Developments and reforms in small business support institutions since 1996

Abstract

Purpose/objectives: The aim of the paper is to investigate the successes and shortcomings of the support services provided by the different Small Business Support institutions during the period 1996 to 2003. It also evaluates the recent developments in these Small Business Support institutions.

Problem investigated: Many small businesses are still excluded from funds and support from Small Business Support Institutions. The paper investigates the extent to which these institutions provided financial as well as non-financial support to SMMEs in South Africa during the period 1996 to 2003. The paper further explores the changes in the legislation in 2004 in this regard, and explains how it intends to extent support to SMMEs.

Design/Methodology/Approach: The paper assesses the small business development policy framework in terms of the functions and assistance of the Small Business Support institutions. Secondly, it analyses the microeconomic evaluation of the services provided for the period 1996 to 2003. This is followed by a macroeconomic evaluation of the impact of support programmes on employment creation, poverty alleviation and economic empowerment. Lastly, the successes and shortcomings of these support programmes are identified and changes since 2003 discussed.

Findings/Implications: The fact that many SMMEs still do not get support, points to the shortcomings in the support programmes. Most programmes do not cater for the very small and micro-enterprises and most benefits from these programmes benefit SMMEs in urban areas.

Originality/Value: The paper finds an original way to explain the shortcomings of Small Business Support institutions and the lack of data from these institutions since 2003. These institutions must do more than banks and also help those that can not be accommodated by commercial banks. Conclusion: The Small Business Support institutions must help the very small and micro-enterprises that can not be accommodated elsewhere.