News Release from the Small Business Institute

15 April 2020

Now more than ever South Africa needs the facts about Small Businesses

Today the Small Business Institute received the fifth request since lockdown asking it to distribute a questionnaire to our members to find out about SMMEs in South Africa.

“We are not surprised,” said CEO John Dludlu.

In October 2017, he said the SBI signed a memorandum of agreement with the Small Business Project (SBP) to be a research partner in what SBI believed was the single most important thing it could do as an advocacy body to help SMEs: learn everything it could about them. The things these new surveys are asking and so much more.

“We wanted to initiate a baseline study of facts because we believed – and still do – that it’s essential to gather evidence before developing policy or designing interventions to unleash the innovation and dynamism of this vital, job-creating segment of the economy, and now to protect them from the fallout of Covid-19,” he said.

SBI raised sufficient funding to complete the first phase, which answered how many formal employing (i.e., not freelancers or self-employed) SMEs South Africa had and how many people micro, small, medium and large businesses employed, according to the generous access Stats SA, SARS and the National Treasury granted the organisation.

“Contrary to inaccurate statistics that continue to be quoted by various organisations (including the CEO Initiative), we learned that there are only 263,224 small, micro and medium enterprises employed 3.9 million people, while large businesses and government employed nearly 10 million. This ratio is unusual in the world, where some 60%-70% of jobs are provided by small firms, not the 28% in South Africa where employment is so desperately needed,” said Dludlu

What SBI planned to explore in the second phase of the research were the sectors of the economy in which SMEs operate (Where do they succeed? In which industries do they struggle, and why? How can we support them?) and their geographical spread (Why do they succeed or fail in certain towns or regions and not others?). We wanted to know the value and contribution that SMEs add to economic factors like GDP; why so few formalise; where the gig economy was clustered; the age, race, and gender of SME owners and employees; their turnover and profit margins; and the varying constraints they face to starting, running and growing their businesses.

“If only we – and everyone – had that information now, for it was to be open-sourced and completely transparent. The Oppenheimers, Ruperts and Motsepes of the world (and the SASME Fund before them) would know where their money would be best spent; the Department of Small Business Development would be able to direct public money to the businesses in sectors most likely to survive; and nimble entrepreneurs would know where to look for opportunities while picking themselves up and dusting themselves off.”

It’s not too late.

Dludlu said we will still need to know, when the dust clears, what is left standing, but surveys will not be sufficient. “We will need real research. We will need the results of the secondary data mining and primary data collection SBP had mapped out. We will need to ask the right questions (more than once over time) and extract the answers to let us see into our future as we move into a post Covid-19 world.”

From decimated value chains and the coming social upheaval to the future of work – digital, gig, blockchained and 3-D printed, South Africa has a chance to make something of this emergency, said Dludlu. To do so “we’ll need to inform our decisions to build that ‘enabling environment’ for new business formation, competition, and growth with facts. We will need, more than ever, to have a picture of the segment already most vulnerable to municipal dysfunction, power outages, choking red tape and whose cash flow was staunched by a government and clients who wouldn’t pay them in less than 30 days for the work or service they’d rendered.

We can still serve them, but we must truly see them.”

ENDS

Note to editors:
For more information and advance interview requests, please contact John Dludlu on 083 676 1881 or john@smallbusinessinstitute.co.za  for any other queries please contact our office 012 348 5440 / leandre@smallbusinessinstitute.co.za