Trade and Industry

Tuesday, 14 June 2005

Working Paper 8 - 2005: The Role of Provincial Governments in Supporting Small Enterprise Development

  • Year: 2005
  • Organisation: TIPS
  • Author(s): John Orford
  • Countries and Regions: South Africa

This paper considers the role of provincial governments in supporting small enterprise development. It is based on research conducted by the University of Cape Town's (UCT's) Centre of Innovation and Entrepreneurship (CIE). It was sponsored by TIPS (Trade and Industrial Policy Strategies), an independent non-profit research institution that is committed to assist government and civil society make informed policy choices, specifically in the areas of trade and industrial policy. In addition to drawing on ongoing research conducted by the CIE, including the Global Entrepreneurship Monitor (GEM) study, the paper summarises the results of discussions with small enterprise development policy-makers and stakeholders in three provinces ? Gauteng, KZN(KZN) and the Western Cape.

The paper begins by summarising key findings from the GEM study. GEM is an annual survey of entrepreneurial activity in over 30 countries worldwide. SA (SA) has participated in the study since 2001 and it now appears that the GEM measure of entrepreneurial activity provides a reasonably accurate measure of entrepreneurial activity, which does not vary significantly from year to year. Furthermore, SA's ranking relative to other countries is stable. One of the key findings from the GEM study in SA has been that the rate of entrepreneurial activity in SA is significantly lower than in other developing countries included in the study.

There are reasonably stable international and national patterns of entrepreneurial activity. An important predictor of whether or not an individual will be involved in starting or running an enterprise is whether or not they believe they have the skills to start a business. An important finding in SA is that we have a very low number of people who believe they are capable of starting a business. This appears to be related to problems in the education system in SA. A major theme in the GEM study in SA has therefore been education.