Displaying items by tag: Small Enterprise Development

The paper presents significant new insights for Policy Makers, Practitioners, Educators, and Researchers into the socio-economy of agglomerated SMEs in developing country context. Using mixed methods of inquiry and concurrent triangulation approach this paper profiles the socio-economy of the internationally competitive textile industry cluster of Faisalabad in Pakistan to establish the validity of the concept of clusters in the context of developing economies and seeks new insights into the phenomenon. The paper also investigates the impact of clustering on the performance, governance, organization and entrepreneurial management practices of the constituent SMEs. The methods employed for research include analysis of secondary data, survey of the textile firms and in-depth semi-structured interviews.

Key learning points of the research are:

1. Cost reductions and information spillovers facilitated by the community ties and the shared local identities were the dominant type of advantages for the agglomerated firms. They largely arose at the level of transactions in goods and services, and to a lesser extent in the transformation of inputs into output. Vertical cooperation, rather than horizontal, was mostly prevalent in the cluster.

2. In the emergence phase of the cluster factor (input) conditions were more dominant. After three decades of growth, however, extensive co-location of related and supporting industries became, and remains, the dominant factor in the success of the industry in the region.

3. The developing economy cluster lacked strong institutions and infrastructure. Selfreliance of the entrepreneurs and the collective action, however, mitigated the aspects of the lack of cluster specific public goods. The Government's initiative and development efforts were mostly passive but still the national industrial policies were instrumental in spurring explosive growth of the small weavers in the region.

4. The paper also provides new insights on the role of the traders in the functioning of the cluster. They helped the small enterprises to overcome the growth constraints and had supported them to compete in distant markets, nationally and abroad. The clustered SMEs are also different from non-clustered firms in terms of average size, governance, human resource practices, marketing efforts, financing, and operations management.

The research process underpinning this article was focused on casting some light on factors influencing the way in which developing countries can enhance linkages between Transnational Corporation (TNC) Foreign Direct Investment (FDI) firms and domestic small and medium enterprises (SMEs). It sought to do this through identifying the major lessons from SME-TNC linkage programmes from three South African Development Community (SADC) case studies: Mozambique and the Mozal aluminium smelter; Lesotho and the clothing and textile investment related to the African Growth and Opportunity Act (AGOA); and South Africa's experience with SME suppliers and Toyota. The process of securing developmental impacts from FDI for developing countries has been a considerable challenge for many countries and has become a greater imperative in a context of relative declines in official development assistance in the past decade. Other authors have explained how FDI can compensate for domestic savings shortfalls and reduce BOP imbalances. This study tries to explore some ways in which FDI can contribute to lasting structural change in developing country production and productivity dynamics.

Siyakhula, or the Western Cape Bus Operators’ Transport Cooperative Ltd, operates within the bus sector of the transport industry. A brief description of the sector follows in order to contextualise the operations of the cooperative.

The transport, storage and communications sector increased its share in real output growth in the Western Cape from 8% in 1995 to 11% in 2002. However, the sector’s growth was due primarily to high growth in the communications sub-sector rather than within the transport sub-sector. The total income of the transport sector was estimated at R14-billion in 2002.

A review of the public transport system in the Western Cape showed that scheduled bus services in the province, particularly in the Metro, declined dramatically over the past decade in terms of the extent (or coverage) of routes, frequency and quality of services. This was largely due to the impact of poor service levels coupled with increased competition from minibus taxis providing commuters with a convenient alternative.

There are about 22,000 buses in the transport industry in South Africa of which approximately 17,000 are involved in formal public transport activities (i.e. for reward/subsidy). The other 5,000 buses are found in commerce and industry and government institutions where they are mostly used for in-house purposes (i.e. not for reward/subsidy). Within the industry, it is possible to distinguish between the big operators, such as Putco and Golden Arrow, and the small operators who own between one and 30 buses.

