SMEs the answer to S.Africa's unemployment - CNBC Africa

SMEs the answer to S.Africa's unemployment


by This article is sponsored by Barclays Africa 0

The SME landscape in South Africa is grappling with the ability to create employment.

The National Development Plan (NDP) states that South Africa would need 49 000 SMEs growing at a rate of 20% per annum to create 11 million jobs by 2030.

However, the reality of the present situation is that the South African GDP is at 1.3% for the first quartile of 2015, averaging growth rate of 2% per annum. Unemployment has ticked up to 26% and inflation is at 4.3% and is expected to reach as high as 6.5 by the end of the year.

Matsi Modise, National Executive Director of the South African Black Entrepreneurs Forum said while it may look like “doom and gloom”, this presents an opportunity for entrepreneurs “who can make something out of nothing”.

Modise said it’s essential to have a positive perspective that will enable the ability to see solutions.

Miriam Altman, who is part of the National Planning Commission, said “The growth of the small medium enterprise sector could be a growth driver, so we shouldn’t fetishize small firms.”

Altman said the kind of ecosystem that’s needed and support is key and often we don’t get to the right complement of services or funding or the right kind of innovation.

Nomvula Makgotlho, Chief Director of the Ministry of Small Business South Africa, said that “they are working against all odds”.

Despite the glaring challenges, Makgotlho said they aim to move SMEs into the mainstream economy. “The main critical thing is partnership between ourselves and big businesses because procurement opportunities are not amongst small business.”

In response to the concern held by many entrepreneurs of cumbersome red tape, Makgotlho said, “We have realised that we have quite a plethora of legislative pieces for SMEs however most of them are creating a lot of challenge and limitations.”

Altman said the regulatory environment needs to be simplified and made easier; however this is not a challenge unique to South Africa. The key is to have opportunity, so the focus should look towards access in the value chain.

Modise substantiated that, “opportunity needs to meet the ability and willingness for entrepreneurs to take advantage of it.” There might be a desire to groom the black industrialists but Modise said unless we can identify who they are, then opportunities will exist in vain.