Why South Africa Needs SMMEs

Upon cutting through the fluffy stuff and discussing why South Africa loves SMMEs, its time to discuss in more depth why South Africa needs SMMEs. They aren’t going away and nor should they. The potential for the growth of SMMEs in South Africa is huge and the benefits thereof can no longer be ignored. South Africa Needs SMMEs this is why…

Quality Employment

At first glance it may not seem like SMMEs make a dent in South Africa’s unemployment rate, in reality these enterprises actually account for up to 60% of our employment (according to the Department of Trade and Industry). This sizeable impact is also owing to the fact that more often than not these businesses upskill their previously unskilled employees when they see the potential for their growth. Whilst those who are considered unskilled are almost entirely overlooked by the formal sector. Through SMMEs they are able to pursue apprenticeships and gain first-hand experience and they are also more often than those not afforded the opportunity to grow further in other businesses. The ripple effects of not only the employment of staff by SMMEs but also in the upskilling thereof has the potential to raise people out of the poverty trap.

Growing the Economy

The term SMME covers a broad range of businesses, from informal to formally registered and non-vat registered. The Department of Trade and Industry estimates that between 52% and 57% of South Africa’s GDP can be attributed to SMMEs. Other stats suggest the figure is closer to 34% of our GDP. Either way, given the current economic environment we cannot afford to ignore SMMEs, moreover there is massive room for growth. SMMEs have to potential to transform our economy; in spite of a few barriers. Globally SMMEs have led the world out of many a recession, for now however they are underperforming in South Africa.

Self Reliance

Its no surprise that due to the economy, jobs are no longer secure nor abundant (depending largely on your field of course). Outside of wooing the owners of SMMEs in an effort to obtain or maintain employment status, it’s not crazy to consider starting your own business. With the risks come the potential for reward in the form of self-reliance and the ability to generate your own income. Sure it’s going to be stressful but so is retrenchment.

Keep Markets Competitive

In the same vein as, ‘n boer maak ‘n plan’, SMMEs have to continually find new ways to do things. That competitive edge comes from the necessity to innovate. Without innovation an SMME quickly becomes redundant. South Africans are unique in their ability to problem solve and find better solutions – we came up with the Kreepy Krauly, the CAT scan and Pratley’s Putty. A good competitive market will boost the GDP and further spurn innovation.

If you still aren’t convinced that South Africa needs SMMEs you have bought into the idea that big business is going to save us; so maybe there’s no saving you. Big business helps students through university with bursaries, those same students are then afforded internships where they are able to continue to grow. But what about the poorest of the poor? Grassroots development, innovation and healthy competition may just hold the key to stronger SMMEs and a more resilient economy.

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