Numbers from Statistics South Africa reveal an official unemployment figure of 32.1% during the third quarter of last year. Unemployment remains a significant obstacle in building an inclusive and prosperous future for all South Africans.
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By Ronnie Mbatsane
The critical role that entrepreneurs and small and medium enterprises (SMEs) play in creating jobs, supporting communities and enabling economic growth is widely acknowledged by role-players across the entrepreneurial ecosystem.
According to the Small Enterprise Development and Finance Agency (SEDFA), small, medium and micro enterprises (SMMEs) are responsible for approximately 60 to 70% of employment in the country. Beyond job creation, these enterprises also drive inclusivity by providing economic opportunities for marginalised groups, including women and youth, bolstering broader economic empowerment.
Unemployment remains a significant obstacle in building an inclusive and prosperous future for all South Africans. Numbers from Statistics South Africa reveal an official unemployment figure of 32.1% during the third quarter of last year. Even more alarming though is the fact that the number of unemployed people in South Africa increased from 5.2 million in the third quarter of 2014 to 8 million ten years later.
Despite their potential for job creation, SMEs are often more vulnerable to economic and operating headwinds, making it difficult for them to survive, with the generation of additional employment opportunities becoming increasingly elusive.
According to a Small Business Project study probing the impact of lockdown measures during the Covid-19 pandemic on these businesses, the vast majority of SMEs experienced a drop in revenue and had to lay off staff.
More recently, economic uncertainty and slow growth, load shedding, frequent water interruptions, access to finance, skills shortages, red tape and supply chain disruptions have also been flagged as an inhibitor by South African business owners.
In recent months, business sentiment has been cautiously optimistic, while lower inflation and interest rates have also provided some reprieve for a consumer-driven economy under pressure.
While the local SME sector is teeming with potential for growth and dynamism in service offering, unlocking the full capacity of SMEs on a sustainable basis will require ongoing public and private sector support and intervention.
To get this right however, an in-depth and contemporary understanding of the sector is necessary to ensure that any potential intervention does not only offer a temporary solution but a contribution that can be a catalyst for sustainable growth and prosperity, collaboration and shared impact.
It is also important to measure perceptions and prevailing conditions on an ongoing basis, ensuring any changes impacting the SME ecosystem can be monitored and tracked timeously – allowing for reviews and adjustments to solutions that have their basis in up-to-date, scientific findings.
It is against this background that Absa and the South African Chamber of Commerce and Industry (SACCI) have announced a new index that will serve as a yardstick for the growth and development of SMEs in South Africa.
Conducted by the Bureau of Market Research (BMR), the Absa/SACCI Small Business Growth Index (SBGI) aims to measure the perceptions of small business owners and managers regarding business growth, prevailing small business conditions and challenges. As such, it endeavours to become a leading national brand in South Africa, representing the voice of the small business community around a core set of important factors impacting entrepreneurs, including business conditions, the cost of doing business, current business challenges and access to finance. It also intends to provide a view on future business prospects and the support required to facilitate the growth and development of this important sector.
Given the critical role that SMEs play in supporting communities and enabling economic growth, the initiative is aimed at providing in-depth insight into the SME ecosystem. This would enable stakeholders across the private and public sectors to provide solutions and support that would enhance the operating conditions for these businesses, ultimately creating an enabling environment for job creation and financial inclusion.
Critically, the Absa/SACCI Small Business Growth Index is intended not only as a tool for SMEs, but to also serve as a resource for policymakers, investors and stakeholders to better understand the SME landscape and execute meaningful interventions.
The findings of the first survey will be published in the coming weeks, with a planned update every six months.
Ronnie Mbatsane: Managing Executive for SME Business at Absa Business Banking
BUSINESS REPORT