Nov 22, 2011
Labour laws, BEE hamper small businessBack
Africa|Business Growth|SBP|Africa|South Africa|Manufacturing|Product|Chris Darroll
"Major regulatory barriers identified by the index are inflexible labour laws, broad-based black economic empowerment (BBBEE) and Sars [SA Revenue Service] inefficiencies," said Chris Darroll, CEO of SBP, the research company which compiled the index.
However, this could be seen as positive as these barriers were influenced by government policy, which could be reformed.
"South Africa is squandering a critical economic asset and source of job creation by failing to create an environment for the small and medium enterprise sector to flourish," Darroll said in a statement.
"But the good news is that this can be remedied."
The 2011 SME Growth Index is the first annual study produced by SBP.
It surveyed 500 small and medium enterprises (SMEs) and would initially track their performance for the next three years.
The firms chosen survived the first two years of operation, employed between 10 and 50 employees, and operated in sectors that the government had prioritised for growth -- manufacturing, business services and tourism.
Respondents said inflexible labour legislation constrained their growth.
"SMEs also express anxiety about increased inflexibility if proposed amendments to labour legislation materialise."
Less than half the firms on the panel had grown their staff numbers over the past five years, while less than a third had created new positions in 2011.
"South Africa's SMEs are simply not growing at the pace needed for large-scale wealth and job creation."
Darroll said the economic climate was given as the main reason for the lack of job creation.
Respondents were also unhappy about BBBEE requirements.
"Widespread dissatisfaction among all the firms, including black-owned businesses, is very evident, despite some 57% having accreditation," said Darroll.
"Accreditation comes with annual costs, is administratively burdensome, and is not balanced by enhanced access to procurement opportunities."
Half of respondents planned to grow in the short term.
"SMEs in the business services sector in particular are confident of growth, but manufacturers and tourism firms are less so.
"Just over half of business services firms envisage expanding staff numbers, as do 35 percent of manufacturers and a fifth of tourism firms," she said.
Darroll said older firms tended to employ more people.
"This is in contrast to government's emphasis on supporting start-ups."
Small businesses contribute more than half of South Africa's gross domestic product and make up 77% of non-government jobs, she said.
Edited by: SapaComment Guidelines (150 word limit)
Other Economy News
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
South African construction company Group Five says work on the rehabilitation of the 800 km stretch of the Plumtree–Mutare highway, in Zimbabwe, should be completed by the end of this year. Giving evidence before the Parliamentary Porfolio Committee on Transport...
The Space Operations division of the South African National Space Agency (Sansa) revealed on July 17 that it had supported the successful launch of the US National Aeronautics and Space Administration’s Orbiting Carbon Observatory-2 (OCO-2) satellite on July 2. The...
Phase 1A of Johannesburg’s Rea Vaya bus rapid transit (BRT) system should carry around 42 000 people a day, while it was been expected that Phase 1B, rolled out last year, would add another 60 000 daily passengers. However, the entire system is currently carrying...
A stormwater project in Bedforview, east of Johannesburg, has stalled for eight months after project managers in the Ekurhuleni municipality resigned and municipal managers were placed on special leave without designating replacements. Construction to reinforce the...
The design of the Beit Bridge border post is the biggest impediment to efficient freight movement between Zimbabwe and South Africa, says Cross-border Road Transport Agency CEO Sipho Khumalo. Beit Bridge is the busiest border post in Africa. A research study on the...