The public transport buses provide direct employment to about 30,600 people throughout the country with about 153,000 people indirectly dependent on the industry (or directly related to employment in companies). The industry also supports a large number of suppliers, such as bus and chassis manufacturers, fuel and tyre companies, that are in some way dependent on the industry for employment. The public transport operators undertake approximately 816 million passenger trips per annum.

The public transport industry is represented by the Southern African Bus Operators’ Association (SABOA). SABOA was formed as a national body in 1980 by the five leading bus companies in order to protect their interests as subsidised transport operators by the Department of Transport. SABOA has gone through a significant transformation and now represents about 76% of the public transport fleet.

Members are offered the following services by SABOA: commuter, contract, learner, organised party, charter and tourism, cross border (international), and scheduled coaches. Given the broad membership of SABOA, its profile could be regarded as representative of the industry as a whole, as evident in Table 1.

This executive summary is not presented in the usual manner of summarising the findings of each chapter of the report. The complexity and detail covered in the report, and the nuances in the debates, makes such an option impossible. Rather, a brief overview of the key issues and approaches is presented as a separate think piece.

This study was commissioned by the Presidency as a follow up to the Review of Second Economy Programmes conducted by the Second Economy Strategy Project. In the Review, it was noted that while social delivery programmes targeting poor people had largely been successful and implemented at scale over the past 15 years, the same could not be said for economic programmes aimed at creating market based employment opportunities. Generally, these latter programmes were found by the Review to be highly project focused, not scalable and, as a result, only reached a small number of direct beneficiaries. The Review cited six contributing factors to the modest success of these economic programmes. One of the cited problems was market access for small and marginal enterprises. It was that broad issue which framed this study.

More specifically, the terms of reference required that the study contemplate mechanisms to support a change in the trajectory of small marginalised producers which will lift them out of poverty. This trajectory change is based upon exploring what it would take to shift these producers away from selling to local, thin markets in favour of selling their outputs to external, developed markets – on fair terms. The terms of reference proposed the use of value chain analysis as the theoretical construct upon which the study is based, and very importantly, that it focus on what kinds of systemic-level changes would facilitate such linkages or allow them to take place at scale.

The study is designed to deliver two outputs. The first output is a linkage framework which will guide policymakers, researchers and practitioners in identifying the systemic issues which consistently, across sectors and nations, constrain marginalised producers from entering deeper and more established formal value chains. The identification of these issues, using value chain analysis, provides a list of issues which any policy intervention will need to address. The second output of the study is to stimulate policy debate in this area by suggesting new and novel approaches to possible linkage strategies. Two strategies are presented, although, an infinite number of strategies could emerge from the framework. The terms of reference are clear that the strategies presented in the second output do not need to be developed to the point where they are ready for programmatic roll out, but should rather catalyse debate. In addition, the terms of reference remove the need for the strategies and framework to deal with all areas of second economy production and poverty, because this study sits alongside other work streams all dealing with different aspects of the challenge.

Value chain analysis has been the cornerstone of the study. The appeal of value chain theory to our linkage study is fourfold.

Firstly, value chain analysis emphasises the issues of governance and power in markets which provides us with important information on the advantages and disadvantages of entering a specific value chain and different realities which will be experienced at different links within a given chain. Importantly, governance and power also direct our attention towards understanding how and why barriers to entry are created by value chain controllers and how these inhibit, but also potentially create, opportunities for small and marginalised 5 producers. Understanding how and why barriers are created and who ‘controls’ these barriers is crucial if one wishes to breach or harness such barriers.

The second appealing feature of value chain analysis is that it directly addressed how and why economic and other rents are distributed across a chain. By understanding which activities are ‘well’ rewarded along a chain, and which activities attract poor returns, we are able to develop a feel for which types of activities in the value chain that are likely to attract a return sufficient to positively impact on incomes and returns and which activities are like to result in immiserising growth. This is a crucial point because linking marginalised and small producers to developed value chains is not a guarantee that the livelihoods of such participants will improve. It is possible to increase such linkages without improving income generation or returns to small producers. As such, chain activity and product selection within a given power and governance environment must be carefully considered to ensure that the created linkages do in fact result in improved circumstances for small producers.

