Tourism,business linkages and small enterprise development in South Africa

Although considerable attention is given to the prospects for developing small, medium and micro-enterprises (SMMEs) in South Africa's tourism economy, very little relevant research has been undertaken in this regard. In this article, the findings are presented from over 60 detailed interviews conducted with key enterprises and entrepreneurs involved in tourism, outsourcing and small enterprise development in South Africa. The aim is to examine opportunities for outsourcing and business linkage development in South Africa's tourism economy, and to investigate the difficulties that confront the tourism SMME economy through examining the status of business linkages between large tourism enterprises and SMMEs in South Africa. The South African research is located within the context of existing works on tourism and small enterprise development in developing countries.     

Tourism and regional development: The case of South Africa's distressed areas

Uneven development is a long-established feature of South Africa's space economy. Recent policy initiatives have been launched for tourism to be a vehicle for regional development. Against the background of international debates about tourism and regional development, this article examines the tourism economy of South Africa's 23 priority development districts or distressed areas that are the current focus of national policy to redress uneven development. The nature and growth of tourism occurring in these areas is shown to be primarily domestic tourism and concentrated upon visiting friends and relatives travel. The prospects for regional development ultimately hinge upon leveraging potential assets for leisure tourism. Key challenges for incipient tourism-led regional development in South Africa are identified.     

SOUTH AFRICA'S INTERGOVERNMENTAL FISCAL RELATIONS: AN EVOLVING SYSTEM

Across Africa, Latin America, Asia and the transition economies of Eastern Europe, the need to enhance the capability and capacity of sub‐national governments (SNGs) in providing public goods and services has become a main theme of development programmes. Central to this theme is the need to design an intergovernmental fiscal relations (IGFR) system that enhances the effectiveness of sub‐national governments in mobilizing revenues and implementing expenditure programmes. For South Africa, the post‐1994 dispensation has involved significant reforms to the structure and administrative capacity of the three spheres of government. Critical to these reforms is the need to formulate an IGFR framework that takes cognisance of South Africa's past, and serves as an effective policy tool in ensuring that public sector service delivery is well structured and managed. This paper provides an analysis of South Africa's evolving IGFR system. It outlines the historical evolution of the current IGFR system, identifies current challenges, and discusses implications that these challenges have for the functioning of the IGFR system. The general conclusion emerging from this study is that in the South African context, the key elements necessary for an effective IGFR system are in place. Ongoing reforms have improved the capacity of provincial and municipal authorities in carrying out their revenue and expenditure responsibilities. However, the evolving nature of South Africa's IGFR system requires that significant attention be devoted towards enhancing coordination between delivery departments and improving the capacity of many SNGs. These should not only aid the effective functioning of the IGFR system but also ensure that the gains of decentralisation are sustainable.     

Perceptions of informal safety nets: A case study from a South African informal settlement

The relevance and importance of informal safety nets that buffer poor households from livelihood hardships have been given little attention in South Africa's development programmes to date. This article contributes to the understanding of informal safety nets by investigating local perceptions in a South African informal settlement. The main findings of the study are that families perform an important safety net function, but that these sources of assistance can be susceptible to social isolation. Immediate neighbours and friends also play an important safety net role, but these reciprocal-based sources of assistance may be difficult to secure. Community-wide threats can have a severe impact on people's ability to engage in safety net transfers. Many of these difficulties stem from South Africa's structural unemployment crisis. This factor is the greatest danger to the future of the informal safety net system in the informal settlement.     

Nelspruit and Dolphin Coast: Lessons from the first concession contracts

South Africa's first two long‐term concession contracts for water and sanitation were signed in early 1999. These complex public‐private partnerships (PPPs) in Nelspruit and Dolphin Coast will use private sector management expertise, as well as huge amounts of private capital investment, to address service delivery challenges in both areas. Especially important will be the extension of essential services to previously disadvantaged residents of both municipalities. The processes of preparing and negotiating these deals have been long and difficult. Councillors and officials have had to overcome a series of obstacles on their way to closing the deal, including fundamental misunderstandings about how such projects work on the part of unions, the general public, other government officials and even some members of South Africa's financial services community. This article provides an account of how and why these PPP projects were developed, and offers some of the key lessons learned regarding how to improve the process in the future.     

