3 small business policies in south africa india and brazil pg20 - tips
3 small business policies in south africa india and brazil pg20 - tips
3 small business policies in south africa india and brazil pg20 - tips
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How South Africa can boost support to <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es: Lessons from Brazil <strong>and</strong> IndiaA recent addition is the Empreendedor Individual (Individual entrepreneur) law, approved <strong>in</strong> 2008, whichaims to help <strong>in</strong>formal one-man-show entrepreneurs (who do not have a share <strong>in</strong> any other <strong>bus<strong>in</strong>ess</strong> <strong>and</strong>who have an annual <strong>in</strong>come of up to R$36 000) to formalise <strong>and</strong> to therefore have access to socialbenefits such as pension <strong>and</strong> medical aid <strong>and</strong> workman’s compensation. To simplify the registration ofthese types of entrepreneurs want<strong>in</strong>g to benefit from the law, the M<strong>in</strong>istry of Development Industry <strong>and</strong>Commerce (MDIC), which oversees the development of <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es, launched an <strong>in</strong>ternet portal <strong>in</strong>2009 where entrepreneurs look<strong>in</strong>g to formalise can sign up. The law also reduces the number of steps<strong>and</strong> pieces of <strong>in</strong>formation (41 to seven) an entrepreneur is required to follow to register <strong>and</strong> offers themlower taxation. 44The promotion of <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es forms an important part of the federal government’s four-yearPluriannual plan, at a time when Brazil is <strong>in</strong>creas<strong>in</strong>gly debat<strong>in</strong>g the role <strong>small</strong> enterprises can play <strong>in</strong>creat<strong>in</strong>g equitable growth. Under the Brazilian constitution, each newly-elected government must submita multi-year plan, or Plano Plurianual, to guide public policy. The plan outl<strong>in</strong>es major objectives,challenges, <strong>and</strong> guidel<strong>in</strong>es for the government as well as programmes <strong>and</strong> actions for the achievement ofthese objectives. An important emphasis <strong>in</strong> the 2008-2011 plan is the need to strengthen <strong>in</strong>novation <strong>in</strong>Brazil if the country is to grow <strong>and</strong> meet its goal of regional <strong>and</strong> social <strong>in</strong>clusion. Another is to target3.8 million <strong>small</strong> <strong>and</strong> micro <strong>bus<strong>in</strong>ess</strong>es by 2011 with loans.The goals <strong>in</strong> the Plano Plurianual 2008-2011 for MDIC concern<strong>in</strong>g <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es 45 name 65 actionsdistributed <strong>in</strong> four challenges: cont<strong>in</strong>u<strong>in</strong>g to implant Lei Geral <strong>in</strong> more municipalities, the participation ofmicro <strong>and</strong> <strong>small</strong> enterprises <strong>in</strong> the local <strong>and</strong> <strong>in</strong>ternational market, improvement of management <strong>and</strong> the<strong>in</strong>crease <strong>in</strong> capacity of <strong>in</strong>novation <strong>in</strong> these enterprises <strong>and</strong> <strong>in</strong>centivis<strong>in</strong>g them to jo<strong>in</strong> associations <strong>and</strong> cooperate.One of the measurable goals is to ensure that by 2011, 65.42% of all jobs <strong>in</strong> the formal sector arecreated by <strong>small</strong>, medium <strong>and</strong> micro enterprises. In 2008 the Brazilian government exceeded this target,with a figure of 65.21%. The projection for 2011 is to reach a target of 68.24%. Another goal is to<strong>in</strong>crease the percentage of micro <strong>and</strong> <strong>small</strong> enterprises <strong>in</strong>volved <strong>in</strong> export<strong>in</strong>g, with a goal to have 8.58%of all <strong>small</strong> <strong>and</strong> micro firms export<strong>in</strong>g by 2011. In 2008 the figure reached 6.58%.The plan also sets various goals for assist<strong>in</strong>g <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es to commercialise, ga<strong>in</strong> access to the<strong>in</strong>ternational market, for research on clusters <strong>and</strong> for f<strong>in</strong>anc<strong>in</strong>g SMEs through specific programmes ofCaixa, Banco do Amazônia <strong>and</strong> Banco do Brasil.A recent development <strong>in</strong> 2010 was the suggestion to create a <strong>small</strong> <strong>bus<strong>in</strong>ess</strong> m<strong>in</strong>istry by the country’soutgo<strong>in</strong>g President Lula. Policymakers will have to wait <strong>and</strong> see what will come of this.SUCCESS & PROBLEMSThe Brazilian government, it appears, is not do<strong>in</strong>g too badly on disburs<strong>in</strong>g f<strong>in</strong>ance to <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es. Ofthe five government funds mentioned <strong>in</strong> the evaluation report for MDIC under the Plano Plurianual 2004-2007, two exceeded their target <strong>in</strong> loans lent out <strong>and</strong> amount of f<strong>in</strong>ance lent out, with a further twofall<strong>in</strong>g just short of meet<strong>in</strong>g their respective lend<strong>in</strong>g target. 46However an assessment by the M<strong>in</strong>istry of Plann<strong>in</strong>g, Budget<strong>in</strong>g <strong>and</strong> Management of MDIC’s goals <strong>in</strong> thelast Plurianual (2004-2007) 47 revealed that very few of the government’s goals to promote <strong>small</strong>enterprises, were achieved. It found that the MDIC was h<strong>in</strong>dered <strong>in</strong> achiev<strong>in</strong>g some of the goals becauseof the difficulty <strong>in</strong> obta<strong>in</strong><strong>in</strong>g from the fiscus certa<strong>in</strong> statistics needed to measure the government’sperformance <strong>in</strong> assist<strong>in</strong>g <strong>small</strong> <strong>bus<strong>in</strong>ess</strong>es. Measures have s<strong>in</strong>ce been amended for the 2008-2011 plan.44 Tres Anos da Lei Geral da Micro e Pequena Empresa, Sebrae publication, 201045 Relatório de Avaliação do Plano Plurianual 2004-2007: MDIC Caderno 18, 2009.46 For example, the state’s Banco do Brasil h<strong>and</strong>ed out 1.6 million loans to medium, <strong>small</strong> <strong>and</strong> micro firms, slightly below the target set of1.8 million. But it exceeded the R$25.9-billion target for f<strong>in</strong>ance h<strong>and</strong>ed out, disburs<strong>in</strong>g R$31.8 billion <strong>in</strong> 2008.47 Relatório de Avaliação do Plano Plurianual 2004-2007: MDIC Caderno 18, 2008Page: 25 of 111