Building Limpopo’s small businesses
Province has its eye on developing rural areas, co-operatives and SMMES
The Limpopo Economic Development Agency (Leda) has been tasked with ensuring that small businesses in the province meet the standards that will enable them to benefit from government procurement.
The provincial department of economic development, environmental affairs and tourism (Ledet) has been allocated a budget of R1.3-billion for the 2016/17 financial year. The amount is set to increase to R1.4billion in 2017/18 and grow to a further R1.5-billion in the 2018/19 financial year.
The allocation will focus on initiatives that include development of manufacturing support centres, resuscitation of provincial resorts and creating sustainable jobs. But key to this is support to co-operatives and small, medium and micro enterprises [SMMEs].
Limpopo premier Stan Mathabatha said in his state of the province address earlier this year that government “will continue to support SMMEs and co-operatives to obtain growth, increase skills levels, and more importantly, create more jobs”. He also committed that at least 10% of government procurement to Limpopo will go towards building SMMEs and co-operatives.
“All major projects must have localisation procurement thrust to ensure that SMMEs and co-oper- atives are developed into credible suppliers,” said Mathabatha. He has tasked Leda to provide the necessary support to both the SMME and co-operative sectors. “An emphasis should be on bias to co-operatives in our villages and vast farmlands of Limpopo to stimulate the rural economy.”
To this end Leda, through its principal Ledet committed to increase the capacity and production levels of SMMEs through the provision of appropriate business development information during the recent Limpopo Economic Development Summit. It has also committed towards the co-ordination and integration of business development support, increasing competitiveness of businesses, access to local and international markets, financial resources and entrepreneurship development and promotion.
In his budget vote speech before the Limpopo provincial legislature in April, MEC for treasury Rob Tooley further reiterated government’s commitment to the support of small business. “We are convinced that with the amount of budget allocated to goods and services in this administration we must impact on the economy of this province by ensuring we purchase local and [particularly] from SMMEs and co-operatives.”
Minister of Finance Pravin Gordhan told Parliament in his mid-term budget speech last month that this year’s unusually difficult economic environment has landed many businesses in deep water. According to the Global Entrepreneurship Monitor Report for South Africa 2015\16, 62% of businesses closed for financial reasons last year, either because they were not profitable, or because they encountered problems in accessing financing to sustain the business.
But the good news for small businesses, said Gordhan, is that resources have been re-prioritised in the medium term for the small business development department, including efforts to strengthen agencies that support small enterprises. In February Gordhan said during his budget speech that R475million has been reprioritised to this department for assisting SMMEs and co-operatives.
In its efforts to increase the competitiveness of small businesses, Ledet has signed memorandums of understanding with Productivity South Africa and the South African Bureau of Standards.
The Limpopo Economic Summit heard that “more black people, and in particular women in rural areas and people with disabilities are forming and managing co-operatives”.
Ledet is currently monitoring the performance of 720 SMMEs and 240 co-operatives spread throughout the province. The department is also assisting 10 SMMEs and 10 co-operatives to access markets.
The provincial government together with Leda have partnered with the department of trade and industry (DTI) in an ambitious project to revitalise the Seshego Industrial Park. The industrial park located near Polokwane is undergoing a R21-million facelift as part of the first phase of the DTI’s R189 Industrial Parks Revitalisation Programme. The programme is aimed at promoting industrialisation, increasing job creation and stimulating the economy.
The initiative is seen as a step forward in addressing the lack of access to physical infrastructure which has been identified as one of the key contributors to business growth, especially in the small business sector, which contributes more than 50% of South Africa’s total GDP and more than 60% of jobs.