PROGRAMME MANAGEMENT

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CASE STUDY

You are an employee of Growing Futures Foundation (GFF), an organisation that aids small businesses and invests in the development of young entrepreneurs. You have recently been nominated to head up a new South African small business development initiative within the company. Many small businesses fail within three years of starting out. Your first task is to investigate why this is the case, and find ways to mitigate this risk in new GFF-assisted start-ups. Your team has gathered the following information for you to review when conducting your analysis.

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In industrialised countries, SMEs provide and create many jobs, and do so at growing rates. SMEs additionally tend to train young people and foster entrepreneurship and innovation, which has positive effects on economic growth and competitiveness. As a result of these findings in developed countries, SME creation has been seen as a key avenue forincreasing employment and reducing poverty in developing countries. Heavily-resourced programmes have been built to achieve this (De Kok, Deijl & Veldhuis-Van Essen, 2013).

However, developing countries face different constraints and often have different economic structures. A literature review commissioned by the International Labour Organization and the Deutsche Gesellschaft fr Internationale Zusammenarbeit set out to examine the evidence from almost 50 studies about the role of SMEs in creating employment in developing countries.

The findings of this study illustrate that although there is great variation across countries, SMEs and micro enterprises generally do provide the greatest share of employment. In developing countries, SMEs provide around two-thirds of employment, while this may be up to 80% in lower-income countries (De Kok, Deijl & Veldhuis-Van Essen, 2013).

Most of this employment comes from the smallest businesses, with between 5 and 99 employees. One identified source of the SME employment benefit is that they grow quickly and produce additional jobs and entrepreneurs. Still, the quality of jobs available in SMEs is slightly lower, with lower wages and levels of job security on average (De Kok, Deijl & Veldhuis-Van Essen, 2013).

Despite their contribution to the economy, SMEs face several constraints in comparison to large enterprises. The biggest constraint is access to finance, with other substantial constraints including competition from the informal sector and taxation (Kumar, 2017). Operational costs therefore pose a significant challenge to SME survival.

SMEs are also less able to benefit from economies of scale or increase their return on investments in production and operations. They may also lack capacity to produce and access information relating to their performance and possible market opportunities (Kumar, 2017). In countries with restrictive regulatory environments, SMEs may struggle to overcome regulative barriers to registration and operation (World Bank Group, 2020).

A 2016 study by the International Labour Organization analysed the economic, social, political, and environmental factors affecting SME development in South Africa. The study found a number of factors, in addition to those already mentioned, that impact SME development in South Africa:

Uncertainty and low economic growth: High unemployment, low productivity, infrastructure disruptions such as electricity shortages, rating agency downgrades, market fluctuations, high crime and a lack of trust in police, and bureaucratic regulations pose barriers to SMEs starting and operating in this context.

A low ease of doing business: South Africa's regulations and procedures may impede small businesses by posing challenges, such as long business registration times.

Government support: Government programmes to support SMEs are generally inadequate and poorly communicated to the public.

Education system: South Africa's education system does not generally teach or encourage entrepreneurship. Due to the difficulties faced by SMEs and entrepreneurs, there is also a low rate of interest in entrepreneurship among South Africans.

Access to finance: When start-ups access finance, it is usually provided by friends and family rather than formal organisations.

Access to information: It is difficult for South Africans to access information about entrepreneurship and business development.

Question 1 (400 WORDS)

As we are now in the Design Phase of the Programme Cycle, we are interested in designing an intervention that will help to alleviate one (or more) of these causes.

Develop a Theory of Change (ToC) for this proposed intervention using the five-step process. For this question, focus on the first four steps. That is, briefly describe the programme's intervention (Step 1), identify the long-term impact (Step 2), identify short- and medium-term outcomes as well as inputs and outputs with relevant activities (Step 3), and identify one or two assumptions that need to be managed for the purpose of this programme (Step 4). Please do this by completing the table below.

Step 1	Describe the intervention	Write here:
Step 2	Identify the long-term impact	Write here:
Step 3	Identify short-term outcomes	Write here:
Identify medium-term outcomes	Write here:
Identify outputs	Write here:
Identify activities	Write here:
Identify inputs	Write here:
Step 4	Identify assumptions	Write here:

(400 WORDS)

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