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Chapter 13 - Small Business Law

Support for SMMEs

SMMEs (small businesses) often need help with problems such as:

• How to write a business plan
• Where to find money to start a business
• Where to sell their goods and services
• Training for staff (for example, in bookkeeping or computer skills)
• How to tender for a contract

The government department primarily responsible for helping SMMEs is the Department of Trade and Industry (DTI). The DTI has set up organisations to help SMMEs but there are also many non-profit organisations that provide assistance. 

The National Small Business Amendment Act (No 29 of 2004) provides for the establishment of the Small Enterprise Development Agency (seda) and the incorporation of organisations such as Ntsika Enterprise Promotion Agency, the National Manufacturing Advisory Centre and any other designated institutions into seda. SEDA is part of the DTI group of institutions.

The Small Enterprise Development Agency (seda)

The Small Enterprise Development Agency (seda) was established in December 2004 in terms of the National Small Business Amendment Act (No 29 of 2004). This law merged the previous small enterprise development agencies Ntsika Enterprise Promotion Agency, NAMAC Trust and the Community Public Private Partnerships (CPPP) into a single small enterprise support agency.  SEDA is the DTIs agency for supporting small business in South Africa.

The mandate of seda is to design and implement a standard national delivery network that must apply throughout the country. Its role includes the support and promotion of co-operatives, particularly those found in rural areas.

The work of seda is carried out in line with the Department of Trade and Industry's Integrated Small Enterprise Development Strategy, which aims to:

• Strengthen support for SMMEs' access to finance
• Create an enabling regulatory environment
• Expand market opportunities for specific categories of small enterprises
• Localise small business support through a grid of seda-coordinated information and advice access points
• Initiate a national entrepreneurship drive and expand education and training for small business
• Co-fund minimum business infrastructure facilities in local authority areas across the country

In terms of this strategy, seda's delivery network must reach all regions of the country and integrate government-funded small enterprise support across all tiers of government.

Regarding business infrastructure facilities, the integrated strategy also requires linking up closely with current local economic development (LED) initiatives in all municipalities.

For information on seda and the services and support it supplies, view the website: www.seda.org.za

Khula Enterprise Finance Ltd (Khula)

Khula was established as an independent agency of the DTI to facilitate access to credit (loans) for SMMEs through various agencies. These agencies include commercial banks, Retail Financial Intermediaries and micro-credit outlets.  In other words, Khula lends money to these agencies to enable them to lend to SMMEs. A list of Retail Financial Intermediaries can be found on the Khula website: www.khula.org.za. A summary of Khula products can also be viewed on this website.

Contact details for Khula are as follows:

Khula’s website: www.khula.org.za
Khula's toll-free help-line: 0800 11 88 15.

Thusong Service Centres

A Thusong Service Centre is a one-stop service centre providing information and services to communities. These centres can provide a variety of services depending on the needs of the surrounding community.  The services that would be relevant for small businesses are as follows:

• Local Economic Development (LED) services - Small business advice and development
• Business services and community opportunities - Small, medium and micro enterprises

For more information view their website: www.thusong.gov.za

Tender Advice Centres

Tender Advice Centres (TACs) provide support to small businesses such as assisting with accessing tender opportunities and completing tender documents. The tender-related services they supply include:

• explaining invitations to tender
• assisting in completing tender documents (including advice on how to enter contracts and how to work out pricing)
• counselling (pre- and post-tender)
• providing information on procurement and tendering policies
• holding tender awareness workshops, seminars and forums.

Other business help they provide includes:

• information on business opportunities
• advice on regulations and legal requirements (for example, VAT registration)
• access to databases of small businesses and suppliers
• referrals to specialist training programmes
• project management assistance
• training needs assessment
• co-ordination of training programmes
• evaluation of the capacity of small businesses to deliver on contracts
• subsidised skills-development programmes.

Example The Department of Public Works wants to build a community hall in Bonteheuwel, in the Western Cape. The Department advertises in newspapers and in the government gazette. In the advertisement the Department asks builders to tender for the job. This means that a builder must write down how he or she will go about building the community centre and how much it will cost.

National Small Business Advisory Council

The National Small Business Advisory Council was established in 2006 in terms of the National Small Business Act. In terms of the Act, the council must perform various functions such as advising the minister of the DTI on issues affecting small businesses, promoting the interests of the sector and monitoring the effectiveness of government policies, programmes and institutions designed to develop the sector.