The third appealing feature of value chain analysis is that product and/or process upgrading is an intrinsic part of the theory. Firms go to the trouble and expense of implementing governance structures in order to assure themselves of access to the right goods, of the right quality, at the right time. As such, lead firms often see investing in their suppliers as a sound business decision and may either offer embedded services or facilitate the access of suppliers to appropriate upgrading services. The fact that upgrading to meet standards and critical success factors is intimately tied to governance and the exercise of chain power means that at least some of the supply side issues which will need to be dealt with in relation to small, marginalised producers can be dealt with endogenously i.e.: a successful linkage programme will by its nature incorporate some upgrading within the linkage itself, thereby decreasing the need to provide extensive, external supply side support over and above that provided by the core economy linkage partner.

The final appeal of value chain analysis is the fact that it is a demand side approach. For too long, policies, programmes and strategies in South Africa (and the rest of the world) have been supply driven, often resulting in production and productivity improvements in small and marginalised economic activities which do not translate into improved livelihoods; either due to a lack of final demand or low prices/returns earned. By adopting a demand side approach, we improve fundamentally the probability that if a linkage is successfully created, the activities or products of such producers will have an effective market in which to sell their outputs and services at a price that will improve their income and return earning potential.

These four appealing features of value chain analysis have motivated us to use value chain analysis as an appropriate construct on which to base our framework and strategic thinking. Essentially, these features offer us a consistent and rigorous methodology with which to isolate and express the crucial questions that will need to be answered in any attempt to link, at a systemic level, mainstream and marginalised economy players in South Africa.

Using value chain analysis for this study has not, however, been a simple task. Value chain theory is based on investigations of a specific product or sector, in a specific location, with specific actors, at a specific time. It is an empirically driven analysis. In our study, where we are searching for systemic obstacle identification and systemic solutions to obstacles, this sector specific approach creates difficulties in terms of the level of analysis.

To counter this, a framework has been developed, and strategic options compiled, based on cross-cutting issues. The study looked at hundreds of case studies and specific sector value chain analyses undertaken in scores of countries. Surprisingly, the same issues arose time and again. This leant credence to the study’s assertion that, irrespective of sector, some characteristics of lead firms in the mainstream economy, and some characteristics of small producers in the second economy, lead consistently to the same obstacles to successful linkages. As such, we identify these cross-cutting issues as systemic in nature and believe that they reveal the key constraints which must be addressed in order to implement a successful linkage strategy.

In 2005, the Small Enterprise Development Agency (seda) - the dti's newly established agency for supporting small business - tasked TIPS to carry out a second annual review of South Africa's small businesses as part of its mandate to support the growth of small enterprise in South Africa, to help create a better regulatory environment for small enterprise, and to encourage a culture of entrepreneurship.

The Annual Review of Small Business in South Africa 2004, this time published in two parts - A Statistical Review and a Qualitative Review - was launched at the first annual seda National Small Enterprise Summit in November 2005. These Summits aim to review the progress made in small business development, and to share best practice in this field.

The Department of Trade & Industry's (the dti's) Enterprise Development unit is tasked with developing policy and strategy for the small business sector. The objectives of government policy and strategy on enterprise development are empowerment, economic development and job creation. Much progress towards meeting these objectives has been made over the first decade of democracy in South Africa, but challenges remain.

In assessing the progress made, it is important to provide a formal mechanism for monitoring and evaluation of government's overarching strategy towards small business development and to allow for feedback on the outcomes of government strategy at various levels household, sectoral, regional and national.

In 2004, the dti commissioned TIPS as an independent, credible institution not directly involved in the delivery of SMME services to undertake a broad-ranging, qualitative assessment of the outcomes of government's policy, strategy and initiatives in enterprise development.

