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1、U N I TE D NATIO NS C O NF EREN CE ON T RADE AN D DEVELOP MEN TENTREPRENEURSHIP STRATEGY REVIEW SOUTH AFRICA i 2023,United Nations Conference on Trade and Development The findings,interpretations and conclusions expressed herein are those of the authors and do not necessarily reflect the views of th
2、e United Nations or its officials or Member States.The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country,territory,city or area or of its au
3、thorities,or concerning the delimitation of its frontiers or boundaries.This publication has not been formally edited.UNCTAD/TCS/DIAE/INF/2023/3 ii Contents Introduction.1 1.Situation analysis.2 2.Explaining the low survival rate of MSMEs in South Africa.4 3.Strategic areas of entrepreneurship.5 3.1
4、 Optimizing the regulatory environment.5 3.2 Improving access to finance.6 3.3 Entrepreneurship education and skills building.7 4.Policy options.9 5.Conclusion.14 Bibliography.15 Annex.17 iii LIST OF ACRONYMS BDC Business Development Centers BDS Business Development Services CIPC Company and Intelle
5、ctual Property Commission DDM District Development Model DSBD Department of Small Business Development EPF Entrepreneurship Policy Framework GDP Gross Domestic Product GEM Global Entrepreneurship Monitor IFC International Financial Corporation IP Intellectual Property ISPESE Integrated Strategy for
6、the Promotion of Entrepreneurship and Small Enterprise MSMEs Micro,Small and Medium-Sized Enterprises(described as SMMEs in South Africa)NISED National Integrated Small Enterprise Development NSEA National Small Enterprise Act TEA Total Early-stage Entrepreneurial Activity SAVCA Southern African Ven
7、ture Capital and Private Equity Association SEDA Small Enterprise Development Agency SMEs Small and Medium-Sized Enterprises TVET Technical and Vocational Education and Training UNCTAD United Nations Conference on Trade and Development UNDP United Nations Development Programme VAT Value-added Tax VC
8、 Venture capital 1 Introduction Micro,small and medium enterprises(MSMEs)in South Africa account for over 2 million companies,represent over 98%of formal businesses,and have experienced two-digit growth in the last years.However,they contribute to creating less than a third of all formal jobs,leavin
9、g job creation highly concentrated in a small number of large employers and in the government.In addition,most entrepreneurs enter the ecosystem driven by necessity and the high rates of unemployment.As a result,the majority stay in the informal sector,keeping low growth aspirations and showing a hi
10、gh rate of failure and a low contribution to the creation of formal jobs.The latter is of particular importance as youth unemployment levels continue to remain very high due to the slowing down of the countrys economic growth,especially when compounded with broader economic fall-out from the COVID-1
11、9 pandemic.South African youth entrepreneurs face similar challenges as their counterparts in the entire continent as they are hindered by a lack of access to sufficient capital,markets,poor marketing and branding skills,suitable infrastructure(including working space and ICT),as well as business ma
12、nagement and educational skills.The aftermath of the pandemic continues to have a devastating impact on MSMEs,youth and women-owned businesses.These weaknesses have been identified in the UNCTAD Diagnostic Assessment conducted in 2021 and by the stakeholders during the diverse workshops organized to
13、 better understand the barriers to MSMEs and entrepreneurship(Partner Dialogue I and Partners Dialogue II).The countrys policymakers have become increasingly aware of the need to support the cultivation and growth of resilient,innovative and agile entrepreneurs as can be seen in the National Integra
14、ted Small Enterprise Development(NISED)Masterplan.To support the Department of Small Business Development(DSBD)in complementing NISED and draft an entrepreneurship strategy(output 4.1.of the NISED program area),UNCTAD prepared a Diagnostic Report for discussion with the support of a local expert.DSB
15、D,UNCTAD and 22 On Sloane,among of the largest start-up campus in Africa,hosted the second Partner Dialogue in June 2022 with the objective of identifying the most urgent and relevant reforms South Africa could implement to boost entrepreneurship and strengthen the performance of its base of small b
16、usiness.It was held with over 30 stakeholders,including national government departments(Department of Social Development,Department of Women,Youth and People with Disabilities,Department of Science and Technology,Department of Fisheries,Forestry&Environment,Department of Basic Education),regulatory
17、authorities,youth organizations,the private sector and other relevant parties.The dialogue discussions were aimed at providing a shared understanding of the strengths and weaknesses of the entrepreneurial ecosystem in South Africa.As part of the consultation process on which this document is based,U
18、NCTAD also held a bilateral meeting with 10 start-ups active in different sectors(transport,digital economy,fintech,creative economy).This report is based on the activities described above and identifies three areas of interest,namely.1.Optimizing the regulatory environment 2.Improving access to fin
19、ance and 3.Entrepreneurship education and skills building The report was prepared in close cooperation with DSBD and offers a brief analysis of South Africas entrepreneurial ecosystem using the UNCTAD Entrepreneurship Policy Framework 2 methodology.1 It summarizes the latest research available,follo
20、wed by a discussion of key challenges in the ecosystem upon which priority actions and activities could be designed.Policy options are then proposed in the form of an action plan,describing in detail the alignment of outputs of the NISED with proposed options and a conclusion.An annex with literatur
21、e on barriers to MSME growth in the country is available.The report was prepared under the United Nations Development Account project“Global Initiative toward post-COVID-19 resurgence of the MSME sector”.1.Situation analysis The transformative power MSMEs can have if properly supported can be used b
22、y South Africa for the implementation of the sustainable development goals.The importance of MSMEs and entrepreneurship in South Africa cannot be understated due to their potential in addressing societal challenges,contributing to innovation,the energy transition and higher employment figures.The im
