Challenges, barriers and policy development for South African SMMEs – does size matter?

Figures & data

Table 1. Department of Small Business Development key service offerings.

Programme	BBSDP^a	CIS^b	SEIF^c	NIBUS^d	IMEDP^e	EIP^f
Description	The grant is offered to black-owned small businesses to improve their competitiveness and sustainability to enable employment as part of the economy.	The grant is offered to registered primary co-operatives to improve their viability and competitiveness by reducing their cost of doing business through a road-based black economic empowerment incentive.	The grant is offered to businesses that provide necessary infrastructure to environments that will crowd in investment, especially in the townships, rural areas and inner city where business activities take place.	The grant is offered to entrepreneurs in the informal economy. Its aim is to uplift informal businesses and provide access to upliftment programs. The focus of this grant is mainly on designated groups which includes women, youth and people with disabilities in townships and rural areas.	The grant is offered to developing informal and micro businesses owned by historically disadvantaged individuals operating in depressed areas.	The grant is offered to assist with the establishment of new incubators or growth and expansion to existing incubators.
Grant offering	Up to a maximum of R1 million. R800 000 for tools, machinery and equipment on 50:50 cost sharing basis. R200 000 for business development and training on a 80:20 cost sharing basis	Minimum grant of R10 000 up to maximum of R350 000.	A 50:50 reimbursable cost sharing grant. The DTI contributes 50% towards qualifying projects up to a maximum of R5 million (inclusive of VAT).	A 50:50 cost sharing grant up to the maximum of R5 million.	Receive an incentive grant for up to R80 000 for tools, equipment, training, working capital etc.	Minimum value of R5 million up to a maximum of R10 million for up to three years depending on the type of business and its needs, subject to the availability of funds.
Specified qualifying criteria	51% black majority shareholding 51% management positions held by black individuals (historically disadvantaged individuals) R250 000 to R35 million turnover per year Operating and trading in business for one year Businesses registered for VAT	Incorporated and registered in South Africa in terms of the Co-operative Act of 2005 Majority of black ownership (historically disadvantaged individuals) Have projects in any of the economic sectors Adhere to co-operative principles Give preference towards women, youth and people with disabilities Rural or semi-urban based.	The applicant should be a municipality; municipal entity as defined in section 1 of the Local government municipal systems act of 2000; or provincial government entity	No specific qualifying criteria are mentioned but its strategies prioritise five economic sectors – retail, manufacturing, services, agriculture and construction/maintenance. The business can include any entrepreneurial activities in the informal sector and can include anything from a spaza shop, general dealer, hairdresser, car washers, etc.	100% black-owned informal business Turnover of between R12 000 and R200 000 per annum Trading for more than a year	Registered tax compliant entities Offering to be used for development support, infrastructure, machinery, equipment and tools

Source: Authors’ own.

^aBlack Business Supplier Development Programme.

^bCo-operative Incentive Scheme.

^cShare Economic Infrastructure Facility.

^dNational Informal Business Upliftment Strategy.

^eInformal and Micro Enterprise Development Programme.

^fEnterprise Incubation Programme.

Table 2. Grouping of business classes based on turnover.

Size of class	Total turnover
Medium	More than R20 000 000
Small	R1 000 001–R20 000 000
Very Small	R 500 001–R1 000 000
Micro	R1–R500 000

Source: Authors’ own.

Figure 1. Challenges faced by SMMEs. Source: Adapted from SAICA (2017).

Figure 2. Barriers experienced by SMMEs when starting a new business. Source: Adapted from SAICA (2017).

Table 3. Statements regarding the DSBD in questionnaire.

	Descriptives		Kruskal–Wallis
	Mean	Std. Dev.	Chi-Square	Asymp. Sig.
1. The new DSBD has a big enough budget to do its job	3.582	2.107	5.976	0.113
2. The views of the DSBD are considered seriously when government considers policy	2.722	1.741	6.070	0.108
3. The new DSBD has improved access to finance for SMMEs	2.329	1.491	10.114	0.018
4.The new DSBD has initiated schemes to improve mentoring and/or advice to SMMEs	2.468	1.593	5.500	0.139
5. The new DSBD has enabled SMMEs to both increase and reduce their workforce more easily	2.172	1.486	4.984	0.173
6. The new DSBD has helped by creating tax incentives for SMMEs to grow	2.567	1.650	6.755	0.080
7. The new DSBD has created tax incentives for SMMEs to employ more people	2.630	1.696	3.795	0.284
8. The new DSBD has reduced government generated red tape	2.269	1.579	7.920	0.048
9. The new DSBD has improved enterprise development benefits for SMMEs in BEE regulations	2.673	1.784	3.798	0.284
10. The new DSBD has improved procurement benefits for businesses who procure from SMMEs in the BEE regulations	2.763	1.825	1.945	0.584
11. The new DSBD has created increased access to work from government for SMMEs	2.536	1.755	3.581	0.310
12.The new DSBD has created a central tendering system which reduces red tape for SMMEs who wish to tender for government work	2.778	1.793	2.692	0.442
13. The new DSBD has made it easier to start/close a business	2.477	1.770	5.269	0.153

Source: Authors’ own.