The first annual assessment of the impact of government policy in this key dimension of government activity, the Annual Review of Small Business in South Africa 2003, was published early in 2004. This Review addressed what has long been a critical weakness of research efforts around SMMEs: the lack of longitudinal or time-series data illustrating the effect of government's enterprise development strategy over time.

Moreover, the Review also focussed on the increasingly desperate need to develop a consistent dataset of SMMEs that have been interviewed repeatedly over time, which thus allows the dti to access a wealth of analytically sound information about how SMMEs develop in different economic climates and their support needs at different times in their development.

TIPS contributed a chapter to this book published by Oxford University Press on International Marketing. TIPS wrote the chapter on Exporting for Small Businesses.

The book is aimed at undergraduate and graduate international marketing students but it also a ready reference and guide to exporters and international marketing practitioners.

For more information on international Marketing, please visit www.oxford.co.za/cws/commerce/international_marketing/316236.htm

The aim of this seminar was to develop a rigorous economic framework to evaluate the SMME sector in South Africa. There is a rich tradition of SMME work in SA and our aim was not to simply reproduce another SMME report. Instead, to date the synergies between the mainstream economy and the SMME sector have been rather weak and the aim of the project was to simply contextualise the SMME sector in the larger economic debate in the country.

The food processing sector is widely regarded as having the potential to generate economic growth, entrepreneurial opportunities and employment (FAO, 1997; CIAT, 2002; Lambert, 2001; McCormick and Atieno, 2002). In developing countries the interest in agro-processing is associated with its potential for generating demand amongst smallholder farmers, upgrading primary production through small scale food processing, and also improving food price stability and food security (Cardoso, 2000; Saasa, 2000). Indeed, in 1997 the Food and Agriculture Organisation's annual State of Food and Agriculture report argued that 'because of its high degree of interdependence with forward and backward activities, agro-industry can play a very important role in accelerating economic activity' (FAO, 1997, 8). The FAO also pointed out that agro-processing was suited to developing country contexts due to the fact that processing plants are not always scale dependent. Small operations, they argued, may be as economically efficient as larger plants which can take advantage of economies of scale (FAO, 1997).

The development potential of agro-processing in South Africa has been recognised for some time. In the period immediately before the country's first democratic election, the Macro Economic Research Group (MERG, 1993) suggested that new policy perspectives be developed for the manufacturing-agricultural complex, a group of industries that reflect the complex and dynamic linkages between agriculture and the manufacturing sector. Their evidence based on data from the late 1980s suggested that the manufacturing-agricultural complex accounted for 28% of manufacturing employment, 31% of manufacturing production, and almost 25% of the manufacturing sector's contribution to GDP. Based on this analysis, they recommended a policy for targeting investment in agro-industry (MERG, 1993). More recently the Department of Trade and Industry — through its Integrated Manufacturing Strategy — identified agro-processing as one of five key sectors of the economy capable of stimulating growth and generating employment (Machaka and Roberts, 2003). Interestingly, the DTI also stressed the importance of the food sector in value addition, food price stability and food security (DTI, 2001).

The ongoing interest in agro-industry internationally and within South Africa has coincided with significant changes in the structure of the food system in developing countries. The key driver of change in agrifood markets is the concentration and expansion of retailing combined with foreign direct investment in the food processing sector. There is now a growing body of research that explores the implications of concentration in retailing and processing for farmers and food processors (Dries et al, 2004; Weatherspoon and Reardon, 2003; Reardon and Berdegue, 2002). This research suggests that while urban based consumers are likely to benefit from modern retail structures, the same cannot be said for small scale farmers and food processors. With few exceptions (Dries and Sinnen, 2004) small farmers and small and medium sized processors are excluded from these chains because they are unable to meet the volume and process requirements involved in supplying retailer driven chains. Instead, retailers rely increasingly on larger food processors who can meet the volume demands and the food safety and quality specifications required by large retail chains. These changes in the agrifood system pose considerable challenges to both governments and donors interested in supporting small scale food processors.

