1. Business in South Africa –
Annual Review of Small
Business in South Africa –
2003
Output vs. outcome or impact
Conceptual framework: data & methodology
Quantitative & qualitative elements
Nuanced analysis: context
Synthesis of relevant research

2. Outline Review of: Trends Performance Basic statistics Sector reviews
Provincial review
Thematic issue
Link to DTI Strategy

3. Review of Trends & Performance
Conceptual framework

4. Review of Trends & Performance
Economic environment
World growth
World trade
SA growth – SMMEs insulated
SA trade performance – SMMEs somewhat insulated
Domestic expenditure
On balance… environment not supportive

5. Sector Reviews Tourism - Highlights Pyramid sector structure
Established (white-owned) tourism SMMEs are often linked to ‘lifestyle entrepreneurship’
Advantages: volume of capital, access to information
Problems: tourism marketing; unnecessary regulation; and infrastructure development for tourism, especially skills training.
Emerging tourism SMMEs
Problems: domination of sector by existing large or established SMMEs, product development, marketing and access to government support programmes.
TEP - successful support initiative addressing some of the issues faced by emerging SMMEs.

6. Sector Reviews Tourism - Conclusions
Differing constraints require different interventions
For emerging SMMEs
Competition policy,
Marketing support,
Regulatory issues

7. Food processing - Highlights
Sector Reviews
Food processing - Highlights
Sector is highly concentrated and dominated by several integrated companies
Recently new entrants, including SMMEs, linked to the liberalisation of agricultural markets and the country’s trade regime
Food processors affected by concentration in retail sector: formal retail chains estimated to control 70% of sales
Food processing sector is ‘buyer-driven’ – retailers play a dominant role in the value chain

8. Food processing - Highlights
Sector Reviews
Food processing - Highlights
Characteristics of food processing SMMEs:
Most sell outside of formal retail chains, e.g. independent retailers, spaza shops, restaurants, banks, hotels etc.
Supply local (mostly) or regional markets
Competitive position based on price or quality, not volume.
Growth challenges
Growth challenge strongly linked to South Africa’s concentrated retail structure
Retail chains are ‘buyer driven’ – supplying retailers involves meeting volume and ‘production process’ requirements
Requires investment in infrastructure and equipment
Also requires a new ‘business model’ – long payment delays, rebates, discounts, storage, increasing volumes

9. Food processing - Conclusions
Sector Reviews
Food processing - Conclusions
Policy implications:
Franchising appears to be one successful model for emerging SMMEs
AgriBEE also recognises the problems facing emerging SMME agri-businesses – target is that 50% of retailer preferred suppliers are black and/or SMMEs.
Can the dti’s support structures for SMMEs in general meet the specific needs of food processing SMMEs?

10. Provincial Review Free State
Objective is to provide key findings from research on the SMME manufacturing economy,
Major finding - general stagnation; SMME component grown
Sectorally, growth has occurred mainly in clothing SMMEs and fabricated metals with significant declines in the traditional food/agro-processing sector
Spatially growth is occurring in only two areas of the Free State – the Bloemfontein and Harrismith nodes

11. Provincial Review

12. Provincial Review

13. Free State - Conclusions
Provincial Review
Free State - Conclusions
Established versus emerging SMMEs in manufacturing show different characteristics and constraints
Established SMME economy is in a fragile state with many entrepreneurs considering closure or relocation
Emerging entrepreneurs are struggling with typical problems of localised markets, poor premises and lack of access to finance
In policy terms the Free State SMME economy requires an array of new support interventions to assist new entrepreneurs and existing producers, including a MAC