Small business boost needed
Ways sought to grow township enterprises
BIG business, foreign competitors, and capital leakage from township and rural areas are among the main inhibitors facing the development of South Africa’s small business sector.
This emerged at an SMME dialogue session hosted by the National Planning Commission (NPC) in Uitenhage yesterday, aimed at assisting growth of the sector.
Sessions being staged by the NPC across the country are intended as a research tool around the topic of “limited success of entrepreneurial activity by locals in townships and rural areas”.
In a hard-hitting presentation, NPC representative, businessman and former journalist Dr Thami Mazwai demonstrated that the country had a long, hurdle-riddled road to travel before achieving a widespread and successful small business sector.
Saying that the SMME sector was the least developed in the country’s townships and rural areas, Mazwai said apartheid had caused both horizontal and vertical discrimination in that black people could not develop industry and commerce in townships and could also not participate in certain professions, trades and occupations.
“The new order [democratically elected government] came, with new initiatives simply being integrated into old communities. The past has perpetuated itself,” he said.
Mazwai said South Africa suffered from a macro culture and the composition of its economy differed vastly from other countries where big business comprised a much smaller proportion of their economies, with medium-sized and small businesses taking up the bigger and biggest portions respectively.
“Immigrant entrepreneurs control more than 50% of small businesses in township and rural areas,” he said.
Small businesses with turnovers of up to R1-million comprised 83% of the economy.
“About 40% of small businesses have turnovers – not profit – of less than R70 000 per year. This means they earn less than R6 000 a month,” Mazwai said.
Twenty percent of these had a turnover of less than R25 000 a year, he said.
Solutions to the challenges faced by small businesses in townships and rural areas included beating foreign entrepreneurs at their own game, engaging with universities for solutions, halting the leakage of capital out of these areas into urban areas and halting the dominance of big business in the areas.