This paper explores the development prospects of small, medium and micro enterprises in South Africa's food processing complex. For several reasons, this is an important time to be considering the development prospects of SMEs in this sector. First, the deregulation of agricultural markets from the late 1980s and early 1990s has opened many new opportunities for small and medium sized processors, but we have little insight into how these businesses operate in a competitive environment dominated by large integrated processing companies and powerful retail chains. Second, the Department of Agriculture and Land Affairs has recently released its black economic empowerment proposals for agriculture (NDA, 2004a). While much attention has focused on the land ownership implications of the proposed AgriBEE, there has been very little discussion about its proposals for agri-enterprises, which includes food processors. The AgriBEE suggests that 50% of preferred suppliers be companies owned by black South Africans and local SMEs by 2010. This is a significant intervention given that most preferred suppliers for retailers are large, integrated food processing companies.

This report is based on secondary sources on South Africa's food sector and a non-random sample of 30 small scale food processors. The findings stress the growth opportunities and challenges of SMEs in this sector given the concentrated structure of retailing and food processing. The first section of the paper reviews the international literature on agrifood restructuring in the developing world. This section emphasises the shift to buyer-driven food chains and the implications of this change for small and medium sized food processors. The second and third sections of the paper provide a profile of the food processing sector and an analysis of its recent economic performance. In the fourth section of the paper, the characteristics of food processing SMEs are discussed followed by a detailed exploration of the growth challenges they face. The concluding section suggests support mechanisms for these enterprises in the light of their growth challenges.

For the purposes of this report, food processing is defined using the Standard Industrial Classification codes 301 to 304. These include manufacturing, processing and preservation of meat, fish, fruit, vegetables, oils and fats (301); manufacture of dairy products (302); manufacture of grain mill products, starches and starch products and prepared animals feeds (303) and manufacture of other food products (e.g. bread, sugar, chocolate, pasta, coffee, nuts and spices) (304).

One of the key issues that has been raised in terms of the analysis of small enterprise (SMME) support programmes in South Africa is that often support initiatives have been in the form of 'generic' packages that overlook the specificities of particular sectors. Although it has been recognized that the SMME economy in South Africa is extraordinarily diverse and composed of different groups of enterprises which require different kinds of support intervention, currently there exists only limited research on the specific support needs and constraints that challenge SMME development in particular sectors of the economy. This report is part of a series of studies to be undertaken on the specific challenges that exist in terms of SMME development in particular sectors of the South African economy with special attention to the priority sectors which have been identified in the government's Microeconomic Reform Strategy and the DTIs Integrated Manufacturing Strategy.

The focus in this investigation is upon the tourism sector , one of the DTI priority sectors - and the specific issues that confront tourism SMME development. For the period 1998-2002 of all the priority sectors tourism exhibits the strongest growth in terms of absolute numbers of formal sector employees. Indeed, tourism is the only sector for the period 1998-2002 that shows both positive growth in employment and contribution to GDP. Whereas for several other priority sectors the trend has been for employment to decrease whilst contribution to GDP continues to grow, tourism has recorded substantial improvements both in terms of employment and GDP contribution (Monitor, 2004).

It is clear that, in terms of the future development of the tourism economy in line with government objectives of transformation and Black Economic Empowerment, the promotion of SMMEs is an issue that is of critical concern for policy-makers (TBCSA, 2002, 2003, Rogerson, 2004a, 2004b). Despite the importance of SMME development in the contemporary South African economy it remains that relatively little research has been undertaken on the issues and developmental challenges that confront tourism SMMEs. This paper aims to present the findings from a number of recent empirical investigations and review material concerning the progress and problems of tourism SMME development in South Africa. The essential argument that is developed here is that the nature and problems that face tourism SMMEs in South Africa exhibit certain similarities but also several important and distinct features to SMME development in other sectors of the South African economy.