An analysis of the determinants of labour force participation and unemployment in South Africa's North-West province

This article uses a probit model to estimate the determinants of labour force participation and unemployment in South Africa's North-West province. Data from three surveys are used, namely the 1993 Saldru survey, the 1995 CSS (now Statistics SA) survey and a survey conducted in 1997 by the authors. It finds that gender, location (rural or urban), education level, and family structure and relations are significant determinants of unemployment in the province. Because the North-West is a rural province, the results are indicative of the unemployment challenges in South Africa's rural areas. Thus, unless job creation initiatives have a specific rural and gender (female) bias, rural unemployment in South Africa may not be significantly reduced.     

Reciprocity in trade relations between South Africa and Europe

This article sets out the arguments, from South Africa's perspective, for a free trade agreement (FTA) with Europe. It argues against signing the Lome Convention. These arguments have more force if the right kind of FTA can be negotiated, because the greater the benefit South Africa derives from such an agreement, the more the credibility of domestic economic policies will be enhanced. Some requirements for the ‘right’ type of FTA are discussed.     

Road construction and small enterprise development: The experience of the N4 Maputo corridor

The problems and support needs of small road contracting enterprises and of the prospects for entrepreneurship and enterprise growth in the South African road construction sector is the focus of this investigation. This study examines the building of the N4 toll road which is the anchor project for the Maputo Development Corridor. It draws on a wide range of source material, including existing secondary sources, primary project documentation relating to the N4 anchor project, a set of interviews with key individuals and business associations involved with implementation of the project, and a questionnaire survey that was administered to 30 emerging contractors that had successfully secured contracts for work on the Maputo Development Corridor. Overall, the article investigates the progress and workings of South Africa's targeted procurement approach towards stimulating small contractors in road construction.     

Trends in living conditions and satisfaction among poorer older South Africans: objective and subjective indicators of quality of life in the October Household Survey

The majority of South Africa's older population is income poor and lives in multigeneration households. Since the first democratically elected government came into power in 1994, South Africans have been promised ‘a better life for all’. A range of policies and programmes has been implemented to improve the living standards and quality of life of the poor. The article asks how the older poor have benefited from government interventions in the period 1995–8. Drawing on data compiled from Statistics South Africa's household surveys in 1995 and 1998 (n=20 000–30 000 households), a set of over 35 objective and subjective indicators broken down by income and younger and older households is reviewed. Older households include at least one member over 60 years of age. Results show that access to services and opportunities improves systematically from poor to rich households. Major material gains for the poor and older households during the review period include access to clean water, electricity and home ownership. Older poor households with better access to services and opportunities are more likely to express overall satisfaction with their living circumstances. The study concludes that the most effective mechanism for poverty alleviation appears to be the non-contributory, means-tested state old-age pension, which lifts some households out of the most disadvantaged bottom income group. Policies under discussion promise further opportunities for empowering poor households with older members.     

Informal retailing through home-based micro-enterprises: The role of spaza shops

The informal trade sector constitutes an important part of the South African economy, with estimated sales of R32 billion in 2002. Its emergence is largely attributed to the divergence between the growth in population, especially the urban population, and employment growth in the formal economy. Growth of informal enterprises, especially in the retail sector, is also thriving on the demand of less affluent households, whose household needs for unsophisticated and affordable products are aptly supplied by the informal sector. The aim of this article is to focus on one of the prominent sub-sectors of informal retailing, namely spaza or tuck shops, defined as small retail businesses which operate from a residential stand or home. Particular attention is paid to the size, role and characteristics of spaza trade in South Africa, which is estimated to account for nearly 3 per cent of South Africa's retail trade.     

