This article is reprinted with permission from Professional Accountant, published by Future Publishing
The economic future of South Africa hinges on the success of SMMEs, writes Michelle Swart.
It is the large corporate companies that get the credit for innovation and the contributions they make to economies in countries the world over. While the contribution of small businesses is often ignored, it shouldn’t be, as small, medium and micro enterprises (SMMEs) are set to lead economic recovery and help to reduce unemployment levels across the globe, especially in developing countries.
It is estimated that in developed countries, small businesses contribute approximately 50% of the GDP. Small businesses in South Africa only contribute around 30% of the GDP; however, they provide around 80% of the employment opportunities.
Finmark Trust’s Finscope South Africa Small Business Survey 2010 indicates that there are just under six million small businesses operating in South Africa, which means that one in six individuals, aged 16 years and older, generates an income through small business activity. As unemployment is one of the biggest challenges facing South Africa, especially in light of the fact that over the last 20 years the formal economy has seen a reduction in the number of people it employs, SMMEs can play a vital role to improve rising unemployment figures. In fact, it is globally accepted that the development and growth of SMMEs can play an important role in improving economies and, therefore, unemployment levels.
Local support for SMMEs