This article explores the state of skills development for smaller enterprises in South Africa through a consideration of two recent empirical studies of very small and micro enterprises (VSMEs--those with 2-10 employees). It provides new evidence about the complexity of the VSME sector and the mixed performance of state attempts to engage with it in the area of skills development. The study suggests that there are relatively high levels of informal training occurring in these enterprises and reasonable take up of a number of elements of the 2001-04 National Skills Development Strategy. However, the study shows that there has been negligible involvement with the National Qualifications Framework. It reinforces international arguments that levy-grant systems are, at best, a difficult tool to use, and that their ability to balance the needs of larger and smaller firms is far from proven. The South African experience also raises a question about the appropriateness of a sectoral approach to skills needs, particularly for smaller enterprises. (Contains 4 tables and 1 note.)