Advertise with fastmoving.co.za
 
 

SA is a "complete outlier" internationally when it comes to employment creation by small and medium-sized enterprises.
SA is a "complete outlier" internationally when it comes to employment creation by small and medium-sized enterprises.

SA ‘completely out of step’ with global SME growth trends

ECONOMIC NEWS

By Jana Marais - Jul 26th 2018, 11:11

SA is a "complete outlier" internationally when it comes to employment creation by small and medium-sized enterprises, raising questions about possible policy and regulatory failure. 

Initial findings of a new study by the Small Business Institute (SBI) and the Small Business Project (SBP), released on Tuesday, found SA has only 250,000 formal SMEs, less than previous estimates of between 2-million and 6-million. "The situation is dire," Bernard Swanepoel, president of the SBI, said at the launch. "SMEs face extinction if we’re not careful," he added.

While formal SMEs — defined as businesses employing fewer than 200 employees — account for 98.5% of the economy, they only employ 28% of the formal workforce. This is significantly lower than employment rates internationally.

In the Organisation for Economic Co-operation and Development countries, over 95% of businesses are SMEs, employing between 60% and 70% of the working population and contributing up to 60% to GDP, said Chris Darroll, CEO of the SBP.

Alarmingly, the contribution of South African SMEs to jobs is falling, with large firms adding more jobs and growing employment at a faster rate than small businesses, according to the research. SA’s 1,000 largest employers, including the government, provide 56% of the country’s jobs. The aim in the National Development Plan is for SMEs to contribute 90% of job growth by 2030.

"The critical point to ask is whether this is pointing to policy and regulatory failure in this country. Why are we so completely out of step with the rest of the world?" Darroll said.

In an attempt to answer this question, the SBI and SBP have embarked on the first comprehensive baseline study on the size, nature, challenges and potential of SMEs in SA.

The initial findings are based on IRP5 and corporate income tax data provided by the South African Revenue Service, the Treasury and existing research.

The study, expected to cost R7m, will ensure SA is no longer "stabbing in the dark" when talking about SMEs, Darroll said. Preliminary findings show a lack of consistency in the government’s definitions of SMEs in 70 laws, regulations and key strategies reviewed.
Business Day 

Read more about: trends | smes's | regulation | policy | growth | business

Related News

Load shedding threatens jobs, economic recovery, says consumer body
22/03/2019 - 13:31
Load shedding, which has been escalated to Stage 4, is posing a significant risk to economic recovery, the Consumer Goods Council of South Africa said in a statement, as rotational blackouts continued to grip the country.

Retail sales recover in January after dismal December figures
22/03/2019 - 09:23
Retail spending showed signs of recovery in January, growing 1.2% on an annualised basis, slightly faster than analysts had expected.

4 Digital transformation communication strategies
20/03/2019 - 09:59
If you’re running a business in 2019, digital transformation should be on your mind. It doesn’t matter whether you’re a one-man band decorating cakes at home, or stand at the head of a multi-national corporation with hundreds of employees – it affects you. From how you engage with your customers, issue invoices, to how staff apply for leave or even claim expenses. The key issue for big organisations is without employee buy-in, you will struggle to reap the rewards. Effective communication is the key.

Tips for small business owners to survive load-shedding
20/03/2019 - 09:36
With small businesses already dealing with hikes in VAT and petrol, coupled with decreased consumer spending, load-shedding is a bridge too far, particularly for restaurateurs.

Business counts cost as Eskom battles power shortages
20/03/2019 - 09:14
State utility Eskom will make more power cuts this week as it struggles with capacity shortages that threaten to stymie President Cyril Ramaphosa’s efforts to boost investments and economic growth.