OVER TWO-THIRDS, or 68% of entrepreneurs that the Small Enterprise Development Agency (Seda) assists run businesses with four or fewer employees.
This is one of the facts to emerge in Seda’s 2009/10 Annual Report, released last month (SUBS: September) which also revealed that 50% of those it assists are women and that a further 35% are youth aged between 18 and 35.
The annual report also revealed that a further 29% entrepreneurs supported by Seda have between five and 20 employees, with the remaining three percent of clients employing between 21 and 50 people.
Absent from Seda’s support are medium firms, despite the agency’s often-made assertion to focus 20% of its support on medium enterprises.
Seda’s focus on micro enterprises has been criticised by Small Business Project (SBP) who last year questioned the government’s focus on these businesses above small businesses in the formal sector, saying there is little indication to suggest survivalist micro firms will create jobs.
But it turns out things are not too different at Brazil’s small business agency, Sebrae, which is also criticised for focusing too much on micro enterprises.
According to the agency’s former technical director Luiz Carlos Barbosa, 85% of Sebrae’s clients have four or fewer clients.
Luiz Sakuda, professor of entrepreneurship and innovation at FEI university, Sao Paulo said Sebrae’s open-door policy which meant it had to help any one who approached it, led to the agency helping many who weren’t entrepreneurs, but rather students or unemployed people.
Sakuda believes Sebrae should aim more of its support at those with existing businesses, but added: “It could be a lot better, but it is what is possible these days”.
In Brazil, small and micro enterprises contribute 20% of the GDP and employ 60% of the workforce. Small, micro and medium enterprises in South Africa contribute 35% of GDP and employ about 56% of the workforce.
José Marcelo Goulart Miranda who oversees the Africa section in Sebrae’s International Affairs unit admitted that a key challenge that support organisations face was whether to target the masses of informal or small enterprises or more sophisticated businesses which although are fewer in number, offer higher job creation potential.
A look at Sebrae’s client profile, from a 2007 Sebrae study entitled Factors of birth and death of small and micro enterprises, reveals that about 60% of entrepreneurs that Sebrae assists are male, averaging 38 years old.
These entrepreneurs are on average very skilled – with 79% having completed tertiary studies and 51% having previous experience in a private enterprise. There are no comparable figures from Seda in it annual report on the skills level of those it assists.
Returning to Seda, the most common type of interventions the agency carried out were for training in human resources such as start up and basic business skills courses (41%), assistance with marketing materials (33%), financial and legal assistance such as a once-off financial clean up (12%) and management training such as business plans and feasibility studies (11%).
The Small Enterprise Development Agency (Seda) last year reached 112,386 entrepreneurs and potential entrepreneurs through branches, events and training courses, down from the 199,830 individuals the agency attended to in the previous financial year.
The figure is disclosed in the release last month of Seda’s 2009/10 Annual Report, which also revealed that 23,874 clients received interventions from Seda, up from the 14,373 which received interventions in the last financial year.
In the last financial year Seda also held nine entrepreneurship awareness events and 81 workshops – 52 on franchise awareness and 29 on quality management and trained 18,271 clients in a business start-up course and 4,675 people in other courses.
But these figures are miniscule when compared to the number of entrepreneurs Brazil’s small business agency Sebrae supported last year.
A presentation by Sebrae made to the country’s parliament in May, reveal that the 38-year-old Brazilian agency – with which Seda already has a technical agreement to share best practices – assisted two million individuals last year.
Sebrae uses various ways to get to entrepreneurs – everything from television, radio, blogs and events and seminars to reach millions of Brazilian entrepreneurs.
Last year Sebrae held 52,121 workshops and seminars, 31,969 group classes, 1,200 events, as well as 2,019 festivals where 20,400 small business exhibitors were hosted.
Added to this it held 257,065 consultations and reached 282,300 participants in distance learning courses and another 131,000 university students from 2,339 institutions of learning took part in the agency’s competition, Desafio Sebrae.
A further 17 million tuned into Sebrae’s radio programme, 9.1 million users accessed Sebrae’s website – where about 30 000 videos were shown every month through Sebrae’s web tv and where 2.3 million visitors accessed Sebrae’s blogs.
The agency’s major focus is on business knowledge. For example Sebrae’s Federal District office offers 20 free seminars a month which usually ran for about 1hr 30 min and are each attended by on average 20 people, according to Ary Ferreira Júnior the superintendent for Sebrae District Federal.
The office is equipped with a library containing 6,892 book titles and 1,167 DVD and VHS titles on business support. Sebrae also has 356 titles of publications that are sold through the internet.
One of Sebrae’s state offices in the Federal District handles 50 400 walk-in enquiries, according to Ferreira Júnior. This figure is 45% of the numbers Seda handles in total, even though the area’s population (2.6m according to IBGE) is just five percent of the whole of South Africa!
Yet despite the seemingly sizeable support offered by Sebrae, José Marcelo Goulart Miranda who oversees the Africa section in Sebrae’s International Affairs unit said the Brazilian agency was not with out its critics.
Some, he said have called for Sebrae to close down, claiming that the agency’s reach – which Goulart pointed out was to about 14% of all small and micro firms – was not wide enough.
The agency’s aim according to a study it undertook entitled Factors of birth and death of micro and small enterprises, is for at least 33% of businesses to access Sebrae by 2010.
