It is time to act with urgency and clear the way for SMMEs – and the economy
15 July 2021
BUSINESS BRIEF BY ALDERMAN JAMES VOS, MAYORAL COMMITTEE MEMBER FOR ECONOMIC OPPORTUNITIES
Repeatedly saying that small businesses are the backbone of employment in South Africa can lead to this phrase sounding meaningless, but it is very true.
It’s worth reminding ourselves that small, medium and micro enterprises (SMMEs) absorbed 66% of the country’s workforce in 2019, according to the governmental Small Enterprise Development Agency.
For me, small businesses mean entrepreneurs, start-ups and niche local services. Why then was South Africa relegated to 49th place out of 54 countries on the National Entrepreneurial Context Index by the Global Entrepreneurial Monitor (GEM)?
The effects of the pandemic on lives and livelihoods have laid bare the urgency with which government needs to do away with policies and mechanisms that only serve to stifle opportunity and growth.
Just this week, the World Bank urged that emergency measures are needed – including tax incentives, labour law reforms and better support for SMMEs and entrepreneurs – to save the country’s economy from declining to the point of no return.
And this is not news to government.
All the way back in 2017, the Department of Small Business Development stated in a report: ‘The regulatory environment in South Africa is… not conducive to business development. …SMMEs are burdened by the costs of licensing, registration and settling of legal claims.’
The GEM puts it simply: ‘Developing economies, especially one like South Africa where there is rampant unemployment, need to shed all unnecessary red tape bureaucracies (from registering a business to reporting and related paperwork) and create innovative incentives for funding and supporting entrepreneurial success.’
This is exactly what City departments and I have strived to do in Cape Town.
Promoting the ease of doing business
What this translates to, for us, is going out into communities, identifying what the needs are, and what we as local government can do to overcome said needs. And to affect changes speedily.
As an example, the City has funded incubators such as:
- FURNTECH, headquartered in Nyanga, which up-skills people for work in the furniture industry and has trained almost 7 000 learners and supported more than 700 SMMEs.
- BANDWIDTH BARN in Khayelitsha, which provides a computer lab for the local community, and also teaches them technology and business skills.
- Atlantis-based SAREBI which trains entrepreneurs for working in the renewable energy sector.
Incubators help us to empower entrepreneurs who are growing businesses in their own communities.
We also looked at how we could answer the questions that most new business owners seem to ask – questions that relate to funding, or tender consideration and cutting through red tape.
Our solution has been to establish teams and programmes that immediately and clearly address these needs.
A prime example is The Business Hub, started in August 2019, whose sole purpose is to answer these queries. Since then, the Hub’s team has received well over 3 000 service requests, with 98% of them resolved in two working days. In March this year, we went a step further and launched The Mobile Business Hub, which has gone into communities such as Delft, Bellville and Mitchells Plain and addressed business owners in their own areas.
We work with partners such as Productivity South Africa, which trained almost 900 businesses through enterprise and supplier development programmes in the 2019/20 financial year. As a direct result of these programmes, we have helped young businesses to source big opportunities.
Fostering innovation and growth
In setting up initiatives to foster business growth, we’re not merely looking to tick boxes.
The results are known: A 2018 study by the Southern African Venture Capital and Private Equity Association revealed that the Western Cape has the most venture capital activity in South Africa. Last year, the Global Startup Ecosystem Map and Research Centre placed Cape Town in the top 150 of 1 000 cities who are succeeding in creating a favourable environment for start-ups to thrive. According to the Innovation Cities Index, Cape Town is Africa’s most innovative city.
This is certainly what I’ve observed during my tenure as the City of Cape Town’s Mayoral Member for Economic Opportunities and Asset Management. I’ve witnessed the ingenuity and drive of small business owners in numerous sectors all across Cape Town.
There are people just like them all over South Africa who are determinedly plying their trade. Let’s all do our part, back a buddy, buy local.
Let us, as all spheres of government and big business, match their determination and act with urgency, clear the way and allow them to grow their businesses and the country’s economy in whichever way we can. We cannot wait any longer.