Despite numerous interventions not enough small and medium-sized enterprises (SMEs) were being created, deputy director-general: Sector Policy and Research at the Department of Small Business Development (DSBD) Mosa Makhele said at the Absa SACCI National SMME Summit yesterday.
She was standing in for Thulisile Manzini, the director-general of the DSBD.
The situation currently was that 2.7 million small and medium-sized enterprises (SMEs) could only create 8 million jobs, per SME that was 3.1 jobs, she said.
“Obviously, there is something that we (South Africa) have done significantly wrong. Unemployment is at its highest, despite several interventions that we have put in place. The interventions we have put in place have not yielded the results we want to see.”
It needed both the private and public sector to develop SMEs, she added.
The DSBD was currently looking at the issue of value chain assessments.
“What we are looking for going into the seventh administration is value chain assessments that are developed by both the government and the private sector, where we can sit across the table and see that once we have provided all the financial and non-financial support to these SMEs and develop them, who is going to buy from them in the market.
“Who is going to give them space or your retail stores? Are you going to trust them to deliver on time consistently with the quality that you want in other sectors as well?” she asked.
One needed to produce SMEs that were needed by business value chains and that the owners of the value chains created space for them to enter and allowed them to participate in.
Makhele said the department was also looking at removing regulatory challenges to enable small businesses to thrive.
Looking at administrative burdens there were currently up to 152 pieces of legislation that a company had to engage with if they wanted to do business in South Africa.
“For SMEs we are sitting at 29 pieces of legislation that they have to comply with. That is not just a burden, but it is a barrier to entry for most SMEs where it is the legislation itself that prevents them from getting in,” she said.
Another barrier to entry of SME’s was access to funding.
Makhele said,“ It is far easier for me to ask for R100 000 loan to go and splash out and buy myself a new pair of shoes than to get a R100 000 loan fora business in this country. There's a reason for that. The bank needs to tell us why is that the case? Why can you give me money to spend, but you cannot give me money to invest in a business?"
The African Union had estimated that South African was sitting on a R500 billion gap on financing SMEs.
But, she said, most SMEs failed within the first three years not because of finance, but due to issues of management, education and investing in the right sector.
“You have to look at the growth of the economy and in order to do that we need to think differently. We want to focus on unblocking regulatory impediments but SME’s need to start to focus on innovation and the production space and taught others,” Makhele said.
Pareshan Rambridge, Absa Executive SME Business Relationship Banking, said, “In 2023 Absa allocated R4.2 billion in support of SMEs. We believe we can do more.”
Rambridge also emphasised the bank was akin to a “financial doctor” and welcomed SMEs to come in for a health check and to get free advice.
“We have data for each and each and every sector, for each and every individual in whatever form or shape to help you. Just knock at our door. And we'll navigate with you will listen to you, and be able to mentor you free of charge and plan the journey with you,” he said.
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