WITH SME growth crucial to economic development and the reduction of unemployment, a recent SAICA survey of SME reveals that most are expecting to expand business and turnover in the coming year.
South Africa must boost the SME sector to help resolve its disastrous unemployment rate. As Department of Small Business Development Minister Lindiwe Zulu said after her appointment in May, “The development of the small business sector is critical to economic development and transformation. The reason government is setting up this department is because small business owners were calling for it.”
The South African Institute of Chartered Accountants (SAICA) has conducted a survey among 888 local SMEs (with turnovers ranging from under R1m to more than R500m per annum) to discover what their chief concerns are, in order to lobby the new government department in the interests of effective policy.
From a brief overview of the bulk data, two conclusions can be drawn. Firstly, 2013/14 has been a rough financial year for many Western Cape small businesses – 28% reported that their businesses are less profitable now than they were a year ago, with a further 25% seeing no growth in profitability.
Paradoxically, the majority of Western Cape small business owners (not just the 47% who have seen profitability increase over the past year) are optimistic about the future: 21% expect their turnover to remain stable, with 64% expecting it to grow, and more than a quarter expecting growth of over 10%.
A similarly optimistic attitude prevails towards employment: 47% expect to be employing more people next year, and a further 46% do not anticipate having to reduce their staff complement.
Regarding the specific challenges to their growth, 73% of Western Cape SMEs are concerned that the amount of red tape around their business will increase, 62% think that labour law makes it harder to employ staff, and 53% foresee an increase in the number of competitors in their fields – although the same percentage expects the market they serve to grow.
With the world’s major economies starting to recover from recession and sub-Saharan African economies growing at very healthy rates, there is no doubt that SME growth can be the driver of major employment in South Africa, with a consequent reduction of the burden of social grants on the fiscus. SAICA will continue to canvass SME opinions in a second survey, due to begin late this year – continuing a proud tradition of constructive collaboration with government in arenas that are in the country’s and the profession’s interest.