But if Seda is to reach more entrepreneurs something must be done to solve its funding constraints.
The agency is hamstrung by a budget of R485 million – a mere five percent of that of the R$2.5bn (R10.4bn) Sebrae had at its disposal last year.
Unlike Seda, which derives almost all its funding from the National Treasury, the Brazilian agency is funded by a tax drawn from companies and amounts to one percent of the amount each company spends on employee’s benefits.
Yet despite this Seda Chief Executive Hlonela Lupuwana said the figure of the number of businesses attended was unlikely to grow as the agency’s main aim would be to focus more on assisting existing clients to grow rather than on taking on more new clients.
Use of management system
Much of Sebrae’s success in carrying out projects lies with their innovative project management system called Sigeor, said José Marcelo Goulart Miranda who oversees the Africa section in Sebrae’s International Affairs unit says
Miranda was part of the team that originally developed and rolled out the system across the country to all Sebrae offices.
By going to www.sigeor.sebrae.com.br any member of the public, consultant or business owner is able to view the details of any Sebrae-related business support project or track the progress of each project. The site also allows for members of each project to post news, meeting agenda and training material.
Miranda said between 2004 and 2007 Sebrae spent about R$10m on developing and testing the system.
Apart from some technical glitches Sebrae faced when developing the site, the agency also ran up against resistance from some at the organisation towards the site. Some having to upload details to the site would waste time. External partners often argued that they didn’t work for Sebrae so why should they upload details to the agency’s site.
Miranda said it was only through numerous workshops – he himself held 30 or 40 workshops in two years in just four states – that partners were finally won over to using the system.
The model of management used by Sebrae is called Gestão Orientada para Resultados (GEOR) which suppliers hundreds of patnerships and projects of Sebrae allowing it to be co-ordinated, systemitised and updated in real time.
GEOR is transparent when it comes to showing how the resources of Sebrae’s budget are used, produces consitent indicators which show the progress of projects and the impacts produced on the community and regions where it takes place.
It allows adjustments and monitoring of the stages. Further the available information about the progress of the projects in all of Brazil gives velocity and spreads the good practices with reduced costs and time.
O Sigeor – Sistema de Informação da Gestão Estratégica Orientada para Resultados is the tool of support to take decisions of the GEOR projects.
It’s in the environment of management and collaboration it’s conceived to get something moving and support strategic decision of each project by means of management and monitoring of some through insitutional partnerships.
Seda has also developed a new customer relationship management system developed, will improve the quality of client data stored. An Improvement Assessment Tool was also developed.
Seda distance learning plans
Seda is looking at running distance learning courses and rolling out mass classroom-based mentoring sessions – two Brazilian interventions that the agency is looking to adopt here at home.
Seda spokesperson Marius de Villiers said the agency was currently looking at aspects of its in-house courses which lend themselves to distance education modules and added that it was being supported by Brazil’s small business support agency Sebrae with technical assistance to roll out group mentoring classes nationally in the “near future”.
Last year Brazil’s Sebrae assisted 282,300 participants through 1,500 distance learning classes. In all 97.2% of participants in these courses were satisfied or very satisfied with the courses, according to a presentation by Sebrae made to the country’s Chamber of Deputies, or parliament, in May.
The head of Seda’s learning academy, John Francis, said Sebrae’s distance learning university is looking to partner with Seda to develop programmes and pointed out that distance learning was a more affordable way to impart business knowledge.
Seda has already trialed another Sebrae intervention – that of training courses held to over groups of over a 100 at a time.
Paul Hoffman, acting head of Seda’s George branch, organised a group seminar in Mossel Bay in June for 300 unemployed people, after returning from a visit to Brazil in April and witnessing a business skills training session organised by Sebrae for 400 people.
Group sessions such as these make up an important component of Sebrae’s efforts to reach more entrepreneurs and potential entrepreneurs.
Only about a third of the entrepreneurs Sebrae assists are through one-on-one visits or consulting sessions, the remainder obtain assistance through business networks, in incubators, producer chains and through other collective means.
Hoffman, who said he was impressed by the excitement during the group seminar he attended in Natal, Brazil, explained that sessions would start at 6pm and run until 9 or 10pm and touched on management, sales techniques, marketing and research. Even the city’s mayor turned up every day to show his support.
Each session would start with a presenter briefing all 400 on one of the specific topics, before the participants broke away into smaller groups of 50 people spread around the hall.
At the end of each session participants were requested to complete various assignments for the next day. They also had to brief one another about their products.
On returning from the eye-opening trip, Hoffman secured the involvement of the Mossel Bay municipality, Red Door and Prestigious Training and Manufacturing Services to hold the five-day seminar.
Hoffman used the same techniques he drew from the Brazilian, but said the difficulty he experienced was that many of the participants dropped out, with only 100 graduating from the course in the end.
He said “one of two” of those who attended had since started their own business and
Seda advisors were assisting others who had formed groups, to set up co-operatives in certain identified areas. Hoffman said Seda George will host another group session in the near future.
This article appeared in Bignews in October 2010. The writer visited Brazil in August 2010. These articles will form part of a report funded by Trade and Industrial Policy Research (TIPS) on lessons South Africa can learn from India and Brazil, in boosting small business support.
Stephen Timm is a