SME development in the country has been set back by the folly of doing things the same way and expecting different results. And this is reflected in the little or no progress made in the area, thus far.
That is why Sanjeev Orie, CEO of Value-Adds at FNB Business, is calling for a radical change of approach, if the potential of a sector commonly touted as the ‘engine for economic growth’ is to be fully realised. Perhaps, he suggests, that country should tackle the development of entrepreneurs as it did with financial inclusion.
Orie observes: “Fifteen years ago, financial inclusion seemed an impossible challenge, but the country has since made significant inroads in extending financial services to the majority of the country’s population, through mobile technology and other means. Similarly, the task of alleviating the plight of SMEs will need a joint commitment by the public and private sectors.”
With only 15 years before the National Development Plan’s (NDP) target of creating 11 million jobs by 2030, time is definitely not on government’s side. But, instead of ruing what could have been, Orie believes that “it is time make bold decisions and take concrete, measurable steps to kick-start almost two decades of entrepreneurial growth”. Simply put, this means that the country will need to consistently create nearly 1 million jobs per year to meet the target.
Moreover, the main recommendation from Statistics SA’s latest quarterly labour survey is that the country still needs to make significant progress in creating jobs as nearly 5 million citizens are unemployed. Hence, this underlines the significance of vibrant small businesses in creating jobs.
For this reason, Orie pinpoints three ways that can revive SME development and reduce unemployment, which are listed below:
- Formalise township economies
There is a great deal of entrepreneurial activity taking place in townships across the country, such as spaza-shops, car-washes and hospitality start-ups.
These and other businesses need to be formalised so that they can access financial assistance and the necessary support. Provinces such as Gauteng have already indicated a commitment to facilitating the development of township economies and this model needs to be implemented across the country.
- Integrate SMEs into the supply chain of various industries
SMEs, especially those looking to service or supply goods to major industries, stand a better chance of being sustainable if they have a reliable client-base. However, they first need to demonstrate that they can offer reliable services to businesses and this is where government could bridge the gap by facilitating the partnerships.
- Approach SME develop according to key sectors
Statistics show that South Africa’s trade balance continues to rely heavily on imports rather than exports, an indication that there is a gap in the market for locally produced goods. There is need to identify the gaps and enhance support for local businesses which could potentially benefit from such an opportunity.
