Environment needed that is conducive to SME growth

Small and medium enterprises (SMEs) are widely considered a major contributor towards the South African economy and one of the biggest contributors to job creation, yet despite this, the SME community continue to face various challenges that limit their growth.

According to Lionel Billings, head for national consulting services at Business Partners Limited, government needs to create an environment that is conducive to SME growth so that businesses can flourish and contribute towards employment. “Small and medium businesses are the bedrock of every economy and society, and government and large businesses need to align their goals to incorporate SMEs.”

Billings, who was speaking at a Sanlam / Business Partners Entrepreneur of the Year® (EOY) workshop, a competition aimed at uplifting South African entrepreneurs, said it is estimated that there are 1.5 million SMEs in South Africa, of which, one million formal micro-businesses are employing five or less people.

The Business Partners Limited SME Index, which measures attitudes and confidence levels amongst the Small and Medium Enterprises (SME) industry in South Africa, recorded confidence levels of only 33% that labour laws are conducive towards the growth of businesses. It was reported that the effort and cost to comply with the very modern labour legislation is often out of reach for most SMEs and inhibits them from employing more people.

Billings added that business and government needed to instil a sense of entrepreneurship in the country’s youth. “Government needs to cultivate and grow the correct type of culture in order to stimulate business growth within the SME sector.”

Guest speaker at the event, Mzukisi Stephen Dondolo, entrepreneur and chief executive officer of investment firm African Pioneer Ltd, addressed the need for entrepreneurs to group together and to lobby Government to improve the environment for SMES and to address the high level of unemployment.

“Government has created a platform that allows for black businessmen to enter the economy. On the one hand that has created ‘tenderpreneurs’, but on the other hand there are those hardworking entrepreneurs who take their hard earned money and reinvest it in the community.”

He adds that widespread corruption and ‘tenderpreneurs’ do not enable the economy to grow. “Corruption creates an environment where someone will have to increase the price of a service to pay for corrupt tenders. It only benefits ‘tenderpreneurs’, who do not invest back in the economy.

“Corruption has also led to the cost of doing business increasing, which prohibits entrepreneurs from entering the market, and results in the pool of taxpayers remaining small, or even shrinking further, while government expenditure continues to grow, leading to taxpayers being squeezed even more. It becomes a vicious circle that has a very negative effect on the economy and benefits only a select few.”

He says that to counter corruption and to bolster the working environment for SMEs, Government needs to pay more attention to the SME’s needs.

“Entrepreneurs must think positively and look for business opportunities as together, we, entrepreneurs, can conquer unemployment. If we can arrest unemployment and instead change it into employment opportunities, that money will circulate and create wealth in the community. Together we can lobby all the spheres of government to improve their service delivery,” concludes Dondolo.