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.     

Prospects for the development of intermediate size cities as part of a decentralisation programme for Southern Africa

he purpose of this paper is to assess the prospects for an intermediate size city strategy as part of the decentralisation programme of Southen Africa. Considering both spatial development and experience elsewhere in the world. South African decentralisation policy has failed to use its full potential to accomplish development objectives. Some general criticism is made of the existing industrial decentralisation programme and the challenges of the 1980s are identified. Against this background, the author advocates an intermediate size city strategy for Southern Africa, discusses some spatial considerations and gives some guidelines for the successful implementation of such a strategy.     

Whither the study of development in South Africa?

In South Africa we have, since 1990, experienced an upsurge of interest in the study and teaching of development. In this article it is argued that two brands of development research and teaching have emerged in South Africa: one brand has a distinct public administration/management focus, while the other has a more pan-disciplinary, development studies focus. Despite these different focuses, a peculiar convergence has taken place in that the themes of study of the two ‘schools’ often overlap. This convergence demands further exploration of a number of themes, such as the research methodologies appropriate to the South African development context; approaches to administration and management relevant to South African development; balancing the role of state and civil society in South Africa; and clarity on what we mean by the concept ‘empowerment’ in our deliberations on development in South Africa.     

SOUTH AFRICA AND THE NEW PARTNERSHIP FOR AFRICA'S DEVELOPMENT: ECONOMIC SPIN-OFFS AND LINKAGES

The New Partnership for Africa's Development (NEPAD) is a concerted effort by Africa's political leaders to develop a comprehensive and integrated strategic policy framework to raise current levels of socio‐economic development and reduce high levels of poverty across the African continent. The NEPAD framework recognises the need for African countries to pool their resources together in order to enhance regional development and economic integration. To this end, NEPAD emphasises capacity building and also seeks to solicit and disburse funds towards infrastructural development programmes and poverty alleviation projects, among others. South Africa's involvement with the rest of Africa has increased significantly since 1994. Trade exports, foreign direct investment (both market and resource‐seeking in nature) and public‐private partnerships have mushroomed in many parts of the continent. Many South African firms are providing the financial impetus for the infrastructural development and rehabilitation of African economies. This paper discusses salient economic linkages between South Africa and the rest of Africa within the framework of NEPAD. South Africa is the economic hub of sub‐Saharan Africa (and indeed of the African continent), with significant agricultural, manufacturing and services capacity. South African firms have invested in the development of a number of sectors in the rest of Africa, taking advantage of the new investment incentives offered by the NEPAD framework. The target sectors range from mining, the hospitality industry, engineering and construction, finance to telecommunications. These investments and economic involvements are crucial to the development of African countries and the relevant sectors that are important for the realisation of some of the objectives of NEPAD.     

Pro-poor microcredit in South Africa: cost-efficiency and productivity of South African pro-poor microfinance institutions

This article compares the performance of selected South African microcredit non-governmental organisations (NGOs) that have a poverty-alleviation focus against various benchmarks drawn from the MicroBanking Bulletin. Donors, governments and many analysts regard sustainability as the benchmark of microfinance institutions' (MFIs) performance. However, the most relevant question is whether microcredit NGOs are doing as well as they can in their context. Of particular contextual importance is income inequality in a society. South Africa has the world's second worst income inequality, after neighbouring Botswana. This creates a situation in which microcredit NGOs must recover ‘First World’ costs, particularly salaries, from revenues based on clients who can only afford loans on a par with Third World countries. Compounding this situation are structural obstacles to microenterprise in South Africa, as well as obstacles to productivity in microcredit NGOs. Taken together, this creates a ‘salary burden’ for South African microcredit NGOs, which is the highest in the world according to relevant benchmarks. South African MFI managers face significant obstacles to improving productivity to compensate for the divergence between staff and client living levels. These include an inadequate skills base, the small scale of the market, rapid labour turnover, and limited resources for capacity development. South African MFIs face the options of moving upmarket (which many have done), adopting methodological innovation or new product development, or closure. Of these, there is a strong argument to be made for supported savings and credit approaches as an alternative to NGO-based microcredit. Such an approach has the advantages of greater voluntary input and social capital formation.     

Tourism development in the SADC region: The opportunities and challenges

This article presents an assessment of recent tourism performance in the countries of the Southern African Development Community region, as well as an evaluation of future prospects. It examines growth rates and source markets in developing a profile of current tourism to the region. It identifies and assesses the current and probable future impact of a range of issues and problems, which are serving either to help or hinder tourism development. It suggests necessary actions for facilitating the accelerated development of tourism. The article also analyses the countries' tourism development policies and their competitive standing with other parts of Africa and other world regions from the market's viewpoint. It evaluates future growth prospects for the region by relating these various strands of analysis to the assessments made in the World Tourism Organization's Tourism 2020 vision study. The conclusion is one of qualified optimism: the natural and sociocultural resources of the region match the growing tastes of the international tourism market but, without concerted action to improve international access and tackle the major (real and imagined) threats to tourist safety prevailing in the region, growth rates will continue to be below their potential. The region's physical remoteness from the military theatre of action consequent to the 11 September 2001 terrorist attacks in the United States could well bring the countries of the SADC, and especially South Africa, some benefit from being perceived in tourist-generating markets as safe from these activities.     

