Current Edition >> Archives Section >> Leading Stories >> February 2003
Revealing trends come to the fore in the latest authoritive study on emerging business development in South Africa. This is contained in the Annual review 2001 of the State of Small Business Development in South Africa just published by Ntsika Enterprise Promotion Agency, the prime governmental organisation tasked in this regard. Emerging business or so-called small, medium and micro enterprises (SMME's) is a priority focus area of governmental economic policy and therefore of key importance to socio-economic growth in SA.
The Review is an in-depth and comprehensive study of the progress of the SMME sector up until the end of 2000. Based on a distinction between survivalist, micro, very small, small and medium-sized enterprises, the Review is loaded with strategic statistics.
Main trends
The main trends being brought to light, are the following :
• 95,3% of all enterprises in SA are SMME's, while micro and survivalist enterprises make up 70,2% of the total number of enterprises.
• In the year 2000, SMME's (excluding survivalist and micro enterprises) contributed 34,8% to GDP - up from 32,7% in 1995. More than 50% of the total GDP contribution by the agriculture, forestry and fishing and construction sectors is by SMME's.
• Unemployment is rising, indicating that currently SMME's are not able to compensate for job losses from large enterprises or to absorb enough new entrants to reduce unemployment.
• SMME's employ 53,9% of people in the private sector - up from 44% in 1995. Employment by SMME's is growing much faster than SMME contribution to GDP, which only increased by 2% between 1995 and 2000. This is indicative of the high labour absorption capacity of SMME's.
• The number of CC's registered in 2001 increased dramatically from 78 730 CC's in 2000 to 94 696 in 2001. In contrast the number of Pty Ltd registrations declined dramatically from 32 419 Pty Ltds in 2000 to 25 669 Pty Ltds in 2001.
• Of the total number of SMME's in SA of 1 079 627, 38,4% is in Gauteng, 18,4% in KwaZulu Natal, 13,4% in the Western Cape, 8,7% in the Eastern Cape, 5,2% in North West, 5,0% in Mpumalanga, 4,6% in Limpopo Province, 4,6% in the Free State and 1,7% in the Northern Cape.
• The future economic growth of the respective provinces will determine the extent to which the current provincial SMME trends will persist. Estimated GDP growth is expected to be greatest in Gauteng (4,1%) over the next five years. Mpumalanga and North West are expected to experience significant increases in growth. Growth rates in all provinces are expected to increase, except for KwaZulu Natal whose five year average growth rate is expected to moderate from 4,3% to 2,1%.
• Micro and survivalist enterprises are more than 70% African, Asian and Coloured owned. Only 12% of survivalist enterprises and 37% of micro enterprises are white-owned, while very small enterprises are 88% white-owned. Thus a trend emerges that as the enterprise size-class increases, the percentage of white-owned also increases. Since small, medium and large enterprises employ 88% of people employed in the private sector and contribute 94% of South Africa's GDP, economic power is mainly in the hands of white entrepreneurs.
• Constraints to growth faced by SMME's, such as access to markets, finance and business premises, the acquisition of skills and managerial expertise, access to appropriate resources and technology, etc., increase in appearance the smaller the business gets - in other words survivalist and micro enterprises experience more constraints than small and medium-sized enterprises.
• An artificial constraint on growth of SMME's has emerged, because owners and managers are reluctant to allow their labour forces to grow to a point which exposes them to threatening employment and labour relations regulations.
• Economic growth in South Africa will not reach the 56% level needed to alleviate poverty and unemployment if the widening gap between the First World, formal economy and the peripheral, informal economy is not reduced. Supply-side solutions such as investment in human capital, which will promote entrepreneurship, need therefore to be put in place.
• For an overall desired level of SMME growth to be obtained, a suitable economic environment needs to be cultivated so as to actively stimulate entrepreneurship.
Food for thought
These conclusions thus contain a lot of food for thought and digestion for both government and business, no doubt. The debate is surely on - and in many instances it is back to the drawing board.
The full Review is available from Ntsika at (012) 483 2000, fax (012) 483 2054, toll-free Helpline 0800 113857, email jsmit@nepe.org.za.
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