23、portance of MSMEs has been widely recognized by policies and strategies.The National Development Plan 2030 clearly identifies MSMEs and entrepreneurship as instruments for the achievement of the socio-economic goals in South Africa,with significant efforts made by the government to promote entrepren
24、eurial activity in the country since the mid-1990s.The NISED Masterplan(2022)lays out several outputs to which this targeted entrepreneurship strategy contributes,in particular output 4.1(National and Provincial Government Policy Developed for Growth of MSMEs).For instance,activities 4.1.1.of the Ma
25、sterplan envisages having an“Entrepreneurship Policy Strategy”.The Action Plan at the end of the document complements targeted activities foreseen by NISED.The continuous policy effort in support of MSMEs has produced mixed results.There are positive signs indicating that MSMEs and entrepreneurship
26、have followed an upward trend in the country:From 2013 to 2019,the formal business sector increased turnover by 50 per cent,representing an average annual growth rate of 7 per cent.2 Medium businesses increased turnover by 8 per cent per year,and large businesses by 5.Small businesses therefore seem
27、 to lead the pack,recording an increase of 12 per cent per year over the same period,according to the National Statistic Office of South Africa.Total Early-stage Entrepreneurial Activity(TEA)increased by an impressive 7 per cent(10 per cent in 2019 to 17 per cent in 2021).3 There has also been a boo
28、m in the tech start-up scene,which is proof that the country has become a fertile soil for entrepreneurs by opportunity.South Africa came first in the inaugural“African Tech Ecosystems of the Future 2021/22”ranking that assessed the conditions for tech start-up growth in 17 African countries.In 2021
29、,it was estimated that there were more than 700 tech start-ups in the country,corresponding to approximately$241 million.Kenya and Egypt,respectively second and third in the ranking,had around 650 and 360 tech start-ups.1 UNCTAD developed the Entrepreneurship Policy Framework and its implementation
30、guidance that aims to support developing country policymakers in the design of initiatives,measures and institutions to promote entrepreneurship.It is based on five pillars that together constitute a national entrepreneurship strategy.2 Turnover grew from ZAR 7 trillion to ZAR 10,5 trillion between
31、2013 and 2019 in absolute number 3 TEA is one of the core indicators of the Global Entrepreneurship Monitor(GEM)See GEM 2021/2022.It measures the percentage of the adult population who have committed resources to start a business and are actively involved in setting up a business they will own or co
32、-own or who have moved beyond the nascent stage and are currently owner-manager of a new business which has paid salaries or wages 3 Nigeria is the only country in the ranking that had a larger number of tech start-ups(over 750),however,they had a lower market value($61 million)compared with the Sou
33、th African ones.4 Figure 1 below describes the evolution of the different indicators of entrepreneurship activity in South Africa between 2001 and 2021.Figure 1:GEM indicator of entrepreneurship in South Africa.Source:GEM(2022)While some positive development seems to have taken place,other structura
34、l impediments still remain:South Africa hosts over two million small businesses but few of these small businesses manage to create sustainable jobs,with only 15 per cent of South African small businesses growing into successful companies(Allen Grey Orbis Foundation,2019).In fact,evidence suggests th
35、at MSMEs have not been able to fulfil their potential for job creation.Preliminary findings of a 2011-2016 longitudinal study conducted by the South Africa Small Business Institute showed that 56 per cent of all jobs in the country were created by 1,000 larger employers,including the government.The
36、same study shows that formal MSMEs correspond to 98.5 percent of formal business in South Africa and are responsible for less than a third of all formal jobs.According to analysis of international trends by the South Africa Small Business Institute,their contribution should be around 60 to 70 per ce
37、nt instead.5 Most of these entrepreneurs participate in the informal sector as necessity entrepreneurs who are predominantly motivated by high unemployment and the waves of inequality that hurt many in South Africa(SEDA,2018).Approximately 70 per cent of MSMEs in South Africa are found in the inform
38、al sector,and among them,many can be considered to be run by entrepreneurs driven by necessity.Throughout the 2017-2019 period,almost two thirds of the MSMEs in South Africa were consistently made of own-account workers,who had not been able to grow their businesses to the point of hiring other indi
39、viduals.The last statistics before the COVID-19 pandemic indicate that approximately 83 per cent of own-account workers operate in the 4 African Tech Ecosystems of the Future 2021/22,fDi Markets(2021).5 The Number of Micro,Small and Medium Businesses in South Africa Preliminary Findings,Small Busine
40、ss Institute(2018).4 informal sector.6 Most of these own-account workers in the informal sector are considered entrepreneurs by necessity who have no alternative income and turn to entrepreneurship as a last resort to provide for themselves and their families.According to Bushe(2019),over 70 per cen
41、t of MSMEs fail in their first 5 to 7 years of inception.According to the SME South Africa study conducted in 2018,the survival rate of South African MSMEs is low.7 In 2016,most small enterprises,including micro enterprises,did not survive beyond 5 years,with only less than 20 per cent of businesses
42、 surviving beyond the first five years.8 Over 70 per cent failed in less than two years of being in operation.9 These estimates support the argument that South African small enterprises are fundamentally nascent in nature.They are in the survivalist stages of development and thus unable to make mean
43、ingful contributions to the economy.South Africas low ratio of early stage to established business activity indicates potential difficulties in replenishing the countrys business base in the near future.This is an issue as value added self-employment and entrepreneurship are needed to absorb labour
