Boost for SA’s small business sector

SMEs, SMMEs can be main drivers of economic growth, job creation

THE SMALL business sector has the potential to unlock South Africa’s high unemployment levels, which is a critical issue for the government after the latest statistics released by Stats SA this week. It was announced that unemployment soared to its highest level since 2008, standing at 26.7 percent in the first quarter of 2016, up 2.2 percentage points since the last quarter of 2015.

Yesterday, Minister of Small Business Development, Lindiwe Zulu met a delegation of key stakeholders from the organised small business sector at UWC.

Zulu said the national government approached her department to help with job creation.

She said the issue of unemployment was critical for the government and therefore the need for the department to reach out to SMEs (small and medium-sized enterprises), because if they received the necessary support they could grow and employ more people.

During her budget vote speech on Wednesday, Zulu said the government was aware that SMMEs (small, medium and macro enterprises) and Co-operatives could be the main drivers of economic growth, poverty reduction and job creation.

“This has been proven globally that SMMEs are the heartbeat of stable, growing and better performing economies such as China, India, Germany, amongst others, and greater source of job creation, economic empowerment and transformation. Chile, for example, had a remarkable resurgence in economic activity thanks to new entrepreneurial initiatives in the past three years.”

She said there was something unique about what was taking place in Africa currently – the boom in small and mediumsized enterprises.

“Today, these small and growing businesses create around 80 percent of the region’s employment, establishing a new middle class and fuelling demand for new goods and services. The scale of this transformation should not be underestimated.”

Zulu said evidence confirmed the potential of the sector, as seen in the Goldman Sachs 2015 report which states, “the South African economy can grow by 5 percent over the next five years if the government and the private sector invest R12 billion in 300 000 small businesses.”

She said South Africa’s Nine-Point plan identified “unlocking the potential of SMMEs, Co-operatives, township and rural enterprises” as key to economic development and empowerment of township and rural communities.

“President Jacob Zuma’s initiative of bringing together the government, private sector and labour bodes well for the country and brings into sharp focus the importance of SMMEs.

“The recent announcement by the president on the establishment of a fund to support small business, especially black entrepreneurs, shows the commitment to growing the economy. Business further announced that they have pledged R1.6bn.”

Zulu said there were indicators that the small business sector was beginning to take its rightful place as the engine of South Africa’s economy.

“This has recently been confirmed by the landmark 2016 tax collection success in which Sars broke through the R1 trillion ceiling.

“The tax authority has reported that more than 18 000 new SMMEs had for the first time submitted tax returns.”

TODAY THESE SMALL AND GROWING BUSINESSES CREATE AROUND 80 PERCENT OF THE REGION’S EMPLOYMENT, ESTABLISHING A NEW MIDDLE CLASS