Gauteng SMME activity not sufficient to achieve economic goals

25th March 2014

By: Leandi Kolver

Creamer Media Deputy Editor

  

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While there is significant small, micro and medium-sized enterprise (SMME) activity taking place in Gauteng it is not yet enough as South Africa is targeting an economy driven not only by big business and government but also by a multiplicity of SMMEs, Gauteng finance MEC Mandla Nkomfe said on Tuesday.

Speaking at the inaugural Gauteng Funding Fair, a corporate fair focusing on projects in excess of R20-million, that was cohosted by professional services firm Deloitte and the Gauteng provincial government, in Johannesburg, he pointed out that currently the province contributed 36% of South Africa’s gross domestic product (GDP), with SMMEs making up more than 50% of this percentage.

“But this cannot be enough,” Nkomfe stated.

Also speaking at the funding fair, Deloitte Consulting public sector lead Gaba Thabane pointed out that currently only 40% of South Africa’s GDP was made up of entrepreneurial activities, as opposed to 70% of the global GDP and 60% of the economic activities for countries such as China and Japan.

He stated that the National Development Plan (NDP) went to great lengths in emphasising the importance of creating jobs in the local economy, “and we recognise economic growth as the catalyst for job creation and, therefore, the circle completes itself if entrepreneurship creates economic growth”.

Meanwhile, Gauteng premier Nomvula Mokonyane said government remained committed to targeted investments that would have a direct impact on economic growth and job creation.

Since 2009, the Gauteng provincial government spent R4.6-billion in targeted interventions aimed at stimulating the economy and creating job opportunities, with another R3.4-billion set aside to be spent over the next three years, she said.

“Our approach in this regard is informed by the NDP and the Gauteng Vision 2055, [a document of the Gauteng Planning Commission that will be launched on March 27]. These key policy documents emphasise the importance of, among others, partnerships between the private sector, business and labour to facilitate and promote investment that would create jobs and assist in fighting the challenges of poverty and inequality,” Mokonyane said.

CHALLENGES
Nkomfe further said government acknowledged the challenges facing SMMEs, such as the administrative burden, which had to be eased.

Gauteng Treasury head Nomfundo Tshabalala said government had to look into interventions, such as “one-stop-shop” centres, to make it easier for start-up businesses to get their paperwork in order.

“Looking into such a model is something that we will take up,” she stated.

Thabane agreed that a “one-stop-shop” entrepreneur support centre was needed and suggested that these be incorporated in local municipalities to ensure that people received support where they lived.

Meanwhile, other challenges entrepreneurs faced, specifically with regard to getting funding, related to the feasibility of their projects, he told Engineering News Online.

“Some entrepreneurs come up with concepts they think there is a need for, but when you go into the marketplace you realise that, [while] there may be a need [for it], it has not been socialised properly with the key stakeholders,” Thabane said, explaining that the initiative then did not meet the demand.

Further, a project might not be feasible as, while it was a viable idea it would take too much work to make it happen, or because the person driving the project or proposed business did not have the necessary record to provide the funder with the assurance that the investment would pay off, he explained.

“This links to the skills level of entrepreneurs. If you do not have the demonstrable capacity…from a skills point of view, [what you are planning] becomes difficult for a funder to buy into,” Thabane said.

The Gauteng Funding Fair was created specifically to help entrepreneurs to overcome these challenges and access funding.

Following the submission of project plans earlier this year, 50 applicants had been shortlisted and given the opportunity to present their ideas to potential funders.

Mokonyane pointed out that the value of the projects that had applied for funding through this leg of the funding fair was more than R10-billion, with the largest single application received valued at R3.2-billion.

“Equally important is that the projects submitted are spread across a variety of sectors,” she said.

Gauteng provincial government, in conjunction with Deloitte, planned to host two further funding fairs this year on the topics of infrastructure and SMMEs.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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