44、surplus,especially among the youth segment of the population,to spur innovation and to drive sustainable growth.2.Explaining the low survival rate of MSMEs in South Africa Bushe(2019)states that 40 per cent of new businesses in South Africa do not make it beyond their first year of business,60 per c
45、ent fail within their second year and 90 per cent are forsaken within their first 10 years of establishment.The poor survival rate of new firms is corroborated by the 2012 and 2022 Global Entrepreneurship Monitor(GEM)reports,which highlighted that the survival rate for local start-up businesses in S
46、outh Africa is low by global standards.As can be seen in the survey conducted by GEM in 2022,the following reasons for business exit have been identified:Reasons for business exit Business exit rate in percentage 10 Coronavirus pandemic 27,4 Business not profitable 23,7 Problems getting financing 21
47、,8 Opportunity to sell 6 Another job or business opportunity 5,9 Bureaucracy 5,4 Some of the reasons for business exit can be tackled by an entrepreneurship strategy such as the cumbersome regulatory environment and the insufficient access to finance.The First Partner Dialogue(2021)organized by DBSD
48、,the United Nations Development Programme(UNDP)and 22 On Sloane to create a platform for solution-seeking dialogue focused on the small business sector and start-ups and their importance in the creation of employment came to similar conclusions.MSMEs and start-ups continue to face barriers to entry
49、into the 6 SMME Quarterly Updates,SEDA(2018,2019,2020).7 SME South Africa.2018.An Assessment of South Africas SME Landscape:Challenges,Opportunities,Risks&Next Steps.https:/www.smallbusinessinstitute.co.za/wp-content/uploads/2019/12/AssessmentOfSAsSMELandscape.pdf 8 Friedrich,C.2016.Why do 70%to 80%
50、of small businesses fail within five years?.https:/www.moneyweb.co.za/mybusiness/why-do-70-to-80-of-small-businesses-fail-within-five-years/9Vuba,S.2019.The missed opportunity:SMMEs in the South African economy.https:/mg.co.za/article/2019-04-12-00-the-missed-opportunity-smmes-in-the-south-african-e
51、conomy/10 According to GEM:Business Exit Rate is the percentage of the adult population who have exited a business in the past 12 months,either by selling,shutting down or otherwise discontinuing an owner-management relationship with that business.5 mainstream economy due to lack of access to financ
52、e11 and markets,as well as poor operational soundness.The dialogue was designed to focus on four areas,namely(a)reduction of bureaucracy that affects small businesses and start-ups,(b)improving access to markets by start-ups,(c)enhancing access to finance by small businesses and start-ups,and(d)stre
53、ngthening implementation of capacity development programmes for small businesses and start-ups(government support).A review of the literature(see table in section 4)on the barriers to MSMEs and entrepreneurship-based on surveys,confirms that one of the most cited barriers are cumbersome regulations,
54、insufficient access to finance,and inadequate/ineffective government support.These three weaknesses have also been identified in UNCTADs Diagnostic Assessment conducted in 2021 and have therefore been the focus of a multistakeholder workshop organized by UNCTAD,DBSD and 22 on Sloane in June 2022.The
55、 dialogue was held with over 30 stakeholders,including national government departments(Department of Social Development,Department of Women,Youth and People with Disabilities,Department of Science and Technology,Department of Fisheries,Forestry&Environment,Department of Basic Education),regulatory a
56、uthorities,youth organizations,the private sector and other relevant parties.3.Strategic areas of entrepreneurship 3.1 Optimizing the regulatory environment Despite the efforts made by the government to improve the regulatory environment for small businesses-reducing bureaucracy and easing the proce
57、ss to start a business,policy uncertainty and weak policy implementation remain a significant barrier to entrepreneurship and investment.South Africa ranks 82 in the Ease of Doing Business,characterized by considerable bureaucracy that is not conducive to a dynamic business environment.As pointed ou
58、t in an International Financial Corporation(IFC)report on South African MSMEs,there are several studies showing that the regulatory environment is singled out as one of the most challenging aspects for opening and growing a business according to local entrepreneurs.12 Academic literature has also id
59、entified substantial tax increases paid by MSMEs,13 strict labor legislation,14 and ineffective bureaucratic practices15 as some of the more specific aspects of regulation deterring MSME development.The degree of informality across the MSME sector also attests to the challenges of complying with reg
60、ulations,and many registration procedures are costly and cumbersome,particularly for entrepreneurs by necessity.Participants to the workshop discussion and entrepreneurs interviewed in June 2022 detailed their concerns about the regulatory environment as follows:There is a one size fits all and infl
61、exible approach to regulation biased toward larger businesses.Similarly,they noted that usually a blanket approach is applied when developing policy interventions to reduce the regulatory burden on MSMEs without considering how each category of entrepreneurs is affected by regulation.11 According to
62、 IFC(2018)the value of MSME credit gap in South Africa is at$6 billion in the formal sector and$24 billion in the informal sector 12 The Unseen Sector A Report on the MSME Opportunity in South Africa,IFC(2018).13 Barriers to Startup and Sustainable Growth of SMMEs:A Comparative Study Between South A
63、frica and Lesotho,in“African Journal of Business and Economic Research”,Vol.15 No.2,Khoase.R.G.,Derera,E.,McArthur,B.,and Ndayizigamiye,P.(2020).14 Challenges facing small business development in South Africa,in“International Journal of Economic Perspectives”,Vol.11 No.2,Zondi,W.B.(2017).15 The Chal
64、lenges/Barriers Preventing the South African Youth in Becoming Entrepreneurs:South African Overview,in“Journal of Economics and Behavioural Studies”,Vol.11 No.4,Radebe,T.(2019)6 Policy implementation suffers from a lack of coordination and non-aligned priorities between government departments.In add
