The quest for rural enterprise support strategies that work—the case of Mineworkers' Development Agency
During the 1990s, 300 000 jobs were lost in South Africa'smining industry. Mineworkers'Development Agency was set up to create jobs through small enterprise in the rural areas from where the mineworkers originated: areas which are now largely without a culture of production. This article describes why MDA moved from supporting co-operatives to individual enterprises. The support encompasses cost-covering business supply centres, as well as product development, marketing, training and counselling, which are covered by user fees and subsidies. MDA aimed to diversify the local supply market by offering training in a wide range of skills; however, only a narrow range of training was taken up, and impact assessments showed that the returns to the enterprises started were very low. MDA then attempted to help businesses reach new, higher-value markets, and is currently developing the production and marketing or marula oil. The role of the agency, and the need to hand over marketing to local private traders is discussed.
In this article examining the basis of the market development approach to business development services (BDS) a number of doubts are raised. First, the emphasis on the commercial delivery of BDS inevitably shifts the focus of interventions towards the formal, growth-oriented sector and away from poorer microenterprises, which are not so much unwilling to pay as unable to pay. Moreover,it is difficult to promote markets for BDS where the small enterprise sector is not buoyant and demand for such services is very weak. The author distinguishes between business-to-business services, which even the poorest microenterprises are prepared to pay for, and business development services,which promote growth or innovation and for which microenterprises and small businesses are less willing to pay the full costs because of the risks involved. It is argued that for such BDS, subsidy is still justified.