Is government meeting the needs of technology-driven, innovative SMEs?

Following the release recently of the dti's medium-term 2005-2008 Strategic Framework for SMEs, NewsBits caught up with the Hub's Incubation Manager, Jill Sawers for comment on how this could impact the high-tech SME environment, specifically start-ups participating in the maxum Business Incubator.

Government's role in SME development is integral to creating an "enabling" business environment for small to medium companies. Although the important role of small businesses in economic growth and development is recognised, the local environment remains primarily hostile and unfriendly. All too often, government officials responsible for service delivery to SMEs fail to differentiate between their needs and those of large companies, treating SMEs with little or no appreciation for the specific challenges that they face. It would indeed be helpful if these officials were themselves entrepreneurial or required to have had small business experience before being appointed to their positions.

The following three examples highlight some of the areas of challenge to small companies. The related recommendations for improvement may help to balance the status quo.

Legislation - currently companies, regardless of size (apart from closed corporations), are required to electronically submit an annual return to CIPRO through a registered agent. To comply, SMEs have to pay a R450 registration fee and approximately R600 for an agent to submit the form. When the electronic submission system does not function effectively, the agent's fee exceeds R600. For small companies trying to survive their first few years of business, this annual financial burden without evident benefit, and the hours required to complete the forms that could have been spent on establishing and growing the business, is unreasonable.

Support schemes - accessing government support schemes is a challenge for most entrepreneurs. Available schemes are poorly publicised, not easily located and generally without effective support services. Websites contain outdated information and inexperienced front-line staff makes it difficult to source relevant information. An SME funding schemes portal, accessed through the dti website for instance, could list and provide access to available schemes, including NEF, GEP, The Innovation Fund Seed Fund, the IDC BEE fund, Triumph VC Fund (of which the dti is a financial contributor) and others. Manned and maintained by competent individuals, such a portal would go a long way towards rectifying this situation.

Seed funding - there is little funding available for start-up companies in the high-tech sector. The perceived high risk, low collateral profile of high-tech start-ups do not attract funders, while the private sector tends to shy away from companies in a market failure area. In this instance, a dti Seed Fund, which could be accessed by start-ups through designated service providers, would have a major impact on removing an inhibiting entry barrier for entrepreneurs wishing to start their own high-tech businesses.

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