One in six Gauteng adults, or over a million people, run small businesses and the growing diverse sector accounts for 35% of the province’s employment a survey has found, the FinMark Trust said on Tuesday.
The survey, commissioned by the Gauteng Enterprise Propeller and the FinMark Trust, aimed at accurate information and better understanding about the small-business sector.
”This study will help the government and the private sector plan how they can intervene to provide services to small businesses in a much more targeted way,” said Mark Napier, FinMark Trust chief executive.
The survey found that 180 000 businesses, almost all registered and employers of an average of five people, were likely to be ”engines of economic growth and employment creation”.
The highly varied market ranged from informal street vendors to sophisticated and fast-growing enterprises and 69% of businesses surveyed operated from home.
The number of small businesses had risen potentially by 200 000 in the past year but were mostly trading business, such as hawkers and spaza shops, with no employees.
Twenty percent of the sector were ”breadline businesses” who made between R750 and R900 a month, for whom life must be considered ”precarious in the extreme”.
Black economic empowerment (BEE) awareness was extremely low, only 8% of small business used government-support mechanisms, and only 27% had a plan for engaging the opportunities of the 2010 Soccer World Cup.
Non-South Africans were responsible for at least 88 000 businesses.
Ten times more service than manufacturing businesses existed and a quarter of small businesses reported crime and theft as a problem.
Less than 10% of owners had a post-matric qualification.
Access to capital was cited as a problem but credit extension was extremely low, with only 2% of businesses said to use loans.
Forty-one percent of small business people in Gauteng were ”unbanked”. Desire for banking services was real with only 27% of unbanked businesses having no need for a bank.
About 120 000 businesses needed start-up capital of more than R5 000, but most needed smaller sums.
The survey uncovered a thirst for training and development among 42% of formal businesses. Seventy percent of formal business said government-support programmes were not working for them.
The FinMark Trust said beneficial measures for development could include tax incentives for private individuals to invest in small business, free SMSes for balance enquiries and a special permit to allow non-residents access to financial services.
”There is no one silver bullet that will address small business needs,” said Napier. ”This study provides a lot of material that builds a rounded picture of the needs and aspirations of small businesses at different levels of sophistication.”
A business sophistication measure was created to look at the continuum of small business from informal to formal businesses. — Sapa