The South African Institute of Professional Accountants (SAIPA) has called for the creation of a unified, strategic national policy, perhaps with its own ministry, to grow the small and medium-sized enterprise (SME) sector more vigorously.
The Black Business Council (BBC) has made the same call.
“Globally, small and medium-sized enterprises are recognised as engines of economic growth and job creation. Our government has long recognised the role that SMEs will have to play in driving jobs and economic growth-but the time has come to coordinate all its initiatives for maximum effectiveness,” says Shahied Daniels, Chief Executive of SAIPA. “Unemployment threatens our social fabric, and SMEs offer our only hope of overcoming this challenge.”
SMEs already play a significant role in the South African economy. According to the Minister of Finance, Pravin Gordhan, “About 70% of private employment is in firms with fewer than 50 workers”. Around 9 million South Africans are employed by SMEs and the sector is said to contribute 60% of the national gross domestic product. Most telling of all, SMEs are creating a disproportionate amount of the new jobs-up to 80.
“Addressing the employment challenge facing our country will be difficult without a sustained upward shift in the number of firms operating in the country and the expansion of jobs created in smaller firms,” Gordhan said.
Government is putting money and resources behind SMEs via various initiatives but, says Daniels, these efforts are fragmented and consequently are failing to gain the necessary momentum. He argues that South Africa should be following the lead of other countries around the world by taking a much more strategic approach to small business. “For example, speaking at the International Small Business Conference in Sandton – in September 2012, Professor Tsugio Ide compared Japan’s astonishing success in growing one of the world’s most dominant economies to the creation of an SME Agency in 1948,” Daniels says. “Australia has a Minister of Small Business and Europe’s small businesses are playing a major role in keeping its economy going during the financial crisis.” Similarly, Botswana, Zimbabwe and Malawi are putting various coordinated initiatives in place to grow their SME sectors, and Malaysia is planning to be a developed economy by 2020 on the back of globally competitive SMEs, Daniels adds.
SAIPA’s members who are in private practice tend to focus on this sector and indeed many of them are SMEs themselves,” says Daniels.
“We understand the challenges that SMEs face, which is why we are making this call to create an overarching SME policy environment and a powerful ministry or other senior capability for enabling SME growth–and through it, the growth of the economy as a whole.”