyond contexts even those agreed at Twin-City context that often purely gather dust can make this count as an opportunity sourcing defined in enabling.
  • The development or identification of markets is crucial for the sustainability of the SMME sector and hence Government will need to facilitate the broader context of that in engaging economic sectors and SMME as to how to make this work for it is bigger than any one sector. This also translates to empowerment opportunities that is derived from Government initiated projects and programmes.

Yet the SMME ministry will have to lead or be seen to lead if the claim is radical economic development.


4. Review of Enabling Environment Support

As government the injunction enabling is a natural imperative for this ministry. Yet imperative must be understood at two levels (business & custodian), one as Business imperative SA Incorporated needs to produced new and more entrepreneurs to grow the economy particularly in manufacturing and innovation sense. This is no more just a wish but a demanded reality if we in any sense will catch up with our sister countries in the East even those in Latin America. It therefore is the business imperative of SA Inc., to work for the conscious growth of a vibrant and growing SMME sector to firstly grow the economy while also focussing on job creation.

The custodian imperatives made self-evident in this that Government is duty-bound to create an enabling environment from a constitutional directive to ensure business like any sector thrives devoid of interference and competes fairly on levelled playing-fields. Yet these imperatives don’t often exist in sanguine unity but contest against each other.

  • The SMME Ministry will need to undertake a systematic and conscious review of what constitutes enabling for SMME development and economic unlocking must be made as a point of departure.
  • Since Government has these twin-imperatives it becomes natural to assume that this new Ministry becomes the face and delivery vehicle for the realising of these imperatives.
  • A careful analysis needs to be made of this contestation of these imperatives for it has direct bearing on the viability of a claimed SMME ministry as a functional reality less a utopian reflection.

5. Potential Termed – Reprieve of Labour Requirements

The subject of labour in the SMME context is one that has not gone to rest, particularly for the competing interests prevalent or around this subject.

The January 8 Statement of the ANC outlines a need for minimum wage for labour the same organised labour keeps Government accountable to actualise, yet the reality question in all of this is how does this engage the SMME context? Should there be a complete reprieve, should there be a period – term waiving of demand? What does labour mean in the SMME sector? In fact what is a SMME becomes key to understand if we intend unlocking the answer that will work for us.

All business operates under the reviewed Business ACT 200 of 1973 which now is the Companies Act of 2008 thus SMME’s no different to corporates and or multinationals have to comply with the necessary legislation. It stipulates “A company is a business organisation which earns income by the production or sale of goods and services”. SMME falls into this category.

Do the December 2013 DTI definitions of EME’s etc. change the definition of what is an SMME or not, where it was firstly defined as R5m turnover it is now stretched to R10m.   The reality is this new definition whilst it helps at one front holds ramifications for the SMME sector in greater labour and taxing contexts

  • SA has perhaps the most vocal and active organised labour lobby in Africa and yet SA is confronted with an average of 26% unemployment reality which warrants new ways to look at sustainable job creation.
  • Ways that do not exclude the rethinking on the part of organised labour on what is its role in helping the unlocking for sustainable answers. Organised labour cannot claim it’s only right immanent in flagging what is wrong and demanding the protection of existing labour community whilst obstructing the chance and opportunity for a swelling of the labour populace although not informed by the traditional means.
  • Thus the SMME ministry will find it at odds and often knock heads with organised labour if it is serious about supporting the SMME sector for labour definition and application warrants in this epoch a re-look less in self-centeredness but in demand of the hour.

We therefore can expect many hours of engagement between the SMME ministry and organised labour the same which often will result in frank and honest replies evidenced in programmes no matter how uncomfortable it may make organised labour fraternities.

  • The ministry has its work cut out to manoeuvre within the ambit of current labour legislation or introduce new legislation for consideration to distinguish a SMME sector in reprieve from a labour definition meted to others.
  • The Ministry will have to re-conscientise organise labour as its partner in finding new ways of looking at labour

This will not be easy and definitely an egg dance, yet I am of the persuasion that organised labour presents at times an enemy of true development when it proves ardent, stoic and less movable on the boundaries of what constitutes their lifeblood.

In conclusion my biggest challenge for the new SMME Ministry is it becoming the cemetery for other dysfunctional ministries and departments.

  • It will be crucial to find a balancing of the other 3 ministries active and competitive directly and indirectly however one may see it in delivery of this Ministry mandate. The issue of red tape, the doings of an official who often feels threaten by a new reality is another factor that lends credence to unnecessary delays of information, access and opportunity.
  • The reality of making the SMME ministry the escape goat for the truculence if not intransigence and failed owning up at their respective ministries is a reality no different to RDP ministry of our first democratic administration. Finding the balance to deliver the support of SMME’s as I outlined will not be naturally easy but possible.
  • The Ministry comes to us as new in hope and new in formation yet it will compete with long standing ministries that preside over the wherewithal in infrastructure and administration to retard its due existence.
  • It will be a non-negotiable to develop a standing functional working agreement evidenced in a cross oriented-ministerial review team that would look at the snag-lists and challenges for ultimate SMME support as it manifests in varied ministries and departments.
  • The new SMME Ministry will have to contend with this reality whilst developing its own identity and supporting SMME’s a mean feat if you ask me.

I guess I am advocating for CROSS – oriented Ministerial Team of champions intoxicated with a new vision and driven by a different ethos, which share a common heart and mind consciously pre- occupied in willingness to see SMME’s work in SA in growing our economy horizontally.

Bishop Clyde N.S. Ramalaine

Independent observer, analyst, commentator & management consultant