The paper aims to contribute towards a body of knowledge and more nuanced understanding of the South African SMME economy with the additional goal of feeding into a rethinking of support interventions. The analysis unfolds through five major sections of material.

• First, a review is undertaken of international writings and debates on small tourism firms. This review provides a wider context within which to view the South African experience and challenges of tourism SMME development.
• Second, clarification is provided of the definition of tourism, its key features and performance in the South African economy.
• Third, the position and importance of developing tourism SMMEs in South Africa is examined.
• Four, new research material is presented which analyses the major problems that face different types of tourism SMMEs in contemporary South Africa.
• Finally, by way of conclusion, a select review is offered of certain support initiatives to assist SMME development in tourism

In 2004, TIPS also undertook a study to document public sector support to the small enterprise sector over the last decade for the dti.

The Review documents 10 years of evolution of the dti's small enterprise support programmes and its overall strategy, leading to the current 'Integrated Strategy for Small-Enterprise Support', and plans for the next 10 years.

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.

The South African financial sector, defined as the banking, insurance and securities industries, has contributed to the growth of the economy since democracy in terms of growth in assets and value added, although its provision of financial services to the poor has been less impressive. The article takes a broad approach to evaluating the performance of the sector in terms of the balance between stability and innovation, and the balance between efficiency and allocation of resources. While the financial system has proved to be stable, innovation has generally been for the high-value, contested market. In terms of cost efficiencies and provision of services to small businesses and poorer consumers, there is room for improvement.

Small Business Entrepreneurship haves been seen as a hub in generating income for the majority of urban dwellers with no formal paid employment. In Tanzania, entry into small business entrepreneurship is usually not seen as a problem. One can start small business at any time and in any place. However, the development of this informal sector has been profoundly characterized by two parallel phenomena which are perhaps contradictory in character. One is the increasing politicization effort encouraging people to engage in Small and Medium Entrepreneurship (SME). This has led to the proliferation and mushrooming of small business most of which are in the form of petty trading, at least everywhere in the urban centres. The second is the parallel increase in events suggesting prevalence of crime and bureaucratic hurdles which affect SME and counter reaction from the small traders. While the second can be characterized as due to the increasing repressive action by city authority over vendors, the counter reaction behaviour of itinerant and small traders toward city authority is also evident in most urban areas. Generally, the sector is characterized by constant tension and feuds between small traders and urban authorities. Drawing on research findings, the present paper challenges the possibility of reducing poverty in Tanzania using the strategy of developing the small business entrepreneurship under the situation where there is an increasing level of petty crime and bureaucratic hurdles. It is argued and indeed, concluded that if the present intricate and controversial situation surrounding SME and small business is not reversed, if not brought to rest, the development of SME is on slippery slope. The option suggested to tame the conundrum includes, developing discourse portfolio between small traders and bureaucratic authority and authorities formulating policies that can promote development of small business entrepreneurship.

