Small Business Development Minister Stella Ndabeni on Friday said her department was steadily moving towards closing policy gaps in order to remove constraints in a move to enable Micro, Small, and Medium Enterprises (MSMEs) and co-operatives to thrive.
“We move from the premise that the small enterprise support ecosystem has legislative and policy gaps. To this end, we are steadily closing those gaps to ensure that constraints are removed, and a more enabling environment is created for MSMEs and co-operatives to thrive,” Ndabeni said.
Speaking during the budget vote in the National Assembly, she said the amendment of the National Small Enterprise Act has led to the establishment of the Small Enterprise Development and Finance Agency (SEDFA) and the Office of the Small Enterprise Ombud.
Ndabeni also said the MSME and Co-operatives Funding Policy was approved by the Cabinet last year.
“We are now working on partnerships to establish an alternative MSME credit rating system as well as a movable asset registry to address the lack of collateral among MSME borrowers.
“The current risk assessment models used by financiers (audited financial statements, credit history, collaterals) are not suitable for MSMEs, as they are mainly designed for big businesses. With an alternative credit data model, we can ensure that financiers are able to use alternative data like bill payments, e-commerce activity, mobile money transactions, and others to foster financial inclusion for the majority of MSMEs.”
Ndabeni further said they were working with the Department of Trade, Industry and Commerce on the Transformation Fund.
“This will be a game-changer for MSME funding. We must enhance MSMEs’ readiness to secure funding, particularly in poorer provinces, townships, and rural areas.”
Ndabeni stated that they have recently approved the National Business Licensing Policy and were now amending the Business Licensing Bill to simplify business licensing and introduce preferential licensing for targeted empowerment and promotion of previously disadvantaged groups in economic activity for specific sectors.
She added that the department was finalising the National Entrepreneurship Strategy, which focused on the individual entrepreneur and their needs at different stages of development.
Another policy initiative was the Township and Rural Economic Development and Revitalization Policy, which will go to Cabinet this year.
“This policy will enable a more consolidated approach by the government when it comes to supporting township and rural MSMEs and co-operatives. The policy calls for the creation of vibrant township and rural small business hubs, which will require a more coordinated approach by the three spheres of government around zoning, business licensing, infrastructure provisioning, and investment.”
Ndabeni was confident that the legislative and policy interventions would make the ecosystem more coherent and ensure that more MSMEs were better served, especially those owned by women, youth, people with disabilities, as well as enterprises from townships and rural areas.
According to Ndabeni, the department was also instituting a new service delivery model.
“We are developing a robust monitoring and reporting framework for all ecosystem players, which we will present to the Cabinet this year. We are also establishing internal research capacity and undertaking sector-specific value chain studies to inform targeted interventions in productive sectors of the economy.”
She also said they have created a research think-tank to support evidence-based policy and formal partnerships with deans of commerce from higher education institutions.
“We are also finalising the appointment of a new Small Business Advisory Body.”
