May 10, 2016 On Monday it was announced by Discovery CEO Adrian Gore that the private sector has set aside R1.5 billion to help small and medium enterprises survive the current tough economic climate. They are hoping that government will match the funding Rand for Rand raising the fund to R3 billion. Deputy President Ramaphosa was quoted as saying that the government wants to see it going to R10 billion so that it can support entrepreneurs who are the great job creators in the economy.
While SASMEF applauds the efforts of corporate South Africa we believe that more can be done and that the funds required to stage a massive intervention in the development of the SME sector should already be available through existing enterprise development spending. Using publicly available records it has been estimated that R23 billion is spent on enterprise development by corporate South Africa with seemingly little impact. The question must be asked – what is done with this amount which is a magnitude larger than the new fund? And if the new fund will be implemented in the same manner by the same persons are we not perhaps a bit naive to expect a different result?
But it is no good just adding to the molasses of accusations, anger and apathy. South Africa is sitting in a precarious position and to say anything less is to be disingenuous. The unemployment rate is simply put, shocking, with 5 700 000 (26.7%) officially unemployed. The expanded (total) number of unemployed is approximately 8 900 000 (39.3%). The biggest job losses were observed in trade, manufacturing and construction which are sectors that can accommodate a lot of SMEs. In the European Union almost all SMEs (93%) are micro SMEs employing less than 10 people. About three quarters of SMEs are active in the five key sectors: ‘wholesale and retail trade’, ‘manufacturing’, ‘construction’, ‘business services’ and ‘accommodation and food services’.
One of the solutions we as SASMEF propose is for both the public and the private sector to take into consideration the value that organisations such as SASMEF provide. There needs to be an immediate high level intervention to stave off the threat of junk status. During her keynote address at the recent SASMEF Convention, Dr Edith Vries, Director General of the Department of Small Business Development, made her message clear – we are all in this together and we must find a way to get past the legacy of distrust between government and the private sector. While much has been done by the department to ensure that small business has a voice in the halls of government, much still has to be done and that all stakeholders must work together to stop the current slide of our economy.
We believe that, through diligent research and robust engagement, we have come up with a viable plan to build the SME sector we need to ensure the safety of employment for more than a third of our people and the development of a thriving economy built on the backs of small business and we shall continue to tirelessly continue to be the voice of small business.
Founded in 2012, the South African Small and Medium Enterprises Federation (SASMEF) is a national private social enterprise that unlocks resources from the political and economic centres as a catalyst for the creation and development of sustainable SME’s.
Carl J Lotter
+2721 850 0780
+2772 881 7900