65、ition,there are slightly different regulatory hurdles depending on which cities or areas businesses run their operations due to varying efficiency levels of public agencies and discrepancies in the interpretation of national legislation.16 Even if recently the Company and Intellectual Property Commi
66、ssion(CIPC)launched an online single window for business registration and an information portal,there are still many issues with regards to accessibility and transparency of the requirements for small businesses as the access,interpretation and application of these regulations were considered as cha
67、llenges:(a)the lack of portals for digital services means entrepreneurs have to visit different departments for registrations and other similar services,and(b)the non-consolidation of various departments knowledge on entrepreneurship regulations presents potential misunderstandings and/or biased dis
68、semination of information among enterprises.According to UNCTADs Global Enterprise Registration assessment,South Africas CIPC online single window ranks 8th,along with Rwanda,among the 19 Sub-Saharan African countries that have this type of service,and its information portal ranks 23rd among 44 Sub-
69、Saharan Africa countries.17 Finally,stakeholders noted that government services were too slow in delivery and costly,in particular for quality standard approval and intellectual property registration.3.2 Improving access to finance Access to finance is often cited as one of the main barriers to entr
70、y and sustained business growth in South Africa(Enterprise Survey,2020).The gap between supply and demand for MSMEs funding accounts for 10 per cent of the countrys GDP.Banks control a large portion of the funding market for MSMEs but as they are by nature risk conservative and apply tight underwrit
71、ing standards before giving credit to MSMEs,it is challenging for business owners to obtain funding through this channel.Banks would generally refrain from funding small business,as being at a higher risk than larger businesses.As shown in figure 2 below,SMEs lending constitute a small proportion of
72、 total business loans.Moreover,one can see that since 2008,total loans to businesses have increased proportionally more than SMEs loans.Figure 2:SME Loan and total outstanding business loans.Source:OECD,Financing SME and Entrepreneurs,South Africa(2022)As a result,the majority of bank credit is targ
73、eted towards larger and more established enterprises rather than the small and micro business segment,which has difficulty meeting 16 Doing Business in South Africa 2018 Subnational Report,World Bank(2018)17 The Global Enterprise Registration assesses whether a countrys online registration process i
74、s clear and complete.Assessments can be found on https:/ger.co/.500 0001000 0001500 0002000 0002500 0003000 0002008200920000192020SME LOAN AND TOTAL OUTSTANDING BUSINESS LOANSOutstanding business loans,SMEsOutstanding business loans,total 7 bank lending requirements(
75、OECD,2022).Indeed,the lack of access to finance is mostly due the result of high levels of poverty of the majority of new entrepreneurs who do not have sufficient,if any,collateral to secure finance(Khoase et al.2020;Nxazonke et al.,2020;Bushe,2019;Zondi,2017).In 2020,4.4 per cent of all firms in So
76、uth Africa had access to a loan or a line of credit,compared to 20 per cent in Sub-Saharan Africa(Enterprise Survey 2020).The structural historical inequalities of skewed assets ownership and limited good-quality financial records exacerbate further the barriers to access to finance.Venture capital(
77、VC)investment is another way for entrepreneurs to finance the development of their enterprise.The value of VC in South Africa rose from approximately$70 million in 2019 to$82 million in 2020,according to the Southern African Venture Capital and Private Equity Association(SAVCA).One hundred twenty-tw
78、o entities benefitted from investments and 74 per cent of the investment fell into the category of new transactions.The top industries by investment value were software,fintech-specific products and services,and business goods and services.According to the deals investment value contributions,growth
79、 capital accounted for 38 per cent of the total,start-up capital for 34 per cent,later stage funding for 20 per cent,seed capital for 4 per cent,rescue/turnaround funding for 3 per cent,buyout funding for 2 per cent,and replacement capital for less than 1 per cent of the total(OECD 2022).3.3 Entrepr
80、eneurship education and skills building The literature review conducted as part of this consultation process underlines the critical importance of skills for both labour supply and demand.Skills raise the productivity of workers and entrepreneurs-and their ability to access finance,help firms innova
81、te,and expand production at competitive prices.This in turn raises demand in the economy for more goods and services,which requires hiring more low and high-skilled workers.Insufficient skilled staff is frequently cited as a barrier to MSMEs growth.The legacy of“Bantu education”continues to deprive
82、South Africa of the skills it urgently needs,resulting in low competitiveness,high unemployment,and wage inequality.The skills and capacity of entrepreneurs can be raised through two channels:a.Improving government support programmes and business development services will increase entrepreneurs skil
83、ls and capacity with effects in the short-term.The NISED does not clearly acknowledge that entrepreneurs by necessity and by opportunity can have different needs,and that these should be addressed through appropriate tailor-made interventions.The Integrated Strategy for the Promotion of Entrepreneur
84、ship and Small Enterprise(ISPESE)only mentions the existence of entrepreneurs by necessity referred to as survivalist enterprises,while stressing the importance of formalization for them.However,besides the fact that formalization can also be an issue for entrepreneurs by opportunity,the difference
85、in needs of these two groups of entrepreneurs are also present in other dimensions of the entrepreneurial ecosystem.The various needs of the different categories of entrepreneurs should be recognized.Government support programmes generally provide generic business plans.The mission of the Small Ente