Mobile entrepreneurship: Informal sector cross-border trade and street trade in South Africa

This article presents the results of a study on the participation of non-South Africans in the handicraft/curio sector of street trade in South Africa in informal sector cross-border trade. The findings provide an introduction to the largely unexplored phenomenon of informal sector cross-border trade between South Africa and neighbouring states and challenge some of the common myths about non-South African street traders which pervade public discourses around migration. The Southern African Development Community (SADC) is presently involved in prolonged and contentious negotiations to establish a free trade area for the region based on the SADC protocol on trade and development. At the same time, against a backdrop of anti-immigrant rhetoric, the South African government is developing a new migration policy. The article argues that informal cross-border entrepreneurs should not be disadvantaged by the renegotiation of regional trade agreements and the reformulation of South Africa's new migration policy.     

The rationale for an employment guarantee in South Africa

This article considers what would happen if unemployed people in South Africa had a right to a minimum level of regular work on decent terms. It looks at the example of India, where a law was passed in 2005 guaranteeing rural households up to 100 days of work a year at minimum wage rates. More than 55 million households now participate in this programme – a rare example of a policy innovation bringing about significant change in a society. India's employment guarantee has important implications for social and economic policy and gives new meaning to the concept of ‘a right to work’. The article explores how structural inequality limits South Africa's development options, and considers early lessons from South Africa's Community Work Programme to make the case for an employment guarantee in South Africa.     

AN ANALYSIS OF ECONOMIC INFRASTRUCTURE INVESTMENT IN SOUTH AFRICA

This paper analyses long‐term trends in the development of South Africa's economic infrastructure and discusses their relationship with the country's long‐term economic growth. A database covering national accounts data, railways, roads, ports, air travel, phone lines and electricity was established for this purpose, and may facilitate further quantitative research. PSS (Pesaran, Shin and Smith, 1996, 2001) F‐tests are used to identify directions of association between economic infrastructure and economic growth. These indicate long‐run forcing relationships from public‐sector economic infrastructure investment and fixed capital stock to gross domestic product (GDP), from roads to GDP, and from GDP to a range of other types of infrastructure. There is also evidence of potential simultaneity between specific types of infrastructure and GDP. The evidence suggests three main findings. Firstly, the relationship between economic infrastructure and economic growth appears to run in both directions. Inadequate investment in infrastructure could create bottlenecks, and opportunities for promoting economic growth could be missed. Secondly, South Africa's stock of economic infrastructure has developed in phases. Policymakers should focus on choosing or encouraging the right type of infrastructure at the right time. Thirdly, the need for investment in economic infrastructure never goes away. The maintenance and expansion of infrastructure are important dimensions of supporting economic activity in a growing economy, provided that individual projects are chosen on the basis of appropriate cost‐benefit analyses.     

Credit guarantee schemes as an instrument to promote access to finance for small and medium enterprises: An analysis of Khula Enterprise Finance Ltd's individual credit guarantee scheme

Small and medium enterprises (SMEs) face many constraints, such as lack of credit, which hinder them from reaching their job-creating potential. This article focuses on the constraints that increase banks' risk in lending to SMEs, and how credit guarantee schemes are used to overcome some of them. In South Africa, Khula Enterprise Finance Limited, a government initiative, operates three such guarantee schemes. This article explains the functioning of one of the schemes, namely Khula's Individual Credit Guarantee Scheme. Its performance is evaluated with reference to international best practices. Although it is generally found to operate efficiently, there are various aspects concerning the functioning of the scheme that influence negatively the willingness of banks to participate. These problems need to be addressed, as the authors are convinced that a credit guarantee scheme, with all its problems, still remains a viable way for the government to lower the normally high risk involved for banks in dealing with SMEs, and in this way to entice them to serve SMEs.     

Measuring our competitiveness - a critical examination of the IMD and WEF competitiveness indicators for South Africa

This article examines the competitiveness indicators that are produced by the highly influential World Economic Forum (WEF) and the International Institute for Management Development (IMD), specifically in respect of South Africa. Neither provides a clear and persuasive guide as to South Africa's overall competitiveness ranking, nor how this has altered over time. The problem resides principally in the assessment of technological capacities and the contribution that technology makes to overall competitiveness. The IMD and the WEF approaches to technology diverge significantly, but both are inadequate. As a consequence, there is a substantial discrepancy between the two as regards South Africa's current overall competitive ness ranking. Neither individually, nor collectively, are these competitiveness indicators - as they are currently constituted - useful as a guide to policy.     

