BLSA’s Mavuso flags the risks and impacts of the small business sector


According to Business Leadership South Africa (BLSA) CEO Busi Mavuso.

Help from government, the private sector and civil society will be essential to their recovery, she notes in her latest weekly newsletter, published on July 18.

Mavuso stresses that small businesses, which play a crucial role in jobs, growth, competition, inclusion and innovation in all the major economies of the world, must be supported and developed.

According to a 2020 report by management consultancy McKinsey, small and medium-sized enterprises (SMEs) in South Africa accounted for more than 98% of businesses, employed between 50% and 60% of the country’s workforce in all sectors and were responsible for a quarter of private sector employment growth.

However, SMEs are often the least resilient in weak economies, as they have smaller customer bases and limited cash reserves.

“The civil unrest that erupted over a year ago in KwaZulu-Natal and Gauteng has seen businesses large and small looted and vandalized. What worries me is the devastating effect [this] on small businesses,” Mavuso points out.

Large companies that have been directly affected have suffered enormous damage, even with insurance cover from the South African Special Risk Insurance Association, “but they have the muscle to recover”.

“Many smaller ones, however, lacked insurance or the financial reserves to rebuild their businesses and the floods added to the woes of those in KwaZulu-Natal. Some will never open their doors again and those that have reopened are struggling to reach pre-hectic levels of operations,” Mavuso said.

The government recognizes the importance of SMEs and, in this year’s State of the Nation Address, President Cyril Ramaphosa said the Companies Act and other laws that affect small, medium and micro enterprises are being reviewed to ease the regulatory burden on small businesses.

He also acknowledged that there are too many regulations in South Africa that are unnecessarily complicated and difficult to comply with, preventing small businesses from growing and creating jobs.

This led to the creation of a dedicated capacity within the presidency, led by the president of the Small Business Institute Sipho Nkosi, to reduce red tape in government entities.

Additionally, the mission of the Department of Small Business Development is to focus on increased support for small businesses and cooperatives, with an emphasis on programs to advance entrepreneurship among women and youth.

The Department of Trade, Industry and Competition also has several funding schemes for new or existing businesses, while the National Youth Development Agency raises funds for small businesses and the Small business financing promotes the growth of SMEs while contributing to poverty reduction.

“Government can’t do all the heavy lifting and BLSA is doing a lot of work in this space to improve the outlook [for SMEs].

“We take a long-term view of the SME sector because we believe that if it is bigger and stronger, it will help to increase employment considerably, allowing more people to support themselves and their families. their families and therefore less reliance on the government for help,” says Mavuso.

It will also broaden the tax base and increase government revenue, allowing more funds to be directed to a smaller group of welfare recipients, she notes.

“One of our key initiatives in this sector is in partnership with the United States Agency for International Development. Through the Beyond Advocacy Fund, we have partnered with startup campus 22 On Sloane to equip entrepreneurs with the necessary business skills .

“The key offering of the campus capacity building program is the accelerator model which aims to support start-ups and help them integrate into the mainstream economy by creating opportunities for them to access markets. , as well as funding.

“Many other initiatives to support SMEs are being led by organized businesses and other entities across the economy but, in the context of the severe blows the sector has suffered since the Covid-19 outbreak, the only element that can hasten its recovery is unity bureaucracy in the presidency.

“We need to start seeing the results of his work, especially on small businesses, as soon as possible,” Mavuso points out.


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