86、rprise Development Agency(SEDA)is to“develop,support and promote small enterprises throughout the country,ensuring their growth and sustainability in coordination and partnership with various role players,including global partners,who make international best practices available to local entrepreneur
87、s.”However,sustainability could involve increased hands-on support and mentoring programmes(Khoase et al.,2020).Indeed,a lot of capacity development programmes are designed without consultation and dialogue with start-ups to clearly understand their capacity development needs(Partner Dialogue I).The
88、re is also a lack of capacity building available in different 8 languages.The use of infographics and audio in different languages was suggested as a possible solution.Another weakness of government support programmes in the country is that they follow a decentralized approach and lack implementatio
89、n guidelines,coordination structures,and rigorous monitoring and evaluation mechanisms.An official evaluation of the ISPESE finalized in 2018 concluded that MSME development in South Africa ended up not meeting some of the expected results because of these weaknesses.Furthermore,the majority of reci
90、pients stated that the governments programmes and policies to help MSMEs were not implemented consistently at all three levels of government(including national government agencies).Similarly,coordination with local government received the lowest rating across all reactions,as well as across governme
91、nt and business responses separately.Government support varies extensively between the different regions of South Africa,reaching a level where location impacts the rate of survival of MSMEs.Participants to the DBSD-UNCTAD workshop confirmed this weakness and noted that unplanned and uncoordinated t
92、raining for entrepreneurs by different government units were inefficient.To ensure a levelled playing field and reduce ruralurban migration of SMEs,government financing aid from organizations 18 should be reviewed and coordinated so that their services improve the performance of SMEs in South Africa
93、 regardless of location(Ogujiuba et al.2021).Finally,there is lack of awareness about government support programmes and Business Development Support(BDS)services19 among entrepreneurs.In a study conducted by McKinsey&Company in 2020 on the impact of COVID-19 on formal MSMEs,36 per cent of the respon
94、dents said that they were not receiving any kind of assistance from the government,mainly as they were not aware of the existence of support programmes they could benefit from.20 During the one-day DBSD-UNCTAD workshop,the challenge of stunted communication was identified as critical where the non-s
95、ummarization of policies as well as language barriers were posed as major hurdles for the MSMEs.Hence,what one typically does not understand,one tends to ignore without attempting to inquire more information for clarification purposes.Thus,participants suggested that“strategic documentation ought to
96、 be clearly summarized in the respective languages,making use of much simpler terminology and through the use of audios and graphics for easier comprehension”.b.Improving the quality of entrepreneurship education is a policy whose effects will be felt in the longer term.It was highlighted that there
97、 is a lack of incorporation of entrepreneurship subjects within schools curricula in the country.The responsibility therefore lies with the Department of Education to instill a business mindset among young people through entrepreneurship literacy.It is important to understand how entrepreneurship is
98、 taught,transmitted in an experiential setting and not in an abstract manner.Participants highlighted that there should be a strong focus on entrepreneurship training from a younger age and the need to use project-based learning and pilots in all schools with the intention of changing mindsets,inspi
99、re confidence and integrate entrepreneurship curricula across all vocational studies.Furthermore,decision makers were advised to possibly review the curriculum in schools to include entrepreneurship development programs and teacher training.18 Such as Small Entrepreneurship Development Agency(SEDA),
100、the Export Marketing and Investment Assistance Scheme(EMIAS),the Agric-Processing Support Scheme(APSS),and the Township Rural Entrepreneurs Program(TREP)19 The UNCTAD Empretec programme and its Empretec Centre under SEDA is one of South Africas entrepreneurship capacity building initiatives.20 How S
101、outh African SMEs Can Survive and Thrive Post Covid-19,McKinsey&Company(2020).9 Enterprise literacy could therefore be introduced and incorporated at all levels of education.This concerns vocational schools too as there is a mismatch between the skills of vocational school graduates and market deman
102、d.4.Policy options The overview presented below summarizes the three areas of interest:Optimizing the regulatory environment Stakeholders highlighted the need for a different regulation system for different sizes of enterprises,such as micro,small and large firms.Excessive and inefficient regulation
103、 is hampering businesses.Hence,participants highlighted the importance of reducing bureaucracy significantly and supporting start-up and micro enterprises separately from medium and large firms.The need for incentives for MSMEs such as tax breaks was deemed a necessity.Regulatory sandboxes could be
104、introduced to allow innovative inventions to be tested in a controlled environment with little or no regulation.Digital skill-building and exchange programmes between provinces and municipalities in order to improve and increase the digitalization of the government services are also suggested as pos
105、sible solutions.Several administrative procedures for business can be streamlined without changing laws,which can significantly reduce regulatory-related administrative hurdles for entrepreneurs.21 Currently,South Africa does not have a network of physical national one-stop shops,or an online one-st
106、op shop solution that could centralize all registration procedures,for example.Improving access to finance There is scope to advance targeted support to improve the efficiency of MSME focused Development Finance Institutions(DFIs).Such technical assistance can address the possible competition for th