Ethiopia is one of the poorest and least developed countries in the world. The country had a real per capita GDP of less than US $100 in 1995, and over 60 per cent of its population lives in absolute poverty. The problem of rural poverty and underdeveloped agriculture are closely linked with both micro as well as macro dimensions. To tackle the challenges of poverty in Ethiopia, the policies need to be initiated both macro and micro in nature and especially the macro-micro linkages are extremely crucial. In order to formulate and implement the macro policies effectively, there is an urgent need to first understand the ground realities of the Ethiopian society in general and of agricultural economy in particular. The micro-level study has been conducted in North Wollo zone, situated in the north-eastern part of the country. The linear programming model was used to study the existing farm income and scope of improvement through optimal and alternative plans. The optimal solutions in both base model and alternative optimal plan resulted in an increase in gross margin. This was obtained by using improved seed with fertilizer. Thus, the availability of improved seed, fertilizer, working capital and other inputs is crucial, i.e. modern inputs should be delivered at right time and place with a reasonable cost, so that all farmers can afford to use it. Agricultural and poverty related macro policies and strategies were reviewed to highlight that how effectively the ground realities of smallholders were addressed through the macro level government agricultural policy initiatives in Ethiopia. The utilization of improved seeds has not exceeded 2 per cent of the overall seed requirements of the country. Hence, pragmatic seed policy needs to be formulated and implemented effectively to make available improved seeds to the farmers for improving their income and reducing rural poverty. The macro fertilizer policy should be designed to encourage the farmers to make use of this crucial input for raising their income and reducing poverty. Contrary to it, the present macro policy of decontrolled fertilizer has discouraged the farmers to adopt crops with fertilizers. The credit extended by Commercial Bank of Ethiopia has been increasing yet it should be taken up on priority at macro level in order to improve the economic conditions of rural folk and hence reducing the poverty in the country. The Small Scale and Micro Industry Development Strategy (SSIMD) and related programs initiated by Government of Ethiopia are very much in line with the micro level requirements. Such efforts must be further strengthened for generating rural non-farm employment and hence tackling the problem of rural poverty in the country. On scarce land, improved technology needs to be made available to farmers through macro policies for intensive utilization of the existing land. Besides, government and NGO's should promote subsidiary activities requiring less land such as poultry and bee keeping. Land-use-planning needs to be initiated to advise the smallholders to use their scarce land only for most desired enterprises and abandon the practice of growing trees like eucalyptus. Besides, Intensive Agricultural Technology Dissemination Programs needs to be chalked out and implemented to improve the efficiency of smallholders farming systems in terms of increasing farm income and reducing rural poverty in Ethiopia.

In literature or current economic life, the concept of 'small businesses' often covers different implicit areas of focus. The lack of clarity about what is understood as a small business can affect the reliability of research findings. Not surprisingly, since there are different concepts of businesses, there are also different qualities of data.

Lack of data is particularly acute among unregistered businesses that employ only casual staff or none, are only a minor side occupation of their owner, or operate on an ‘on-and-off’ basis. While in developed countries these cases can be considered as marginal, in South Africa many of these informal and micro enterprises are key to the livelihoods of millions of people.

Generally speaking, the methodology for this Review was defined according to three principles:

• A multiple data source approach
• Minimisation of the effect of short-term fluctuations
• Minimisation of extrapolations.

The unemployment rate among semi- and unskilled workers in South Africa is over 50%. This high rate can be attributed to various factors, including political decisions of the past, educational inequalities, and poor economic growth. These factors have contributed to the structural unemployment problem in South Africa. The real cost of labour and in particular that of semi- and unskilled workers has also increased dramatically. This could be a further incentive for firms to hire fewer semi- and unskilled workers.

Investment in human capital is imperative, as this will increase the income earning potential through higher skilled employment. However, in the short run this may not be enough. A wage subsidy has been proposed as a further incentive for firms to employ more semi- and unskilled workers. This type of subsidy lowers the cost of employment to the firm while maintaining the wage of the worker. It is a tool that is equally useful in reducing unemployment and improving the distribution of income, particularly when semi- and unskilled workers are targeted.

The outcome of various wage subsidy experiments are analysed using a CGE model. This class of multisector model is useful for evaluating the impact of policy tools that can have economy-wide effects. The simulations suggest that employment can be raised quite significantly, with important benefits especially for poor households.

The cost of employment subsidies can be substantial, depending on the extent of the target group. However, it is argued that the benefit of increased employment justifies the cost. It is shown that although the negative indirect effects of raising funds for the scheme, either via an increased budget deficit or increased taxation, counteract the positive impact of an employment subsidy scheme, the net overall benefits are positive. All modelled household groups increase their income, while all industries are able to employ more workers than before.

The first section sketches the well-known argument that there is a potential clash between trade policy reform, employment creation and poverty alleviation in the context of economic integration in Southern Africa. The argument is developed in the wider context of the endowments and accumulation of key resources in Sub Saharan Africa since 1960 and the consequences for the pattern of trade and growth. Unilateral and multilateral approaches to trade policy liberalisation are then discussed in the context of some macro structural characteristics of Southern Africa. The known wide disparities in the level of development between countries sharpen the potentially uneven distribution of benefits of trade policy liberalisation, whether unilateral or multilateral.

