Paper on Enhancing Enterprise and Supplier Development
The GIBS report concedes that South Africa has a
Ecosystem Effectiveness in South Africa (2024: 8) contends
relatively robust financial and capacity-related
that there is more consensus in the implementation
development landscape for MSMEs. The report
challenges of ESD programmes such as limited resources,
State of the Small and Growing Business Sector
misalignment of corporate and MSME programme
identified 197 active funding sources offering financing
participants, and inadequate monitoring and
in the form of loans (43%) and equity (41%), with the
evaluation. These challenges are at the core of
remainder made up of grants (16%), quasi-equity (7%),
botched ESD programme implementation.
and guarantees (5%). Nevertheless, the credit gap among MSMEs continues to be significant.
South Africa’s effort to increase participation of MSMEs in the economic mainstream hinges upon a plethora of
Additionally, the South African economic
support mechanisms. According to the report on the State
mainstream’s relationship with MSMEs is characterised
of the Small and Growing Business Sector by ANDE (2024:
by relationships that are both progressive to the
04) the South African entrepreneurial ecosystem requires
country’s reindustrialisation efforts and the ones that are
innovative solutions to increase the available finance,
only driven by the compliance imperative (informed
improve access to markets, reduce bureaucratic burdens,
by the tick-box approach for compliance purposes).
and strengthen the capacity of small businesses and start-
The magnitude to which MSMEs are connected, or not
ups. The report also examines the state of the Small and
connected, to the GVC of MNCs differs significantly and
Growing Businesses (SGB) sector in South Africa as of 2023
varies from strategic high value chain integration to
by assessing the amount and type of financial support
non-core value chain integration. On one end, certain
available to enterprises, the type of capacity development
MNCs conduct extensive value chain and supplier
offered, and trends in the policy landscape that affect the
opportunity analysis to inform the identification of supplier
entrepreneurial ecosystem. It is also vital to acknowledge
opportunities. At the other end of the scale, other MNCs
that the legislative ecosystem that is in existence to support
and corporates link MSMEs to less strategic, non-core
entrepreneurship, enterprise and supplier development
supply opportunities. Some corporates have a mixed ESD
requires updating and review to provide a blueprint for the
approach in terms of linking MSMEs to both core and non-
building of a vibrant MSME sector.
core supply opportunities.
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2 4 TH E D I T I O N
