The effectiveness of local business service centres in small business development : a study in Gauteng Province, South Africa

Abstract

The Local Business Service Centre (LBSC) programme launched by the government of the Republic of South Africa in 1995 to provide business development services to small business, moreso in the Black communities, did not live up to expectations. This is according to the responses of a sample of 400 small business owners who were researched regarding the effectiveness of the LBSC programme, with a usable questionnaire response rate of 37.8%. The purpose of this ex post facto research, conducted in 2006 and 2007, was to evaluate the impact of the LBSC programme on small businesses in the Gauteng Province of South Africa. The results will assist in developing strategies for the delivery of business development services (BDSs) that would meet the expectations of all stakeholders. This is the challenge facing South Africa. The better-known service centres include the Small Business Development Centres in the United States of America and Business Link in the United Kingdom of Great Britain; and international brands like the Enterprise Development Centres sponsored by the International Labour Organisation. These centres provide business development services such as information, basic management training and referrals to more advanced services. The quantitative research was based on a questionnaire consisting of 42 variables and one open-ended question. The questionnaire was sent to 400 small business owners who had received counselling from the LBSCs. The questionnaire was developed from a literature review on service centres in the developed and developing world; the qualitative studies of Bloch&Daze in 2000 and Urban-Econ in 2002 which were conducted nationally, and structured qualitative interviews with former government officials and existing LBSC owners. The open-ended question solicited respondents to specify the type of service centre that would meet their requirements. According to the four-point Likert scale used, most respondents “disagree” that the LBSCs were effective, and the rating was just shy of the 2.5 median. Three factors emerged from the responses: “capacity and professionalism”; “productive relationship” and “empowering association”. According to a t-test and an analysis of variance (Anova), there was no statistical difference between the means and mid-points of the independent variables for the three factors which indicated “disagree”, except “capacity and professionalism” and “empowering association” in terms of turnover. The independent variables included the age of the SMME owner, the qualifications of the owner, the turnover, the number of employees and the age of the entity. The researcher has recommended an eight-point SMME development strategy as the basis to introduce a new generation of service centres to stimulate entrepreneurship and provide business development services. The recommended eight-point strategy will also assist to assess new business development services centres being introduced by various governments.