Thinking regionally: Aviation and development implications in the Karoo region,South Africa

This study focuses on regional economic development in South Africa, across provincial political jurisdictions. The article argues that remote hinterlands can be more usefully understood as forming an integrated whole, rather than functioning as the poor rural cousins of their provincial metropoles. This article considers three propositions: that key transport projects (such as airports) may unlock regional development; that this may stimulate regional spatial integration; and that this may spur the South African government to address its weak regional planning system. All three propositions are speculative, drawn from the international literature, but they contribute to an argument for greater spatial coherence in South African planning in rural regions. The argument is illustrated with reference to the Karoo region of South Africa, and the potential of a new airport to impact on regional economic dynamics. Furthermore, the article argues that such impacts will require new regional planning systems, which are currently absent from the South African political system.     

Contributing to the African Renaissance vision: The role of South African higher education institutions

President Mbeki is emphasising the vision of an African Renaissance in many of his public addresses. Many multifaceted inputs are required to realise this vision, and human resources development is one of the cornerstones of this ideal. South African higher education institutions could play a major role in this quest by sharing their expertise to upgrade the scientific, economic and educational competencies of all people in Africa. Data analysis shows considerable potential for attracting students from Africa, especially from the Southern African Development Community, to study at South African institutions. Current initiatives for facilitating intellectual mobility across the country's borders lack vision, however. Academic exchange programmes in other countries could serve as models to kick-start the contributions of higher education institutions in South Africa in realising Mr Mbeki's vision for an African Renaissance.     

Successful SMEs in South Africa: The case of clothing producers in the Witwatersrand

The objective in this article is to examine the key determinants of successful SME development in post-apartheid South Africa. The determinants of successful SME growth are investigated by concentrating upon one specific branch of manufacturing, namely clothing production in the Witwatersrand. The article unfolds through four sets of material. First, a review is undertaken of research concerning the factors influencing successful SMEs in sub-Saharan Africa. Major themes are the elements of successful individual enterprise, successful clusters of enterprises and of available research in South Africa. In section two, attention turns to the case study and outlines key features of the development of the South African clothing industry. Section three presents the findings from 27 detailed interviews conducted with successful clothing producers in the Witwatersrand. Overall, it is concluded that the South African research confirms certain of the findings relating to trajectories of successful SME development in other parts of Africa.     

Municipal bonds as alternatives to PPPs: Facilitating direct municipal access to private capital

The advantages of using municipal bonds to finance urban infrastructure are becoming increasingly evident to policy makers in emerging economies, many of whom are making efforts to accelerate the development of municipal bond markets in their countries. Municipal bonds are sometimes viewed as a less expensive way of financing infrastructure than by public‐private partnerships (PPPs), or methods that maintain greater public control over projects and service provision. The objective of this article is to place current efforts by the South African government to promote municipal bond market development in an international context. This is done by briefly reviewing the advantages local governments experience by issuing municipal bonds to finance infrastructure; discussing some experiences of other countries in trying to accelerate the development of municipal bond markets; and reviewing the need and prospects for an active municipal debt market in South Africa. The article also examines the extent to which municipal bonds should be thought of as alternatives to PPPs in an emerging economy context.     

The impacts of tourism investment on rural communities: Three case studies in South Africa

Significant research, both locally and internationally, has been undertaken on tourism development and its impacts on the empowerment of rural communities. This article analyses the extent to which three tourism projects in South Africa, namely the Makuleke tourism initiative, Umngazi River Bungalows and the commercialisation of Manyeleti Game Reserve, have improved the livelihoods of rural communities and contributed to rural economic development. The projects are analysed in terms of both their economic and non-economic benefits, as well as their contribution towards the attainment of certain key policy objectives of the South African government.     

Relaxing Export Supply Capacity Constraints and Promoting Export Expansion and Diversification in Africa: The Role of Special Export Development Strategies

Abstract: This paper examines the role of several export development strategies in relaxing export supply capacity constraints and promoting export expansion and diversification in Africa. It starts with a review of the analysis and recommendations in Can Africa Claim the 21st Century? ( World Bank, 2000 ) and an identification of subsisting supply obstacles. This forms the background against which the paper discusses changes in the growth, structure and destination of African exports during 2000–2005; explores the use of export development strategies (such as supply chain management, networks and clusters, as well as branding); and discusses the enhancement of market access of African exports regionally and globally. The paper concludes with an analysis of the prospects for relaxing Africa's export supply response capacity constraints and the feasibility/viability of the suggested strategies for expanding and diversifying the region's exports.     