107、e same clients in the upper ranges of the DFI offer and the lower ranges of the commercial offer as well as the possible gap at the seed financing stage.Moreover,decision makers were advised to“use a more structured and selected approach in facilitating access to funding”.Upon receiving funding,entr
108、epreneurs are expected to obtain support through their entrepreneurship journey with calls for the funding organizations to monitor and evaluate targeted achievements.Multiple programmes with similar goals and methods that can be merged to increase efficiency and efficacy.Demand analysis and a consi
109、stent approach to evaluation of public support to entrepreneurship and MSMEs finance can be implemented(OECD,2022).The government could guide entrepreneurs through all finance support agencies while possibly considering partnerships with Fintech start-ups.Furthermore,the government could attempt to
110、incentivize banks to assist MSMEs through efforts such as the creation of tax incentives,non-payment of bank charges by start-ups,start-up mentorship(upon receiving funding)and compelling large corporations to create partnerships with small businesses in order to receive incentives.21 UNCTADs eRegul
111、ations is a web-based tool that helps governments work towards business facilitation through transparency,simplification and automation of rules and procedures relating to enterprise creation and operation.The tool shows which administrative steps are not driven by law,hence can be improved without
112、legislative reform.10 Entrepreneurship education and skills building The private sector could play a greater role in the early stages of planning capacity development programmes.This could also improve small businesses access to finance and markets.Government information and communication on policie
113、s and support programmes could be vulgarized and simplified.To improve the quality of data and research on government support programmes and BDS,outcomes-based reporting instead of a tick-box approach can be implemented.11 Table-ACTION PLAN BASED ON THE FRAMEWORK GIVEN BY NISED Outcome to programme
114、areas Output to programme areas Project activities to achieve outputs Strategic recommendations to support entrepreneurship development Bureaucracy reduction and better service delivery to MSMEs 3.4.E-government practices to streamline government proactive Review administrative procedures(by sector
115、and competent authority)to result in affordable and digitally led compliance Ensure inclusivity by consulting with MSMEs,informal sector,youth and women entrepreneurs Establish and regularly convene bureaucracy reduction business and Govt working groups(Local,District,Province&National)Develop burea
116、ucracy reduction methodology and run capacity building for public servants and Govt stakeholder Implement UNCTADs Business facilitation programme Excessive bureaucracy Regulatory reform for better business environment for MSMEs 5.2.Effective use by all government of Section 18(3)of the NSEA(consulta
117、tion and impact assessment of lays and regulations to minimise administrative inefficiencies and unintended effects)Review and reform/amend the National Small Enterprise Act(NSEA)to provide for institutional reform that minimise compliance for MSMEs and improves service delivery Draw inspiration fro
118、m Start-up Act models In conjunction with bureaucracy business and government task team(see 4.2.1.3)determine priority regulatory and legislative reforms for MSMEs.Input from DBSD-UNCTAD workshop:Undertake a systemic review of regulatory requirement that are biased toward large enterprises Implement
119、 a one-stop shop for business registration and other regulatory requirements Reduce cost and time for compliance with quality standard,certification,and IP registration Reduce the differences in regulatory requirement between provinces 12 Setup sandboxes regulations for innovative start-ups and MSME
120、s.Based on bureaucracy reduction task team,establish regulatory sandbox in pilot project Based on DBSD-UNCTAD workshop and UNCTAD consultation,digital entrepreneurs and fintech entrepreneurs would benefit the most from sandbox regulations in their respective sector Fair and equitable opportunities f
121、or growth to MSMEs.6.1.Extend social benefits and incentives to enterprise(entrepreneurship)activity in the formal and informal marketplace Setup a mechanism where sole traders and self-employed entrepreneurs can register their activities/enterprise with the CIPC Implement UNCTADs business facilitat
122、ion(e-registration)programme 6.3.Design and develop a programme of action to help facilitate practical steps to encourage greater participation in the formal economic structures e.g.,local authority administrative compliance,employment administrative compliance,tax administration and business regist
123、ry Identify and develop institutional and policy reforms to incentivise informal enterprises to participate in the formal economy Implement UNCTADs e-accounting tool for MSMEs Build and promote expanded supply of support to MSMEs.7.1.In alignment with DDM and IBDS policy publish online directory to
124、showcase supply of support to MSMEs.Develop a technology platform which can be easily accessed digitally and Public and Private role-players(including MSMEs)to register and map support programmes for MSMEs.Increase the role and impact of private sector in the design and delivery of capacity-building
125、 programme and BDS(as per first Partner Dialogue).Encourage entrepreneurship 8.2.Working with business and service providers using the technology platform,identify gaps of services and support offered to MSMEs.Setup a national team to coordinate and publicise programmes that are aimed at MSMEs and e
126、ntrepreneurs(National and Provincial across different departments)Summarize,vulgarize,simplify information on capacity-building programme and BDS.Harmonize support programmes offered to entrepreneurs across the different departments Conduct regular needs assessments with MSMEs and cooperatives to en
127、sure that the support services offered meet their needs Implement an outcome-based approach instead of a“ticking the box”approach to improve alignment with the needs of 13 MSMEs and increase the quality of data on BDS and capacity-building programmes.8.5.Entrepreneurship and business skills enhanced
