Mandisa Tshikwatamba, the new Small Enterprise Development Agency (Seda) head, plans to strengthen the agency’s often poorly equipped business advisors – but will it be enough? The agency helps a mere 10,000 business owners a year.
Tshikwatamba (pictured above), who previously served as corporate management head at the National School of Government, took office as Seda head on August 1.
She is the agency’s first permanent head since Hlonela Lupuwana stepped down from the agency two years ago to take up a role at mining company Anglo American. The agency has had several acting heads during this time.
Seda relies on internal business advisors to diagnose client’s needs and to advise them on the appropriate Seda interventions - some of which are then carried out by external mentors and service providers.
But a recent survey that the agency carried out revealed that most of the present business advisors are more equipped to deal with the lower end of the SME sector, while there are few that have specific sectoral expertise and financial skills.
Seda's approach is to focus on fewer entrepreneurs and work with them over a period of time to improve their business. To make a greater impact on the small number it helps, it will therefore have to increase the level and sophistication of business support it offers.
Tshikwatamba told Small Business Insight that building capacity around business advisors is key to making Seda a “point of excellence for enterprise development”. She says the agency plans to boost the capabilities of advisors and would work closely with universities and colleges in doing so. It also plans to roll out a cadet programme.
While a framework is being developed to identify business advisor competency gaps, Seda staff have requested online assessment tools. A project is under way to develop a registration and online diagnostic tools and link these to the agency’s client system.
But it's not just the advisors, many of Seda's mentors and service providers are also not up to scratch. Seda told Parliament in April that it is looking at accrediting service providers in collaboration with the Institute of Business Advisors (IBA) of South Africa.
A central challenge is that Seda currently works with a very few small businesses – just 10,697 in 2014/15. The number has fallen since 2009/10 when it supported 23,874 with products and services, shows an annual report from that year.
The agency told Parliament earlier this year that nearly 40% of the about 84,000 clients it has assisted during six years to the end of March last year were able to employ more people subsequent to the agency’s interventions. But most of those businesses it assists have fewer than five employees.
The agency has been trying to prioritise more support to those small firms that employ between 21 and 200 people, which it says has more job-creation potential.
In contrast Brazil’s small business agency Sebrae was able to increase the number of small businesses it assisted, from over 1.6m in 2012, to almost 2.2m in 2014, shows a report. This
amounts to over one in every five small firms in the South American country (see this post).
However Tshikwatamba questioned what kinds of clients were included in this number, as Seda’s 10,697 assisted in 2014/15 includes only clients that the agency works with over a period of time through various support interventions, rather than those who get quick help over the phone or from a branch.
Sebrae’s management report for 2014 is not clear on how the 2.2m was calculated, but a total of over 5 million people (including those who have yet to start a business and business owners themselves) were assisted by the agency in 2014 shows a presentation.
Where Seda might make a mark is in rolling out more business incubators.
In 2014/15 Seda’s 48 incubators – funded by R85.3m in grant funding – assisted 403 new businesses which created 1,963 jobs in the 2014/15 year. Well over half of these jobs were created in the agriculture as well as mixed high-tech sectors
Tshikwatamba says the agency plans to roll out nine incubators this financial year and last week launched one of these in Potchefstroom, bringing the number of incubators under its stable to 58 (up from 48 since end of February last year).
The plan is to reach 100 by 2020, by getting existing incubators to replicate in other points across the country and to partner with other organisations to launch new incubators.
Tshikwatamba said she would spend time initially engaging with stakeholders and Seda’s 58 branches (including satellite offices and co-location points in rural areas and townships) in the provinces to get to know first hand the challenges that the agency faces.
She says the agency is currently working on an action plan from a review of its programmes it carried out earlier this year. Next month she will be in Kimberley to engage with stakeholders.
Tshikwatamba once worked at the Eastern Cape’s Department of Economic Development where she helped Seda get started after it was launched in 2004, she is now at the helm. Steering the agency to making a bigger impact will be key now.
Timm is a South African who writes on small business. He first met Mandisa back in 2004 in Bhisho. He also interviewed her last year when she was at the National School of Government. Click here to sign up for the monthly Small Business Insight newsletter.
Stephen Timm is a