Section 2 looks at some of the early research on the employment impact of economic integration in Southern Africa, the Southern African Development Community Free Trade Area. The early datasets used to estimate the employment and later, welfare response to different strategies towards economic integration, highlighted many of the issues that have been subsequently researched using better data and better economic policy models. Principally, the early results showed wide variability of the distribution of gains from a SADC FTA both within and between countries. However, because of data gaps and unreliability and the use of simpler models, the particular findings were always subject to strong qualification.

In section 3, the 1997 dataset from the Global Trade Analysis Project (GTAP) was used to develop the general arguments about resource endowments for Sub Saharan Africa discussed in section 1 in the context of a detailed analysis of the structural characteristics of seven SADC countries. The argument was further developed using the GTAP standard Computable General Equilibrium (CGE) model to explore the poverty and employment impact of unilateral, regional and global trade policy reform packages. Detailed calculations of poverty impacts were only possible for Zambia. It was found that the unilateral trade policy reforms in Southern Africa had powerful welfare and employment benefits, as did global reforms. Regional reforms such as the SADC FTA had useful but much smaller benefits. Typically, the country results were polarised with the weaker countries benefiting least from the reform packages

The links between BEE and competition policy are outlined in the Competition Act of 1998. It is recognised in the preamble to the Act that competition law has to specifically address the excessive concentration of ownership and control of the economy and the unjust restrictions on the full participation of black people in the economy that arose from the various Apartheid laws. Thus, the Act allows for exemptions from the provisions on anti-competitive practices where such practices promote the ability of black-owned and controlled enterprises to become competitive. Furthermore, decisions on mergers on public interest grounds made by the Competition Commission and Tribunal take into account the effect that the merger will have on the ability of black small businesses or firms to become competitive.

Although the objectives of competition policy seem very clear in theory, it is unclear what has been happening in practice. The paper aims firstly to look at the effect accepted BEE policies have had on the application of competition legislation. A critique of the relationship between the two will be undertaken and finally recommendations will be made on how practice can be modified to match more closely with theory. The methodology that will be used will include a literature review as well as an analysis of relevant cases that have been brought before the competition authorities.

This paper looks at social mobility in the context of a growing economy. The nature and extent of Black affluence in South Africa provides an indicator of the impact of efforts to eradicate the remnants of apartheid-era racial discrimination in the South African education system and labour market. Most studies examining social mobility and inequality in South Africa have looked at the bottom of the income distribution, investigating changes in the severity and also the racial incidence of poverty. This paper explores the same topic by studying the top of the income distribution. Focusing on the Black members of this group of affluent, this paper hopes to make some contribution towards an improved understanding of social mobility and inequality in South Africa

Firstly, we attempt to identify the features that distinguish the Black upwardly mobile from those parts of the Black population seemingly trapped in poverty, starting with a descriptive analysis of the affluent. Using the 2000 LFS/IES and the 1995 OHS/IES, the study examines the profile of the richest 15% of household in South Africa. In the second section of the paper logit and multinomial logit models are used to consider the impact of spatial features, household characteristics and the age, education and occupation of the household head on affluence. We also investigate how affluence predictors vary between different race groups. The third and last section is devoted to exploring the spending patterns of the Black affluent.

The analysis here confirms many of the traditional views of social mobility. The paper finds a strong association between geography, demographic profile and social mobility that is robust across population groups. The empirical evidence cited is consistent with convex returns to education and a substantial role for quality of education.

Also, we find that the Black affluent exhibit distinctive spending patterns. Compared to the affluent from other population groups, the Black affluent spend more on appliances and furniture and less on personal computers, telecommunications and domestic workers. This may be due to their relatively new status among the affluent.