SMME development in the ICT sector

[28 May 2018] The ICT SMME Development Strategy is a sector specific intervention to address challenges facing SMMEs operating in the ICT sector. It sets the policy context and defines the vision for the development of the ICT SMMEs in South Africa up to 2020, and outlines the support mechanisms required to realise this vision.

Final ICT SMME Development Strategy

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[2 April 2017] The Department of Telecommunications and Postal Services has published a Draft Information and Communication Technology Small, Medium and Micro -Enterprise Support Strategy (“Draft ICT SMME Support Strategy”) for public comment.

Draft ICT SMME Support Strategy 31 March 2017

Comments are due by 30 April 2017 using email address ictsmmestrategy@dtps.gov.za marked for the attention of Mr Charles Mabuza, Director: ICT Policy Implementation.

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[10 March 2015] Let’s try again…

The new date for the two day ICT SMME workshop is Monday, 23 – Tuesday, 24 March 2015 at the Birchwood Conference Centre in Boksburg-Johannesburg.

If you wish to attend email this confirmation slip to  ictsmmes@dtps.gov.za.

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[3 December 2014] The proposed workshop has been postponed.

According to the DTPS:

The postponement was due to the extension of the Parliamentary programme by a week, thereby ruling our political principals out for the workshop.    With no other date available before the festive break, and given the importance of having this project led by the political principals as a priority of government,  it was logical to postpone the workshop to early next year (2015).  The exact date will be communicated in due course. 

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[16 November 2014] As a follow-up to its information request, the Department of Telecommunications and Postal Services (DTPS) has invited stakeholders to attend a two-day workshop to be held in Johannesburg on 10 and 11 December 2014. According to its website the DTPS “is embarking on an exercise to comprehensively understand the ICT SMMEs environment in terms of the scale of business activity, size and challenges they face. This is an attempt to move from a blanket approach of understanding SMMEs so as to reflect the uniqueness of each sector of the economy, thereby applying sector-unique intervention for maximum impact.”

The DTPS wishes to develop a baseline report to facilitate:

  • Re-engineering ICT SMMEs development so as to enable them to participate across the entire ICT value chain,
  • Creating specific support mechanisms in the way that is impacts positively for their long-term sustainability.

Key amongst issues set for discussions at the workshop includes:

  • ICT SMMEs overview in South Africa
  • Emerging ICT SMMEs opportunities
  • Institutional arrangements & support measures

The workshop will run from 09h00 – 17h00 on the 10th and 11th December at the Birchwood Conference Centre, Gauteng.

RSVP: Ms. Wendy Jacobie, 012 427 8541 or email wjacobie@dtps.gov.za

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[30 July 2014] The Minister of Telecommunications and Postal Services has gazetted a notice requesting information on ICT SMMEs for the purpose of developing and promoting SMMEs in the ICT sector.

Request for Information: ICT SMMEs

  • Responses must be submitted by 29 August 2014 to:

The Director-General, Department of Telecommunications and Postal Services

For attention: Dr Mashilo Boloka, Director: Broadcasting Industrial Development, SOEs Oversight and Enterprise

Block A3, iParioli Office Park, 1166 Park Street, Hatfield, Private Bag X860, Pretoria,

Tel: 012 427 8055/8293; Fax:086 550 7525; ictsmmes@doc.gov.za 

  • The following information is required:

 1. Company Name

2. BEE Ownership Percentage

3. Number of years in operation:

4. Sector: (e.g. Broadcasting, Postal, electronic manufacturing):

5. Nature of business:

6. Describe the business activity in brief:

7. 3 major cost drivers in your business activities

8. Area of operation:

9. Major clients to date:

10. Partnerships (local and/or global)

11. Number of employees:

12. Annual Turnover:

13. Challenges:

14. Nature of support required:

15. Additional information:

  • Full text of the notice:

1. Contextualising ICT SMMEs in South Africa

The development of the SMME sector has been prioritised by the South African government, fundamentally for economic and social growth. The importance and need for growing the sector stems from the potential It has in bridging the gap between the first and the second economy through poverty reduction, employment creation, economic empowerment and innovation.