Table

		Economic uncertainty	Rising cost	Competition	Difficulties accessing finance	Compliance with regulations	Keeping up with new technology	Attracting and retaining staff	Financial crime
ANOVA
F		0.881	0.278	5.044	10.258	7.364	0.582	5.525	1.282
Sig		0.451	0.841	0.002	0.000	0.000	0.627	0.001	0.279
Scheffe post-hoc test
Turnover group	Turnover comparison group	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.
Less than R500 000	R500 001–R1 million	0.928	0.997	0.129	0.010	0.578	0.762	0.789	0.286
	R1.1 million–R20 million	0.471	0.858	0.009	0.000	0.000	0.708	0.051	0.740
	Over R20.1 million	0.893	1.000	0.979	0.002	0.987	0.976	0.005	0.973
R500 001–R1 million	Less than R500 000	0.928	0.997	0.129	0.010	0.578	0.762	0.789	0.286
	R1.1 million–R20 million	0.949	0.970	0.994	0.982	0.165	0.999	0.682	0.724
	Over R20.1 million	0.991	1.000	0.324	0.455	0.968	0.997	0.052	0.911
R1.1 million–R20 million	Less than R500 000	0.471	0.858	0.009	0.000	0.000	0.708	0.051	0.740
	R500 001–R1 million	0.949	0.970	0.994	0.982	0.165	0.999	0.682	0.724
	Over R20.1 million	1.000	0.989	0.186	0.526	0.288	0.999	0.165	1.000
Over R20.1 million	Less than R500 000	0.893	1.000	0.979	0.002	0.987	0.976	0.005	0.973
	R500 001–R1 million	0.991	1.000	0.324	0.455	0.968	0.997	0.052	0.911
	R1.1 million–R20 million	1.000	0.989	0.186	0.526	0.288	0.999	0.165	1.000

Values in bold indicate significance at the 5% level.

Table

		Registering a company or company changes at CIPC	Submission of documents to CIPC	Engaging with CIPC	Registering for PAYE, UIF and SDL at SARS	Registering for VAT at SARS	Submission of all tax returns at SARS	Engaging with SARS	Registering for UIF at the Department of Labour	Submission of returns to the Department of Labour	Engaging with the Department of Labour	Operational issues such as finding customers, sourcing suppliers & marketing the business	Compliance with legislation	Red tape from government and large private sector business	Obtaining start up finance	Growing too quickly without available capital to finance the growth (growth finance)
ANOVA
F		6.429	4.783	4.71	1.33	5.967	0.642	6.046	1.669	1.225	5.145	3.245	5.247	5.461	0.773	0.185
Sig		0.000	0.003	0.003	0.263	0.001	0.588	0.000	0.172	0.299	0.002	0.021	0.001	0.001	0.509	0.907
Scheffe post-hoc test
Turnover group	Turnover comparison group	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.
Less than R500 000	R500 001–R1 million	0.086	0.232	0.294	0.520	0.875	0.698	0.047	0.664	0.319	0.282	0.648	0.879	0.210	0.678	0.949
	R1.1 million–R20 million	0.000	0.004	0.004	0.326	0.003	0.996	0.001	0.185	0.701	0.002	0.037	0.003	0.001	0.734	0.995
	Over R20.1 million	0.768	0.991	0.987	0.911	0.095	0.986	0.491	0.985	0.988	0.968	0.308	0.566	0.362	0.787	0.959
R500 001–R1 million	Less than R500 000	0.086	0.232	0.294	0.520	0.875	0.698	0.047	0.664	0.319	0.282	0.648	0.879	0.210	0.678	0.949
	R1.1 million–R20 million	0.867	0.876	0.810	1.000	0.170	0.768	0.983	0.972	0.794	0.742	0.774	0.161	0.782	0.986	0.981
	Over R20.1 million	0.959	0.823	0.877	0.997	0.312	0.759	0.996	0.984	0.886	0.918	0.792	0.867	0.984	0.997	0.999
R1.1 million–R20 million	Less than R500 000	0.000	0.004	0.004	0.326	0.003	0.996	0.001	0.185	0.701	0.002	0.037	0.003	0.001	0.734	0.995
	R500 001–R1 million	0.867	0.876	0.810	1.000	0.170	0.768	0.983	0.972	0.794	0.742	0.774	0.161	0.782	0.986	0.981
	Over R20.1 million	0.737	0.497	0.522	0.998	0.932	0.966	0.965	0.912	0.996	0.547	0.977	0.973	0.998	0.973	0.979
Over R20.1 million	Less than R500 000	0.768	0.991	0.987	0.911	0.095	0.986	0.491	0.985	0.988	0.968	0.308	0.566	0.362	0.787	0.959
	R500 001–R1 million	0.959	0.823	0.877	0.997	0.312	0.759	0.996	0.984	0.886	0.918	0.792	0.867	0.984	0.997	0.999
	R1.1 million–R20 million	0.737	0.497	0.522	0.998	0.932	0.966	0.965	0.912	0.996	0.547	0.977	0.973	0.998	0.973	0.979

Values in bold indicate significance at the 5% level.

