Frances Baard SMME Week Overview NDP Challenges Conclusion NDP Sets out ambitious goals for smmes Target 90 of employment opportunities to be created by this sector by 2030 Envisions the SA economy growing by at least 54 growth per year over the next 15 years to treble ID: 383549
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Slide1
Challenges Facing Small Businesses
Frances Baard SMME
WeekSlide2
Overview
NDP
Challenges
ConclusionSlide3
NDP
Sets out ambitious goals for
smme’s
:
Target – 90% of employment opportunities to be created by this sector by 2030.
Envisions the SA economy growing by at least 5,4% growth per year over the next 15 years – to treble in size (
smme
sector is pivotal to drive this growth)
These targets depend on a business environment that supports the growth and sustainability of existing smme’s; a culture of entrepreneurship and enables new sme’s to prosperSlide4
Challenges
Growth cycle of
smme’s
: survivalist businesses to potential high growth entrepreneurial firms
Require a richer more detailed analysis of the
smme
lifecycle to enable policy to be targeted more effectively.
Comparatively underperforming –
Estimated that SA
smme’s
account for 60% of
empployment
compared to global average of 77%.
Exceptionally high failure rate:
Min Rob Davies noted that 70% of
smme’s
fail in their first year.
World Bank: Viability of micro-enterprises is linked to the motivation for starting the business:
Successful businesses start by choice, as entrepreneurial ventures.
Survivalists – motivated by a lack of other employment options – seldom successful.
Most of SA’s
smme’s
fall into the latter category.
Since - Decline in
smme’s
employing less than 50 workers Slide5
Challenges
NDP places
smme’s
at the head of the employment charge.
Regulatory burden:
Smme’s
spend a disproportionate amount of time dealing with regulatory compliance ( approximately 8 working days a month dealing with red tape – a cost of about R 216 000/year- 4% of turnover if the
smme
turn R 5 million per year)
Top red tape headaches:
Dealing with SARS
Labour issues
Dealing with their
municinaplities
Compliance with BEE
Responses differed across industries: tourism – concerned with municipal issues; manufacturers – labour issues (11 days per case to resolve a dispute)Slide6
Conclusion
Policy makers need to understand the complexity and diversity of the sector.
Needs linked to incentives.
Address the red tape and burdensome regulations.
Use regulatory impact assessments as a mechanism to reduce red tape.
Interventions to reduce skills shortages
Incentives to encourage investment in
smme’s
.Slide7