Post-1994, the Government adopted the White Paper on the National Strategy for the Development and Promotion of Small Business in South Africa (1995). The strategy sought to foster an enabling environment for the accelerated growth of small business subsequent to a history of dominance of large, capital intensive firms that suppressed the small enterprises (Dti, 2003).

The larger economy of the country has been characterised by increased spending and by SMMEs owing largely to preferential procurement by government. Other than providing an enabling policy framework, the public sector has put in place initiatives that support SMMEs in general including:

    • Easing the regulatory and compliance burden on small enterprises through reduction of tax compliance burden for small enterprises.
    • Access to finance through the establishment of financial products and services comprising loans, and incentive grants that play an important role in enabling access to finance for small enterprises.
    • Business development services.
    • Youth enterprise development through National Youth Development Agency (NYDA) Fund.
    • Support for women-owned enterprises.
    • Incubation and technology acquisition and transfer services.
    • Skills development measures. As part of their sectoral skills-development mandates, various sector education and training authorities (SETAs) have developed and are implementing small business skills-development programmes.

In addition to the above, various other private sector, Non-Governmental Organisations (NGOs) and academia initiatives do exist to support SMMEs.

It is estimated that SMMEs account for up to 99.3 percent of the privately owned enterprises in South Africa. According to Statistics South Africa, there are 428,540 formal and economically active SMMEs in the country. Out of the total formal sector SMMEs, only 6737 are operating in the ICT sector (Socikwa & Sunker, 2005). This implies that ICT SMMEs accounted for approximately 1.6 percent of the total formal small enterprises In South Africa in 2008. SWMEs currently contribute 35 percent to Gross Domestic Product (GDP). They also contribute 54 percent to formal private sector employment. Given the statistics, this gives an indication that the SMMEs play a pivotal role in resolving the country’s development challenges such as employment and economic growth.

Given its vastness and limitless opportunities, the ICT sector provides a fertile ground for SMMEs incubation, development and promotion. In analysing the state of SMMEs in South Africa, the ICT SMME Enterprise Development Strategy (2008) provides as follows:

“The South African SMMEs operating in the ICT sector are not as productive and as competitive as they should be. For the most part, this is due to the fact that SMMEs still use old-fashioned technologies of which most of them has no access to testing facilities and promotion of innovative ideas. Access to markets, inadequate business and technical and capital also pose a huge challenge for SMMEs. As a result, there are vary low entry rates of SMMEs into the productive “Value added” section of the ICT sector and this leads to the high failure rate among startup SMMEs, According to the Global Entrepreneurship Report, nine out of ten SMMEs businesses fail in the first year of operation”.

2. Objectives   

Notwithstanding the various initiatives and support highlighted above, the information regarding the economic activities, the sizes of SMMEs in the ICT sector and their peculiar challenges, including business models is still very sketchy. Other than in Internet service related business activities, not much has been done in terms of showcasing and profiling other SMMEs opportunities available in the ICT sector including electronic manufacturing, assembly, content development, repairs, refurbishment, etc.

Therefore, policy interventions are often broad and influenced by general SMMEs environment in South Africa. This has created a difficulty in terms of making targeted intervention.

This, therefore, Is a scoping exercise to really understand ICT SMMEs, their size, their business activities and exact challenges they face with the intention to achieve the objectives of the Electronic Communications Act (no.36 of 2005) set out in section 2(p) relating to developing and promoting SMMEs and cooperatives so as to accelerate black economic empowerment, transformation of and unlock the potential of the sector to create employment.

The information gathered through this exercise will help in:

    • re-engineering ICT SMMEs development so as to enable them to participate across the entire ICT value chain,
    • creating specific support mechanisms to help SMMEs to achieve certain levels of competitiveness in the industry.
2018-05-28T19:40:48+00:00 May 28th, 2018|miscellaneous, policy, snippets|