128、 encourages lifelong learning vocational training and education Setup task team to enable ecosystem actors to develop appropriate skills development courses and pedagogy for better entrepreneurship development,targeting skills deficit for better entrepreneurship development Partner with Empretec Cen
129、tre to develop the appropriate skills development courses and pedagogy Develop and deliver curricula in partnership with business to support new technology advancement(4IR)for artisanal and vocational upskilling Use the framework provided by the BEAR II 22 to establish ICT-based learning in TVET pro
130、gramme Partner with international or regional organizations with expertise on the development of entrepreneurship curricula and promote experiential and learning-by-doing methodologies23 Delivery of cost-effective support to MSMEs Update and deliver MSME Support Plan and Game-Changer Programmes in a
131、ccordance with NISED and publicise yearly in the Annual Review for Small Business New Agency Updates of programmes based on performance and impact tracking of the MSME support Plan/Game-changer programmes Among the current programmes are the:Empretec training Workshop She Trades programme Youth Chal
132、lenge Fund Township and Rural Enterprise Programme Incubation and Digital Hubs Programme Integrate the Empretec programme in to the MSME Support Plan and Game-Changer Programme 22 Better Education for Africas Rise II(BEAR II):promoting and transforming TVET in Eastern Africa.https:/en.unesco.org/the
133、mes/skills-work-and-life/bear and https:/unesdoc.unesco.org/ark:/48223/pf0000260719_eng 23 Organizations such as The Center for Entrepreneurial Leadership Centre for Entrepreneurial Leadership-Anzisha Prize and the Mastercard Foundation https:/mastercardfdn.org/uganda/have such expertise 14 5.Conclu
134、sion Entrepreneurs are needed,not only as their businesses are the backbone of an economy,but also because they help solve societal problems.Having a conducive entrepreneurship ecosystem in South Africa can stimulate innovation which is crucial following the impact of the COVID-19 pandemic,the high
135、rate of youth unemployment,inequality and the need to deal with the energy transition.A regulatory environment should take into account the needs of MSMEs,their scale and capabilities.MSMEs need to have a future perspective that allows for long term business planning and investment possibilities.Unc
136、lear governmental goals and expectations can block this.While entrepreneurship entails risk-taking,norms that are clear and provide a long-term vision of the future are key for entrepreneurs to scale and invest in innovation.Among the measures that can be taken to increase the survival rate of MSMEs
137、 are the reduction of bureaucracy,country-wide streamlining of regulations and their easy access online,simplified economic and fiscal regimes and the creation of differential support programmes including temporary tax exemptions or tax credits at the initial stages of entrepreneurship.Incentives to
138、 facilitate access to finance for MSMEs are key.They can be both traditional,fiscal-based and less traditional.For instance,MSMEs can be better informed on the diverse set of financing that exists,from traditional banks to Fintech,micro credit and more.Also,support can be provided to financial insti
139、tutions to better segment the MSME market and cater to the different types of entrepreneurs and different stages of entrepreneurship in a more appropriate way.Furthermore,follow-up programmes can be set in place that accompany MSMEs in their financing journey such as finance-based advisory and mento
140、ring programmes and partnership programmes between large corporations and MSME suppliers.The quality of human capital is crucial in entrepreneurship and requires investments in building an entrepreneurial mindset through education and skills development.This can be done at an early stage at schools,
141、but also by developing capacity building programmes on entrepreneurship,including topics such as talent management,technical skills,preparation of a business plan,finance,networking and more so as to build a resilient and agile competitive local MSME sector that will help to drive the country toward
142、s the future,with equitable growth and sustainable development.Measures may include,among others,the inclusion of entrepreneurship-related subjects in school curricula at all educational levels,training the teachers to improve educational quality,the introduction of an approach of skills development
143、 and learning by doing through apprenticeships and dual vocational training systems to bridge the gap of skills required in the market.Linking incubators and accelerators with universities and other educational institutions can also contribute to a conducive entrepreneurial ecosystem.Public support
144、programmes to MSMEs and entrepreneurship should be well communicated to all audiences and information should be made easily accessible.Awareness raising and networking campaigns should be deployed to create inclusive multistakeholder communication channels to strengthen the health of the business ec
145、osystem and at the same time align all public and private efforts with broader national development policies.15 Bibliography Abor,J.,&Quartey,P.(2010).Issues in SME Development in Ghana and South Africa.International Research Journal of Finance and Economics.http:/ Allen Grey Orbis Foundation.(2019)
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161、ves,11(2),621628.17 Annex Literature on barriers to MSME growth in South Africa Authors Barriers to growth identified Characteristics Characteristics Chandra,Moorty,Nganou,Rajaratm&Schaefer(2001)Lack of skilled staff Lack of access to finance Insufficient government support Independent Survey 792 ob
162、servations of registered firms employing 1-49 employees Location:Johannesburg Sectors included:1.Manufacturing:Clothing,metals,furniture,food products.2.Services:Tourism,construction,retail,information technology.Berry&Al(2002)Lack of skilled staff Lack of access to finance Labour regulations.High w
163、age requirements High interest rate None.Drew on 78 pieces of literature to establish arguments as to what the paper believes the greatest barriers to growth are.Brink&Cant(2003)High inflation and high interest rates Increasing competition Crime.Technological change Burdensome debt.Independent Surve
