SMEs still face challenges while entering new dawn of hope

14th March 2018 By: Simone Liedtke - Creamer Media Social Media Editor & Senior Writer

Small and medium-sized enterprises (SMEs) continue to face several challenges, which has resulted in a slowing down of SME investment in the economy.

While the National Development Plan (NDP) states that about 90% of jobs in South Africa should be created by SMEs by 2030, Western Cape High Court judge Dennis Davis on Wednesday warned that a large and overly concentrated industry, which is dominated by a few big companies and supported by government, is one of the many challenges that may hinder this development goal.

In addition to this, he highlighted during an SBi SME Indaba that fragile and economically small SMEs are overburdened by “red tape”, along with far too many regulations, a highly concentrated market, tax code concerns, inflexible labour laws and corruption.

However, the country’s SMEs could be facing a new dawn of hope, which Davis believes could be brought on by a better understanding of small businesses, the introduction of certain tax concessions, as well as bridging the disconnect between tax policies and the objectives it aims to achieve.

He further added that the reduction of regulatory hurdles for small businesses, as well as providing access to finance, could help boost SMEs to start up, grow and create job opportunities within the local economy.

He further highlighted that while structural challenges in South African businesses are the root of high levels of inequality in the country, the NDP has stated that this can be approached in a range of ways to improve the state of lifelong learning and career advancement.

Should this become a focus, lifelong learning and career advancement could enable members of the public to have the opportunity to access funds to allow retraining in another area of expertise, while also having the opportunity to become entrepreneurs and reintegrating into the economy.

This, Davis averred, is in line with the Fourth Industrial Revolution.

He further added that the eradication of corruption, for which the private sector is also largely responsible, in the country also needs to be a topic of debate.

Meanwhile, during a panel discussion led by SBi director Siki Mgabadeli, economist Mike Schussler highlighted that South Africa’s recent leadership change with the appointment of President Cyril Ramaphosa could effect more positive change for the country going forward.

“The longer-term outlook for businesses isn’t great, but if we can get a bit more business confidence, it certainly would help,” he added.

Commenting on the crux of the economy, Schussler said: “We need to make the business atmosphere easier for businesses to operate in; we need to ensure that we help them to lower their cost of doing business, whether this is through regulations, better roads, cheaper transport, right through to the price of our labour, interest rate prices. All of these need to come down, and we need to look at it in realistic terms as to how we can do that.”

Business Day editor Tim Cohen noted that there is a growing gap between government and the middle class, with Schussler emphasising that the country still has a long way to go before being able to approach the hoped for new dawn.