Seda to focus on small and medium businesses to create jobs
CAPE TOWN — The Small Enterprise Development Agency (Seda) is to focus its energies on small and medium-sized businesses rather than micro enterprises as it tries to make a more significant contribution to job creation.
The shift in emphasis was outlined in the 2012-13 annual report of the state-funded agency tabled in Parliament last week.
Seda has historically focused primarily on the micro and very small segments of the small, medium and micro enterprises sector due to the large number of applications for funding.
The change of strategy takes place at a time when Seda has experienced a decline in the number of walk-in clients at branches over the last two years. New programmes are to be launched to visit communities to identify existing small enterprises that had the potential to develop further.
According to the annual report, there has been a “huge” output in the number of clients assisted, but the performance was not so good when measured against the rate of employment, profitability and sustainability of these enterprises”.
“Seda believes that to contribute to the target of 5-million jobs by 2020, as outlined in the New Growth Path, it has to review its focus on existing micro and very small enterprises (with a staff maximum of 20) as well as those potential entrepreneurs who want to start a business or are in the early phase of establishing (one).
“Whilst working with these clients, the organisation will increase its focus on small and medium-sized enterprises (those employing between 21 and 200 employees),” the report said.
Seda believes this segment of the market has a greater potential to create jobs. It also wants to devote more time to existing clients so that it can have a greater effect on them .
CEO Hlonela Lupuwana reported that the organisation had supported 376 business startups last year, up from the previous year. Seda spent R635m (R586m) and had a deficit of R2.4m at the end of the year.
“During the year under review more than 60% of assisted clients recorded a growth in turnover while 35% increased the numbers of people employed,” Ms Lupuwana said.
Trade and Industry Minister Rob Davies said in his foreword to the annual report that one of the key roles of Seda was to reduce the mortality rate of start-up enterprises which is very high in SA, especially in the first year of operation. He noted that about 71.4% of clients supported through the Seda technology programme survived the crucial first two years of operation.
The government and Seda are also focusing on the creation of incubators. Ten were created last year, bringing the total to 42 which Mr Davies said supported 2,282 small enterprises last year and created 2,301 direct jobs.
Mr Davies also said he wanted to see more incubators established in collaboration with the private sector and encouraged universities and science councils to host incubators concentrating on the development of hi-tech and high-growth sectors.