Enterprise Development Is An Important Tool

Economic Growth Relies on ED

Small businesses need assistance so as to contribute to the economy
small business.jpg
The local government recognises that small businesses are vital contributors to the health of the economy and to diversity of opportunity in our society. Small businesses boost productivity, increases competition and innovation, creates employment and prosperity, and revitalises our communities.

Unemployment having risen in the first quarter of 2010 with 0.9 of a percentage point to 25.2% according to Statistics South Africa (STATSSA) in SAPA (2010) is a wake-up call to all in South Africa. 

The fact is that all companies and organisations have within their structures a tool to make a difference and if all take up the challenge and use their resources the picture will look different. This tool, according to the Verwey (2011) is enterprise development. 

Economic growth is critical to addressing unemployment, gender equality, health and other poverty-related issues worldwide. Enterprise development (ED) is an important tool and essential element to economic growth. 

Raizcorp (2011) in an article entitled Enterprise Development Made Easy, defines enterprise development as investing time, knowledge and capital to help Small and Medium Enterprises establish, expand or improve businesses including empowering modest income-generating informal activities to grow and contribute to the local economy. According to the Tourism Empowerment Council of South Africa (TECSA), a company enterprise development policy should be developed with outcomes in mind such as:
steering the economy towards a stable environment that nurtures growth and increases the country’s economic competitiveness
fostering a synergistic relationship between private and public sector to embrace social investment as a common vision
fostering an entrepreneurship culture amongst previously disadvantaged groups.

Through enterprise development people can earn a living and rise out of poverty. In turn over time they create jobs as well as empower other individuals and the communities in which they live. Market development, commercial business services and social enterprise are part and parcel of Enterprise Development. 

Moreover it encompasses finance, entrepreneurship development, investment and growth in Small Medium and Micro Enterprises (SMMEs), including initiatives that range from enabling the start-up of small businesses to providing business skills development through training, mentoring, coaching. 

With large enterprises having restructured and downsized, SMMEs have come to play an increasingly important role in South Africa’s economy and development. According to the Department of Trade and Industry (DTI) small businesses represent 98% of the total number of firms and employ 55% of the country’s labour force, contributing approximately 24% of the total wage-bill. Small firms account for 35% of GDP overall (SEAF 2009).

Enterprise development is an inexpensive way to implement broad based black economic empowerment (BBBEE) but SEAF 2009 reports that it is not often seen as an option. Claasen 2006 states that Enterprise Development (ED) where big companies offer operational assistance to small, black-owned enterprises, is also a core component of the SA Government’s BBBEE strategy and globally recognised as an effective way of reducing poverty. It is not that companies and organisations are not interested in enterprise development, but the problem is that few have an understanding of it. 

Many companies are not sure how to integrate enterprise development into their transformation strategy. According to Empowerdex researcher Mrinal Patel, this is a pity, because developing black-owned and black-run businesses can be an inexpensive way for a company to implement an aspect of its transformation agenda.

The primary objective of the eThekwini Municipality is to develop an enterprise development strategy in order to capitalise on private sector involvement in economic growth and the reduction of unemployment. It is also necessary to develop a programme for the purpose of developing strategic partnerships with organizations which share Business Support mandates and who would like to contribute to the achievement of their own strategic objectives either through their community social investment programmes or through B-BBEE Performance scorecard fulfillment. Further, it is necessary for business support programmes to be accredited so that companies participation can be recognised as their enterprise development contribution.

Some of the programmes that will benefit from an enterprise development programme are as follows:
  • Sector Development Programmes
  • Women Empowerment
  • Strategic Partnerships
  • Support to Enterprises
  • Business Week.

Business support, markets and the Durban Tourism Unit is looking to secure partnerships with corporates to help them achieve their enterprise development contribution of the scorecard. For more information, please contact Dr Anneline Chetty on chettya@durban.gov.za.
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