Research on the Performance of the Services Sector

6.3. SEDA Support

Feelings toward Seda Programmes/Services

The majority (63%) of the businesses did not feel that the services at Seda needed to be improved, however 21% felt that service delivery should be faster and 12% felt that more specific business training should be offered to businesses. Furthermore the businesses were not able to comment on whether or not Seda offered a unique product when compared to other development organisations as they were unaware of the product offerings. The majority (85%) of the respondents required assistance from Seda for their businesses.

Figure : Improvement of Seda Programmes

Awareness of Seda Programmes/Services

Fifty percent (50%) of the businesses had made use of Seda programmes. Of this total, 72% felt that the programmes had been effective in assisting their businesses.

Table 25: EFFICIENCY of Seda Programmes

Previous use of Seda	%	Efficiency of Seda programme	%
Made use of programmes	50%	Effective	72%
Did not make use of Seda	50%	Not effective	28%

Relevance and Effectiveness of Seda Programmes to SMME Development

When asked to comment on what programmes Seda should offer, the businesses that responded had three comments;

More marketing and training

Seda should provide financial assistance

Seda should provide better follow up services and programmes

Figure : Programmes to be offered by Seda

The tourism industry and the businesses that operate within the industry require assistance in four areas; marketing, training, certification, and financial assistance. Seda can provide assistance with marketing and basic business training; as they do not currently offer specialised training specific to the needs of the tourism sector.

Furthermore Seda does not offer financial assistance and accreditation or certification that many businesses require assistance with. If Seda were to offer assistance in these instances the programmes they have would be more relevant for tourism businesses.

Conclusion

The businesses in the tourism sector that made use of the Seda programmes found them to be effective in assisting the business however a large number of the businesses were unaware of the types of programmes that Seda offers and as such could not comment on Seda. The businesses that had made use of Seda felt that the organisation should provide assistance with funding, increase marketing products and provide a better follow up and communication process with clients. The majority of respondents felt that they would require some form of assistance from Seda, despite being unaware of the product offerings.

ICT Sector

Demographic Profile of Businesses

This section of the report provides the analyses of the surveys conducted on the ICT businesses for the research on the performance of the services sector report. The questionnaire was designed by FEM Research and interviews were conducted telephonically using a database of Seda clients from across the country and a list of businesses in the industry generated by FEM Research. This section is structured in the same way as the questionnaire and provides a brief analysis of the responses gathered during the surveys. There is some overlap between these sections and the key findings and recommendations section.

ICT businesses were contacted across the provinces and the most data was gathered from Gauteng (22%), Eastern Cape (22%), Western Cape (16%) and Free State (16%) regions. The Northern Cape and North West had the lowest number of responses.

Figure : Business Location

The surveys were completed by the owners (44%), directors (23%) and managers (33%) of ICT companies across the provinces of South Africa.

Figure : Representatives

The main business activity and core work conducted by businesses that were surveyed in the ICT sector was services related. Sales and software design businesses accounted for the bulk of the surveys.

Looking more closely at the business’s being assessed it is evident that the bulk of the entities (62%) are well established with 26% being between 3 – 5 years old and 36% being older than 5 years, only 12 percent of the businesses surveyed were in existence for less than 1 year.

Figure : Age of Business

The majority (88%) of the businesses surveyed were registered as Closed Corporations. The remainders of the businesses were registered as PTY Ltd, Section 21 and Trusts. Regarding the type of business operations that the firms are involved in it is evident that Sales and Distribution is the largest contingent counting 53% of all firm surveyed. Software design was also a significant sector with 33% of businesses surveyed conducting work within this sector. None of the businesses surveyed were owned by people or companies outside of South Africa.

From the graph it is clear that the bulk of the businesses that have been assessed are micro and micro as defined earlier with 62% having only 1 – 5 employees. In total 80% of all businesses assessed have less than 10 employees.

Businesses in South Africa are classified into the following categories:

Micro- owner run and employs up to 5 people

Very Small- Employs between 6 to 20 People

Small enterprises - Employs between 21 and 50 people

Medium- Employs between 51 to 200 people

For the purpose of this report we have further broken down the small category into businesses that employ between 5 and 10 employees and businesses that employ 10-20 employees as well as businesses that employ between 20-50 employees. This has been done to provide a more in depth understanding of small businesses that were interviewed for this study.

Figure : Employees

The graphs on the following page illustrate the size of the firms that have been assessed. This is done by assessing to key facets i.e. turnover and the number of employees. From these graphs it is evident that the majority of firms assessed fall below R1 million turnovers per annum. The majority 38% have a turnover of R0 – R150 000, followed by 23% that have a turnover between R400 000 – R1 000 000. In total 76% of the firms assessed fell below the R1 million marks.

Figure : Annual Turnover

In the case of firms with a turnover of R0 – R150 000, 94% have 10 or less employees (67% have 1- 5 employees, 27% have between 5 – 10 employees). As the turnover rises it can be seen that this changes with 50% of firms having a turnover of R2million to R4million employing between 10 and 50 employees while all firms having a turnover of greater than R4 million employ in this range.

In order to get a better understanding of the sector and the businesses that function in it, a cross tabulation was conducted between the number of employees and the type of employment. From the analysis it is interesting to note that across all business sizes the number of permanent contracts comprise between 60 – 70% of the total employees. A positive note is that the industry does not experience much seasonality however temporary employment seems to be well entrenched (firms with 10 – 20 employees have 27% of their staff on temporary contracts).

Another interesting observation is regarding highly skilled workers, from the analysis it is evident that the % of skilled workers within the firms decline as the number of employees increase. This has important implications for job creation in that if the small firms grow the jobs that they will create will allow for semi-skilled individuals to enter the job market.

Table 26: Number of Employees

Categorisation	Temporary	Contract	Permanent	Seasonal	Highly skilled
Micro (1 - 5 Employees)	30%	8%	80%	16%	77%
Very Small (6 - 20 Employees)	6%	6%	12%	2%	63%
Small (21 - 50 Employees)	0%	0%	8%	0%	47%

The client base for the ICT businesses was South Africa, less than 10% of the business had international clients or clients from another African country.

Of the businesses surveyed, 24% felt that their business played a role in skills development in the industry, 16% felt they assisted in creating jobs in the economy and 8% felt that they were involved in community development.

Figure : Role in ICT sector

Conclusion

The majority of the ICT businesses that participated in the survey are established and have been in operation for more than three years. The bulk of the businesses are registered as closed corporations and have an annual turnover of less than R 1 000,000 and employ less than 10 people. The major source of clients for these businesses is South Africa.