Mining companies' role in sustainable development: The 'why' and 'how' of corporate social responsibility from a business perspective

This article - the first in a pair of articles on corporate social responsibility (CSR) - provides an overview of mining companies' role in sustainable development, from a business perspective and in the South African context. It argues that companies' social and environmental responsibilities are increasing, due to global changes in the way the role of business is perceived, South African policy developments, as well as a strong 'business case' for companies to actively support sustainable development - beyond philanthropy and impact mitigation. Partnerships between companies, the government and civil society are introduced as a potentially effective and efficient strategy for CSR. They are no panacea, however, and require a commitment to local communities' rights to informed prior consent and authentic participation. CSR hence presents mining companies with significant challenges. Given committed leadership and the right approach, it can entail important opportunities as well. Particular attention will need to be given to potential tensions between the international debate surrounding CSR, on the one hand, and local South African development challenges and companies' responses to them, on the other.     

Service provision for street-based traders in Pietermaritzburg,KwaZulu-Natal: comparing local findings to lessons drawn from Africa and Asia

South Africa's informal economy absorbs approximately one-quarter of the labour force of 15 million people and is therefore the fastest growing sector of employment. Street-based trading constitutes a major subsector within the informal economy and is continuously expanding through unrelenting proliferation of survivalist micro-enterprises. However, few organisations that support enterprises are accessible or appropriate to survivalist and informal sector micro-enterprises. Interviews were conducted with 98 Pietermaritzburg street-based traders and ten KwaZulu-Natal service providers to determine service provision requirements. The results are compared with findings of four international studies. The findings suggest that for survivalist enterprises to benefit from entrepreneurial education and training services, obstacles with regard to South African traders' understanding of entrepreneurship and cultural limitations to enterprise growth should be overcome. Service institutions also require incentives to serve the informal sector, as well as the capacity to design and deliver appropriate services.     

Urban agriculture in South Africa: Policy issues from the international experience

Recently, an increase has been observed in the practices of urban food gardening and the cultivation of vacant land on the peripheries of South Africa's metropolitan areas. In this paper it is argued that urban agriculture represents an issue of considerable importance for South African policy makers. A review is undertaken of research on informal agriculture in Asian and African cities. On the basis of this International review certain suggestions are offered for policy debates and research in South Africa.     

How social security policies and economic transformation affect poverty and inequality: Lessons for South Africa

This article examines how various characteristics of social and economic policy frameworks affect poverty and inequality levels in developing countries, principally in Botswana and Mauritius. The research findings suggest that poverty and inequality are lower in countries with generous and broad-based – rather than pro-poor – social security policies, and where social policies are complemented by economic policies promoting economic transformation rather than mere economic growth. While South Africa's challenges of combating poverty and inequality are shaped by its own historical context, the lessons from other countries offer the opportunity to reflect on the social consequences of various social and economic policy mixtures. In particular, it may be worth considering how to bridge the divide between the economically productive contributors to social security policies and the economically marginalised beneficiaries of such policies.     

The ‘alien invasion’ in South Africa: Illegal immigrants in Durban

Although South Africa's emerging non‐racial democracy has been internationally acclaimed, global integration has also brought its problems. One of these is the greater number of illegal immigrants entering the country. This article examines the problem of illegal immigration by focusing on an intensive case study in the locality of Durban. It attempts to identify reasons for illegal immigrants coming to South Africa, ascertain their country of origin, investigate the consequences of their stay in the Republic, identify problems associated with immigrants, and assess policy options to reduce the influx of aliens. The study reveals that the majority of illegal immigrants come to South Africa in search of better economic opportunities. However, they are accused of taking away the jobs of locals, lowering wages and spreading diseases. Although official government policy towards illegals is embodied in the Aliens Control Act (1991), there is a need to understand the problem within its regional and historical context.