government’s 1995 White Paper on the national strategy for development and promotion of small business (Sibiya & Kele, 2019). This White Paper consists of three separate legislations, namely the 1) National Small Business Act, 2) Transaction and Procurement Act, and 3) Small Business Finance Act. The National Business Act worked to establish the SEDA and outlines the agency’s activities in broad terms. In particular, this Act defines SMEs according to separate schedules, and sees SME membership to business associations as a precondition for eligibility for State support (Department of Small Business Development, 2019). By comparison, the Transaction and Procurement Act aimed to establish terms and conditions as well as principles specific to small enterprises and manufacturers and supported non- discriminatory public-sector procurement rules as well as incentives for big business subcontracting to small enterprises (Sibita & Kele, 2019). Then, the Small Business Finance Act aimed to encourage financial institutions to become more active in supporting and
investing in SMEs. It should be noted, however, that the National Business Act is the only Act that was formally formulated and promulgated.
2.6.1 National Small Business Act
The National Small Business Act of 1995 was promulgated by the South Africa small business legislation. The Act was amended in 2003 in a bid to repeal all provisions pertaining to the National Small Business Council and to empower the acting Minister to establish an Advisory Body to represent the interests of small business (National Small Business Amendment Act, 2003). In 2004, the Act was again amended to additionally provide for the establishment of SEDA. The main mission of the Act was to establish SEDA and then provide for matters relating to the governance, function, and operation of the Agency (National Busines Amendment Act, 2004). According to South African Institute of Chartered Accountants (SAICA, 2020) the National Small Business Act provides the necessary guideline for organs of the states to effectively promote and develop small businesses.
2.6.2 Integrated small business development strategy
As noted previously, SMEs play a significant role in economic growth, innovation, and job creation, with the sector employing more than 50% of the whole South African workforce (Kalidas, Magwentshu, & Rajagopaul, 2020). Hence, the South Africa government has established policies and regulations for the development and protection of the SME sector. For example, the 1995 White Paper is the initial document that details the national strategy for the development and promotion of SMEs in South Africa (Bruneel & de Cock, 2016). The 1995 White Paper helped to accelerate the growth and development of SMEs and led to the Integrated Small Business Development Strategy (ISBDS), which presents a clear path for achieving small business development over the span of 10 years (i.e., 2005-2014). The ISBDS specifically established an action plan that focussed on three pillars, namely 1) supporting SMEs both financially and non-financially, 2) creating a market in which SMEs can offer their products and services, and 3) reducing regulatory barriers (Bruneel & de Cock, 2016). The ISBDS also established multiple governmental institutions, including SEDA and the South African Micro-Finance Apex Fund (SAMAF) (Bruneel & de Cock, 2016).
2.6.3 Small Enterprise Development Agency
SEDA is an agency that was established by the Department of Small Business Development in 2004 as a means to implement the government’s SME strategy (Bureau of Economic Research
[BER], 2016). The Agency is responsible for implementing governmental SMEs programmes, as well as to design and implement a standard and common national delivery network for small enterprise development (BER, 2016). Furthermore, SEDA assists with integrating government- funded small enterprise support agencies across all tiers of government (BER, 2016). The objectives of SEDA is to create development programmes that assist SMEs, include SMEs in service delivery networks, and provide service support for SMEs to successfully operate and compete long-term (Maloka & Dlamini, 2016).
Primarily, SEDA offers support to both small enterprises and cooperatives in and across South Africa. SEDA also supports and grows new small business and where small businesses are already established, SEDA helps these to become stronger and more profitable (Department of Small Business Development, 2018). According to a report by the Department of Small Business Development (2018) SEDA facilitates and promotes entrepreneurship and helps entrepreneurs to establish sustainable and competitive SMEs. SEDA also creates environments for SMEs in which to successfully operate, and provides both financial and non-financial resources for further assistance (SEDA, 2019).
Also according to the Department of Small Business and Development (2016a), SEDA assists SMEs with market access, trade information, business linkage and network, information, advices and referrals, mentoring, technical support, and necessary import and export training.
SEDA also helps individuals in small businesses to gain the skills required to grow their businesses and to run sustainable, profitable, and responsible operations (Department of Small Business Development, 2016a).
2.6.4 South African Micro-finance Apex Fund
SAMAF offers financial services to scale entrepreneurs living in rural and outer urban areas in South Africa (Department of Small Business Development, 2016b). SAMAF does not lend money directly to the public but uses existing institutions to handle funds and lend to qualifying institutions (Department of Small Business Development, 2016b). According to the Department of Small Business Development (2018), SAMAF offer three products, namely SME loans, resources, and equipment to help SMEs build their businesses. The Fund also offers SMEs’ savings and investment opportunities (Department of Small Business Development, 2018).
By extension, the Khula Enterprise Finance Limited helps SMEs to get loans from banks but does not offer loans itself (BER, 2016). Rather, the organisation assists with mentorship to entrepreneurs in a bid to help them build strong and sustainable businesses and to transfer skills for business growth (Department of Small Business Development, 2018). The Enterprise also assists entrepreneurs with viable business plans, as well as pre- and post-loan services (Bruneel
& de Cock, 2016). SEFA, in turn, caters for SMEs requiring funding up to a limit of R5 million.
In particular, SEFA offers bridging finance, revolving loans, term loans, and asset finance, while also funding working capital needs (BER, 2016).