By Siaka Momoh
There’s a buzz in South Africa as most citizens are hoping that the SME Master Plan will be the vehicle to their economic freedom.
The phrase, ‘economic freedom’ is a dream that resonates with most South Africans.
In October, the Small Business Development Institute (SBDI) engaged in a colloquium and tasked to draft a SME Master Plan which will later be submitted to the Ministry of Small Business Development.
Slogans such as ‘radical transformations of the economy’ resonated with majority of those at the colloquium and most unemployed South Africans.
However, the question is whether it resonates with government.
“Contractors, when awarded a tender, experienced a delay in payments from the take-off and in other instances there’s a bureaucratic delay,” Modula Mofolo, managing director of Utho Capital Fund Managers told CNBC Africa.
This was an indication that state-owned enterprises contributed to the death of small businesses due to late or non-payment. Utho Capital Fund Managers have mandated a fund for SMEs within infrastructure development, focusing on property development and construction. This is an initiative seeking to bridge the gap and confidence between sub-contractors and large contractors.
The fund itself is primarily focused on South African infrastructure development.
“There are few partners from the US who are interested in our broader base fund which seeks to expand into Africa. Recently, GE South Africa had set up a massive fund which is looking into infrastructure development in Africa,” said Mofolo.
The SBDI has tasked itself in compile a master plan that can address issues faced by SMEs.
Xolani Qubheka CEO at SBDI said, “Our focus is on the entrepreneur as we will seek to build capability gaps, which will lead to support mechanisms for the SMEs.”
There have been various talks about the potential of SMEs to provide job creation alongside the goals of the National Development Plan, however the main concern for entrepreneurs is being part of an ecosystem that gives them access to the markets.
“We facilitate the ecosystem, by building symbiotic linkages between large corporations and SME’s in order for the SME’s to be included in the value chain,” said Qhubeka.
The high rate of employment has led to many South Africans adopting self- employment and deeming themselves entrepreneurs. Moreover, Qhubeka clarifies that the market environment will sift real entrepreneurs form circumstantial entrepreneurs.
“The business idea must be bankable. Majority of the time the idea is good however the market can be saturated. There must be a certain selling proposition as majority of institutions have a lack of appetite for start-ups, as they prefer business transactions with the traditional partners in their supply chain.”
Alongside the challenges within the SME development space the SBDI has verified it’s allegiance to championing the cause of South African SMEs.
“We have teams doing research on the issues people spoke about, particularly the PPPFA. A report should be compiled by January 2015, which will be forwarded to the national Ministry of Small Business Development,” said Qhubeka.
While it will be an anxious wait to January, most entrepreneurs will carry on with their endeavour for economic freedom.