Table

		They are not good at managing cash flow	Their debtors pay them late	They do business with clients who don't pay them	They have overhead levels that are too big	They have become victims of business risks that they were unaware of and did not mitigate	They are unable to survive on the margins that the market dictates	They are unable to manage their labour issues	They don't take advice early enough	They have seen an increase in the number of competitors in the market	They lack internal business processes to help the company function	They don't take the time to deal with essential administration
ANOVA
F		3.095	0.599	0.167	2.547	1.377	0.719	1.017	1.227	6.587	3.830	1.837
Sig		0.026	0.616	0.919	0.055	0.248	0.541	0.385	0.299	0.000	0.010	0.139
Scheffe post-hoc test
Turnover group	Turnover comparison group	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.	Sig.
Less than R500 000	R500 001–R1 million	0.559	0.674	0.980	1.000	0.577	0.642	0.744	0.861	0.314	0.970	0.828
	R1.1 million–R20 million	0.808	0.889	0.950	0.882	0.286	0.727	0.467	0.958	0.000	0.061	0.567
	Over R20.1 million	0.035	1.000	0.965	0.068	0.887	0.907	0.768	0.649	0.990	0.848	0.941
R500 001–R1 million	Less than R500 000	0.559	0.674	0.980	1.000	0.577	0.642	0.744	0.861	0.314	0.970	0.828
	R1.1 million–R20 million	0.916	0.932	1.000	0.934	1.000	0.980	0.999	0.587	0.477	0.052	0.189
	Over R20.1 million	0.303	0.874	0.997	0.095	1.000	1.000	0.990	0.385	0.878	0.722	0.712
R1.1 million–R20 million	Less than R500 000	0.808	0.889	0.950	0.882	0.286	0.727	0.467	0.958	0.000	0.061	0.567
	R500 001–R1 million	0.916	0.932	1.000	0.934	1.000	0.980	0.999	0.587	0.477	0.052	0.189
	Over R20.1 million	0.099	0.970	0.997	0.144	0.999	0.999	0.994	0.786	0.323	0.974	1.000
Over R20.1 million	Less than R500 000	0.035	1.000	0.965	0.068	0.887	0.907	0.768	0.649	0.990	0.848	0.941
	R500 001–R1 million	0.303	0.874	0.997	0.095	1.000	1.000	0.990	0.385	0.878	0.722	0.712
	R1.1 million–R20 million	0.099	0.970	0.997	0.144	0.999	0.999	0.994	0.786	0.323	0.974	1.000

Values in bold indicate significance at the 5% level.

Table

	Turnover group
	Less than R500 000	R500 001–R1 million	R1.1 million–R20 million	Over R20.1 million
The new ministry has a big enough budget to do its job	69.080	87.818	74.089	50.143
The views of the ministry are considered seriously when government considers policy	89.283	85.000	71.605	80.636
The new ministry has improved access to finance for SMMEs	87.000	89.896	68.257	82.556
The new ministry has initiated schemes to improve mentoring and/or advice to SMMEs	85.739	84.609	70.435	77.688
The new ministry has enabled SMMEs to both increase and reduce their workforce more easily	85.370	88.130	72.833	76.800
The new ministry has helped by creating tax incentives for SMMEs to grow	84.043	87.283	71.288	96.900
The new ministry has created tax incentives for SMMEs to employ more people	82.196	85.326	71.422	86.500
The new ministry has reduced government generated red tape	88.217	87.591	70.474	76.400
The new ministry has improved enterprise development benefits for SMMEs in BEE regulations	81.856	85.896	72.721	62.357
The new ministry has improved procurement benefits for businesses who procure from SMMEs in the BEE regulations	82.728	84.646	74.188	77.389
The new ministry has created increased access to work from government for SMMEs	83.109	81.022	73.782	56.583
The new ministry has created a central tendering system which reduces red tape for SMMEs who wish to tender for government work	82.106	83.826	71.974	74.857
The new ministry has made it easier to start/close a business	85.702	82.783	70.909	87.250

Values in bold indicate significance at the 5% level.

SAICA (South African Institute of Chartered Accountants), 2017. 2016 SMME insight report. https://www.saica.co.za/Default.aspx?TabId=2830&language=en-ZA Accessed 25 June 2017.

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