The biggest challenge facing small, medium-sized and microenterprises (SMMEs) in the Southern African Development Community (SADC) is access to markets, says consulting firm Tutwa Consulting researcher Anna Ngarachu.
Addressing delegates at the SADC Industrialisation Week Conference, in Johannesburg, on Wednesday, she noted that the complexity of sustainability standards was preventing SMMEs from accessing the market, as the SMMEs were generally unaware of what standards they needed to comply with and how to implement them.
“Rural SMMEs, especially, have no support mechanism to guide them on standardised principles.
“Adopting these standards is also very costly and implementation is arduous, which negatively affects SMMEs,” said Ngarachu.
Market structure and contractual agreements also play a role in hindering SMMEs from moving forward, she noted, as support is only provided to small businesses that are partnered with big multinational corporations.
“Multinational corporations should be willing to help smaller businesses by introducing them to suppliers in their own value chains. German conglomerate Siemens, for example, has a good supplier programme whereby it assists its SMMEs and pays the costs of implementation and certification,” she said.
Ngarachu further noted that accessing adequate financing was another challenge for SMMEs.
“Government grants are great, but they can be competitive and often offer only 50% of grant funding, leaving small businesses to try and raise the rest of the capital themselves.”
She stressed that innovative ways of raising capital, such as crowd funding, enabled SMMEs to fund their own operations using funds provided by investors.
“It helps them gain control of their own operations instead of going directly to banks and falling into a debt trap,” she said.