Creating Jobs Through Enterprise Development: Lessons From an Impact Study on Selected Projects from the Jobs Fund Enterprise Development Portfolio
Small, medium and micro-enterprises (SMMEs) have been acknowledged as important contributors to economic growth and vehicles of job creation in both developed and developing countries. Furthermore, local communities can benefit from the presence of SMMEs as they assist in stabilising local economies, improving resilience, and providing a base of economic activity. 3 However, SMMEs tend to face a number of constraints that prohibit them from growing into sustainable businesses. These include human capital constraints such as a lack of business management skills or specialist technical knowledge related to crucial business functions,4 and physical capital constraints such as a lack of access to quality infrastructure and a lack of appropriate funding products and mechanisms.5 Additionally, SMMEs typically face high barriers to entry in accessing viable domestic and international markets.
It is within this context that Enterprise Development (ED), defined as the investment of time and capital in establishing, expanding or improving the operations of enterprises with the aim of enhancing business sustainability, has emerged as a strategy for government and the private sector to promote employment and socioeconomic change. ED programmes attempt to address the constraints faced by SMMEs to help them grow into sustainable businesses
One such programme is the Jobs Fund, a ZAR 9 billion challenge fund, launched by the South African National Treasury in 2011, that aims to catalyse job creation in South Africa. The Fund operates through four distinct funding windows: Enterprise Development, Infrastructure Investment, Institutional Capacity Building, and Support for Work Seekers. The ED window, which makes up approximately 60% of the Fund’s portfolio, is aimed at partnering with the public, private and not for profit sectors to establish or expand ED programmes that incubate and grow job creating enterprises across a variety of sectors.
Now in its eighth funding cycle, the Jobs Fund is starting to better understand the impact that has been achieved through the ED window to date, and through working with over 70 ED programmes, has accumulated key insights as to which ED models work best and why. In order to further explore and capture these lessons, the Jobs Fund appointed Genesis Analytics (“Genesis”) to conduct an impact evaluation on three selected ED projects, as well as a comprehensive review of the entire ED portfolio. This evaluation has produced insights into the relevance, effectiveness, scalability and replicability of ED models that are applicable to a variety of audiences including ED practitioners, SMMEs, governments and funders of ED programmes.
This summary brief aims to disseminate these key insights and highlight a set of best practice guidelines for supporting or implementing ED interventions.