According to Thami Mazwai, director of the Centre for Small Business Development, the state of South Africa’s small medium and micro enterprises (SMMEs) is unhealthy, with 80% of the estimated 3.5-million small business owners in the country having a turnover of approximately R200 000 a year.
This is a worrying figure because it does not create an atmosphere for further and sustainable economic development.
The National Development Programme has prioritised job creation and economic development in its 2030 plan, with the vision to grow South Africa’s economy by 5.4%.
It is however clear that government cannot achieves this vision by itself; an inclusive relationship between all stakeholders must be entrenched.
Research shows that about 68% of all South African workers are employed by small businesses that employ fewer than 50 people.
A sizeable proportion of the national workforce (43%) is employed by businesses that employ fewer than five people.
South Africa’s estimated 2.8-million SMMEs contribute between 52% and 57% of Gross Domestic Product and provide about 61% of employment.
SMME development is therefore critical for driving employment, economic growth and stability.
However, the 2012 Global Entrepreneurship Monitor South African report indicates that only 14% of South Africans have intentions of venturing into business within the next three years, which is a great concern when compared to efficiently driven countries.
This is most worrying because South Africans, especially the youth, have a low perception of opportunities for starting their own businesses (40% in South Africa versus 80% in Uganda and 81% in Zambia).
According to the preliminary findings of the Nedbank Small Business Index, launched in August, a significant number of small businesses look to Africa for growth due to the local market conditions slacking.
While the country is setting its hope for job creation on the small business sector, the index revealed that fewer business owners plan to hire more people, and 15% intend shedding staff.
Most business owners cited the affordability of salaries and wages (16%), followed by changes in the economy (11%) as reasons for anticipated layoffs.
As the economy tightens, fewer business owners are taking out finance and only about half (48%) surveyed had applied for finance in the last year.
Of those, about two-thirds (64%) reported that they were successful in obtaining finance.
With such alarming statistics, coupled with the high youth unemployment — unless this dire situation is resolved urgently — we will continue to see heated debates and massive protests, which sometimes end in violence.
Tackling challenges head-on
Nedbank remains committed to working with like-minded stakeholders that seek to make socioeconomic transformation happen.
Through our continuous research into the challenges impacting entrepreneurs, we have noted that 67% of small business owners are self-taught, with the majority of small business owners with some level of high school education or a matric qualification.
This is why we partner with Old Mutual, WIPHOLD, Mutual and Federal as well as Masisizane on the Imbizo Business Acumen programme, which provides basic business skills, training and mentoring to enable emerging entrepreneurs to efficiently run their enterprises.
Nedbank continues to support SMMEs through initiatives such as Small Business Seminars that offer practical advice to entrepreneurs and “It’s MyBiz”, which is a reality TV show on etv that takes viewers into the world of small business – tackling their challenges head-on and PocketPOS, the first mobile payment solution in South Africa that enables businesses to process payments via a smartphone or tablet.
Nedbank’s procurement strategy supports SMMEs with the provision of contract opportunities and enabling policies, as evidenced by the R2.8-billion spend on goods and services procured from 3 120 SMMEs in 2012.
It is against this backdrop that Nedbank took the lead and became the first signatory of the Prompt Payment Code initiative.
The code was launched at the Small Business Friday event, an initiative aimed at creating an environment in which small businesses can thrive – from consumers to large corporates – to support small business.
The initiative is championed by the National Small Business Chamber, which serves as a pledge for organisations across South Africa to commit to paying small businesses promptly. The Code promotes payment of small businesses for goods and services rendered within 30 days from receipt of a valid and compliant invoice – and within seven days for businesses with an annual turnover of less than five million rand.
Nedbank continues to make strides in developing and transforming the communities we serve. South Africa must become more accommodating to entrepreneurs to collaborate and nurture the future of entrepreneurship and ultimately South Africa’s economy.
This article forms part of a supplement made possible by the Mail & Guardian’s advertisers. Contents and photographs were supplied and signed off by Old Mutual and Nedbank