4.2. Definitions of SMMEs 72
4.4.4. Training for SMMEs 93
The debates about SMME development is an important policy priority in South Africa. These debates about the importance of SMME development intersect with other national priorities with respect to skills development. According to McGrath (2005), skills development has been given increasing attention in the President’s State of the Nation address since 2003. In a Parliamentary Bulletin No.11 (March, 1997), the following were highlighted as some of South Africa’s training and skills problems:
• There is a mismatch between education and training decisions and the real needs of the economy and society, that is, there is too little training in skills that are needed, and too much training in skills that are inappropriate.
• The level of industry training is much lower than that of our major trading partners, leaving South Africa with a major competitive disadvantage.
• The sectors in which most growth and employment opportunities are likely to occur spend less on skills development than the national average.
• Most industry training is informal.
• Only a very small proportion of formal training is provided to lower-level workers.
• There is a shortage of high quality management. Firms fail to recognise the importance of training within the new competitiveness environment and within their competitive strategies
• Apprenticeships and artisan training has declined dramatically.
McGrath (2005) highlighted the fact that the Department of Labour (DoL) is generating R3 billion per annum for skills through its levy-grant system and is maintaining the high profile of skills through its National Skills Development Strategy which is an attempt at addressing the above mentioned problems. In the Skills Development Strategy for Economic and Employment growth in South Africa, the DoL (1997: 1, cited in McGrath, 2005: 3) highlighted the following:
Given the demands of a more complex and changing economy, characterised by increasing use of information, more complex technologies and a general rise in the skill requirements of jobs, people must also have rising levels of competence. The focus on skills development in this Green Paper is about this process of deepening individuals’
specialised capabilities in order that they are able to access incomes through formal
sector jobs, through SMMEs or community projects which in turn positively contribute to the economic success and social development of our country.
McGrath (2005) pointed to the Department of Education which is stressing the importance of the Further Education and Training College sector and the need for public education to stress scarce skills needs. Moreover, he pointed to the Human Resource Development Strategy which emphasises the need for coordinated action across government on skills issues. According to Nieman (2003), the government recognised the importance of developing a strong SMME sector.
He asserts that it is rather “a feather in the cap” of the new government to do this in such a short space of time since in more than 300 years successive governments have failed to give this particular impetus and status to SMMEs (Nieman, 2003: 7).
According to Nieman (2003), entrepreneurship education should be directed at the preparation of individuals who can be change agents for the next decade, simultaneously providing the much needed entrepreneurs required in South Africa. He further added that entrepreneurship and small enterprises training can be approached from different angles and that the main areas of concentration are business skills training, technical skills training and entrepreneurial skills training. Business skills training, according to Nieman (2003), covered all the conventional management training areas in a business while the technical skills’ training addresses the ability to use knowledge or techniques of a particular discipline to certain ends. He further indicates that entrepreneurial training involves the birth and growth of a business enterprise and includes among other entrepreneurial traits creativity and innovation, risk propensity and a need for achievement.
Wickham (1998) defined entrepreneurial skills’ training as the skills which enhance entrepreneurial performance. A critical debate Henry, Hill, and Leitch (2004) presented pertain to whether or not entrepreneurship can be taught and if so, what aspects can be taught. The research shows that entrepreneurship can be traced to a complex interaction of innate, background and environmental factors (Faris, 1999). Jack and Anderson (2001) indicated that the entrepreneurial process is both an art and a science. However, the potential for, and benefits of, enabling factors such as structured training interventions cannot be ignored (Atherton, Gibb, and Sear, 1997). Furthermore, as Robertson (2004) asserts, in developing economies where a number
of restrictions persist, small business development may depend significantly on subsidised educational and training infrastructure and services the government sector provided.
Small business training is not only about entrepreneurship development. Fernald and Solomon (1997) indicated that although small businesses hired the majority of new, entry level employees, they are often unable to afford the substantial costs of training that are necessary for successful employee performance and productivity. Thus, the majority of small business employees do not receive the training they need to remain competitive in the market and increase their productivity. What is also important is that given the constraints small businesses faced, they are often unable to afford expensive or time consuming training programmes. Many small businesses cannot release employees for training and they are unable to hire consultants to conduct in-house training for employees.
Fernald and Solomon (1997) identified the following employee training needs:
• Sales/marketing
• Record keeping
• Managing inventory
• Financial analysis and control
• Funding/securing capital
• Procuring government contracts
• Computer skills
Devins and Johnson (2003) stated that smaller businesses account for the vast majority of enterprises in the economy and their reluctance to become engaged in external training activities continues to present policy challenges. In numerous countries, including South Africa, policy documents identify the importance of SMMEs in the economy and recognise the need for policy to consider their interests. Devins and Johnson (2003) asserted that the rationale underlying the need for policy intervention is largely based on the argument that smaller enterprises face greater barriers to training than their larger counterparts. Consequently, Kitching and Blackburn (2002) argued that they undertake less training. A critical conceptual problem pertaining to SMMEs is the different ways in which small businesses are categorised and the difficulty of defining small
business “success” (Honig, 1998; Simpson et al., 2004). It is also important to give due consideration in terms of policy development and training to businesses that do not pursue active growth in relation to turnover or the number of employees (Walker and Brown, 2004). Many SMMEs are not only financial growth motivated but may be personal factors and lifestyle choices personal factors and lifestyle choices motivated. Thus, policy and training efforts need to take into account non-financial measures of success and motivation which include autonomy, job satisfaction and/or the ability to balance work and family responsibilities (Parsuraman, Purohit, Godshalk and Beutell, 1996). Banfield, Jeenings and Beaver (1996) indicated that it is important to recognise that some small business owner-managers prefer independence and autonomy to growth and profit, and they often work within limited geographical horizons with little desire to expand. This will have implications for the timing and type of training being conducted. Banfield et al. (1996) further indicate that it is generally assumed that training and development will lead to growth and expansion; however, some owner-managers of small businesses choose not to participate in training and development programmes since it is very time consuming and may impact negatively on profit generation during the training period.
Devins and Johnson’s (2003) study indicated that where public/government policies are in place to inform SMME training there is greater commitment to training and development. The main challenge becomes harnessing the appropriate resources and support to translate commitment into practice. In the absence of clear policies, training and development in the SMME sectors tend to be largely unplanned and reactive (Kitching and Blackburn, 2002).
The review of literature indicates that the training of entrepreneurs in South Africa is still rather fragmented and most probably in the hands of too many role-players. According to Nieman (2003), the training emphasis in most SMME service providers still seem to be more on conventional management training than entrepreneurial training. He further indicated that there are a number of institutions that claim to provide entrepreneurship training whereas it is mainly business training. It is clear that more emphasis needs to be placed on appropriate training which is much more coordinated than current trends. Nieman (2003) further asserted the importance of ensuring that the results of training interventions are measured and researched to determine the best interventions that could and should be used.