164、y 301 observations.Used firms considered“sophisticated”.*1-50 employees.Data was collected provincially.No further detail is offered.Robinson(2004)Overcoming the legacies of Apartheid Containing crime Fostering an acceptable business ethic Dealing with diversity Facilitating reconciliation between e
165、thnic-groups Interview based Interviews with 7 entrepreneurs in established service-orientated venture FinMark Trust(2006)Lack of skilled staff Little awareness of MSME support initiatives Regulations and red tape Lack of access to finance FinScope dataset(2006)2000 observations.Less than 200 employ
166、ees.Firms are mostly micro in nature.SQLF Survey of Employers and the self-employed(2009)Lack of access to finance Lack of marketing skills Lack of access to alternative sites for business operation Quarterly Labour Force Survey Firms are not VAT registered.Micro enterprises Abor&Quartey(2010)Lack o
167、f access to finance Lack of skilled staff None.Drew on 49 pieces of literature to establish arguments as to what the paper believes the greatest barriers to growth are.18 Regulations and red tape Lack of access to international market(Critical literature review).FinMark Trust(2010)Lack of access to
168、finance Space to operate Increasing competition Crime FinScope dataset(2010)1075 observations.Less than 200 employees.Olawale&Garwe(2010)Lack of access to finance Lack of collateral Insufficient government support Insufficient owners equity contribution Crime Independent Survey 361 observations Newl
169、y registered firms.Locations covering East London,King Williams Town and Queenstown.Small Business Project(2011)Regulations and excessive bureaucracy Lack of skilled staff Lack of access to finance Labour regulations Poor global economic conditions SME Growth Index(2011)500 observations.10-49 employ
170、ees(not strictly adhered to)Sectors included:-Manufacturing Business Services Tourism Firm must have been in existence for over 2 years Friedrich and Isaacs(2010)Low educational qualifications Lack of knowledge of government selected support organisations Lack of access to finance below R50 000 Inab
171、ility to meet stringent government regulations Lack of transport,premises,and water Lack of innovation Lack of previous experience in managing a business Starting business due to necessity Inability of the informal sector to become part of the mainstream Lack of risk-taking Poor perception and servi
172、ce delivery of Business support organisations Independent survey Survey emailed to SMMe owners and managers,and CEOs from business support organisations 106 observations Profile of business owners:Rural-9 of which services-9 Urban 97 of which services-71 and manufactures-26 Zondi(2017)Lack of access
173、 to finance Lack of operational education Accessing legislated bureaucracy Foreign markets are not obtainable SMMEs limit their operations to traditional marketplaces Technological skills barrier Independent Survey 320 SMMEs registered with Seda within the eThekwini Metropolitan Municipality in KwaZ
174、ula-Natal 19 Lose et al.(2017)Enhance entrepreneurial education Better access to funding Identified barriers that entrepreneurs attempt to overcome by entering incubation hubs:Acquire entrepreneurial skills Access to business networks Access to technology Identified a gap in the market Employment cr
175、eation.Independent Survey Sampled 65 entrepreneurs active in an incubation program in the Western Cape and Gauteng Williams and Kedir(2018)Firm Performance is associated with:-Access to finance-Human capital level-Firm size,smaller firms preform worse than larger more established firms-Ownership str
176、ucture-Level of technological innovation-Owner experience-Level of professionalism-Existence of numerical flexibility Female barriers to Entrepreneurship:-Financial exclusion-Gender discrimination in bank loans-Poorer education WBES(2007)Cross-sectional data from the 2007 World Bank Enterprises Surv
177、ey(WBES)consisting of 937 South African Enterprises Non-agricultural formal private sector businesses Bushe(2019)Entrepreneur incapacity Environmental inauspiciousness Enterprise incompetence None(Systematic literature review)Drew on 82 pieces of literature to identify the main reasons of business f
178、ailure in SA Radebe(2019)Excessive bureaucracy Lack of access to finance Labour regulations Lack of education societys attitude towards youth entrepreneurship and a poor entrepreneurship culture.None(Systematic literature review)None given 20 Urban and Ndou(2019)Lack of access to finance Inability t
179、o access market information Lack of access to institutional and infrastructural support Low levels of entrepreneurial skills and competency development Independent survey Cross-sectional survey in Gauteng in the following municipalities:Ekurhuleni,Johannesburg and Tshwane Township entrepreneurs with
180、 operational township based businesses in accordance with South Africas SMME definition Ekurhuleni-41 respondents Johannesburg-74 respondents Tshwane-39 respondents Sample total 154 Khoase et al.(2020)Barriers to accessing finance from supporting institutions:-High interest rates.-Collateral require
181、ments.-Not having a lease agreement.Impediments to starting a business:-High interest rates.-High rental charges-Licensing procedures-and wages of skilled staff Hindrances to the sustainable growth of SMMEs:-Access to finance-Income tax.-High rental charges.-Licensing procedures and wages of staff I
182、ndependent Survey Sampled 379 SMMEs across all sectors in Maseru(Lesotho)and 384 SMMEs across all sectors in Pietermaritzburg(South Africa)Collected from April to June 2015 Nxazonke et al.(2020)Foreign direct investment(FDI)has a positive short-run and long-run influence on domestic entrepreneurship
183、.SARB and GEM(2000-18)Stock data from SARB and GEM database from 2000-2018 Ogujiuba et al.(2020)Access to start-up capital Labour relations Level of education Age of business Independent Survey Survey conducted with owner-managers,entrepreneurs,and experts actively involved in SMEs in Mpumalanga.All
184、 participating SMEs have less than 250 employees,with a total of 501 respondents.Cao&Shi(2021)Main Barriers for Emerging Economies are:Institutional void;Resource scarcities;and structural constraints None(critical literature review)Extensive literature review where 68 articles on advanced economies and 18 articles on emerging economies were reviewed Source:UNCTAD and extrapolation based on Flowerday(2013)