Global Risk Factors and South African Equity Indices

South African equity is frequently portrayed as a market requiring a high degree of local expertise – to appropriately understand its many idiosyncratic features – as well as intimate knowledge of its unique drivers – to prudently invest in the same. This claim is evidenced by the amount of research and effort devoted to understanding South African‐specific economics, interest rates and risks. The aim of this research is to debunk this perception with a simple yet robust and highly replicable statistical model (best‐subsets regression) for the majority of the traded South African equity indices. We show how the South African equity market is mostly a one‐way mirror of a confluence of international factors, all arguable largely unrelated to South Africa. We discuss why these models are currently less useful than their longer‐term predictive averages and note the current relevance of including implied volatility and interest rates as predictors.     

Why Doesn't Regional Integration Improve Income Convergence in Africa?*

Abstract: This paper investigates why regional integration does not improve income convergence in Africa, despite the common goal of more open and freer trade. Based on empirical analysis using African countries data, the paper presents the evidence that there has been little progress in income convergence in Africa. The paper shows that despite the importance of regional integration there has been limited progress and prospects of the African integration process are not as promising as would be expected for such an important pillar in Africa's development agenda.     

Determinants of labour force participation in the North West province of South Africa

Based on data extracted from the 1995 October Household Survey of Statistics South Africa, this study has found that potential income is a major factor in labour force participation by African women in the North West province of South Africa. Other significant determinants of participation for both genders are age, education, region, marital status and relationship to the head of the household. The results imply that significant discrimination against African women still exists in the North West province, which partly explains the much lower participation rate for African women (64 per cent), compared with that of African men (86,5 per cent). The study supports the North West government's development strategy of developing human resources to eradicate poverty.     

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.     

Aiding self‐employed car‐washers in the informal sector in Durban

In the past year, the South African Government has committed itself to ‘developing’ the informal sector as a strategy to ease the unemployment crisis and to aid the underemployed. In this paper, the author examines both the lives of self‐employed car‐washers and car‐washing as an activity within the informal sector. He argues that many ‘marginalised’ people who eke out a subsistence in the lower echelons of the informal sector in South Africa regard themselves as lumpenproletariat (or ‘wage‐labourers‐in‐waiting') and not dynamic entrepreneurs. These people expect the Government to intervene in the process of their transition to proletarianism. Further, activities such as car‐washing offer no prospects for self‐advancement.     

Immigration policy in South Africa: does it make economic sense?

Current levels of international labour migration are exceptional. Several thousand skilled South Africans leave the country each year. Historically, the country attracted more skilled workers than it lost, from Europe and, more recently, other African countries. But emigration is increasing and immigration is restricted by policy and a range of socio-economic factors. The trends in the ‘brain drain’ from South Africa and its causes and severity are relatively well understood and will be reviewed in this paper. However, the policy response has been slow and confused. The paper highlights some of the economic determinants and effects of South African emigration and immigration and reviews recent changes to South African migration legislation. It asks how South Africa can attract the right kind of skilled immigrants and what more can be done to stem the loss of professionals from the country.     

Supply‐leading versus Demand‐following Hypothesis: Empirical Evidence from Three SSA Countries

Abstract: This study investigates empirically the direction of causality between financial development and economic growth in three sub‐Saharan African countries — Kenya, South Africa and Tanzania. The study seeks to answer one critical question: Does financial development in sub‐Saharan African countries exhibit a supply‐leading or demand‐following response? Using three proxies of financial development against real GDP per capita (a proxy for economic growth), the study finds that the direction of causality between financial development and economic growth is sensitive to the choice of measurement for financial development. In addition, the strength and clarity of the causality evidence is found to vary from country to country and over time. On balance, a demand‐following response is found to be stronger in Kenya and South Africa, whilst in Tanzania a supply‐leading response is found to be dominant. The study therefore recommends that for Kenya and South Africa the real sector of the economy should be developed further in order to sustain the development of the financial sector. However, for Tanzania, there is need for further development of the financial sector in order to make the economy more monetized.     

Market-based incentives in South Africa and Zambia: A comparative analysis of the clean development mechanism

The clean development mechanism (CDM) is intended to serve as a market-based incentive that is both efficient and cost-effective for eligible developing countries. The analysis contained in this article explores why, in theory, such an attractive incentive opportunity has been so under-utilised in sub-Saharan Africa. The paper compares the experience of the CDM in South Africa and Zambia. These two Southern African countries were selected because of their varying levels of statehood, South Africa being an emerging, middle-income economy while Zambia is classified as a least developed country. General challenges affecting the CDM were identified in the literature to be awareness, capacity, eligibility and access to finance. The paper then compares how these overarching issues specifically impact the CDM experience in South Africa and Zambia. The paper finds that common complexities relating to the CDM have varying implications for eligible host countries at different levels of statehood.