Professor Wiseman L Nkuhlu | Trustee | Wiseman Nkuhlu Trust |
South African Institute of Chartered Accountants (SAICA) | Secretariat | Wiseman Nkuhlu Trust | mail me |
SME development has been on the agenda since the days of the Mandela presidency – and yet, South Africa’s small businesses continue to founder. Their precarious state has been placed under even more pressure by unforeseen events such as the pandemic lockdowns and July riots, and, with our unemployment rate now standing at more than 30%, it is more important than ever to take action.
Will it ever come right? Well, according to the panellists taking part in a recent Courageous Conversation hosted by the South African Institute for Chartered Accountants (SAICA) and facilitated by Daily Maverick investigative journalist Pauli van Wyk, SMEs will continue to find it difficult to forge their niche in the mainstream economy until we find a way to fix deep-seated societal problems.
According to event’s speakers, which consisted of SAICA CEO Freeman Nomvalo; KPMG’s Professor Wiseman Nkhulu; Oteo Investment Holdings’ Mlu Manci, BASA’s Khulekani Mathe and BUSA’s Cas Coovadia, the depth of the problem becomes clear when one considers that the unemployed are not the only people marginalised from the mainstream economy. Taking into account those who earn a meagre income in the informal sector and the unskilled who earn very low wages, we are looking at a total of almost 70% of South Africans who feel disaffected – and whose view of the economy as a vehicle for ‘the few’ is likely to lead to more unrest unless urgently addressed.
SME definition unclear
The problem – or, at least, one of them – is that the definition of what, exactly, constitutes a small business remains blurry: the parameters range from entities generating a turnover of less than R200,000 per annum, to those turning over R70 million.
Obviously, there is an enormous range of challenges experienced across this spectrum; the obstacles facing a micro-enterprise cannot be compared to those encountered by a medium sized business.
This became clear immediately after the KZN and Gauteng July riots.
While roadside vendors were as likely to have their businesses destroyed as the independent pharmacies, hardware stores, doctors and lawyers based in the malls that were targeted by looters, the latter had a definite advantage over the former in that they have maintained records proving their existence.
Challenges faced
The contribution of informal businesses to the economy is no less important, and yet it is harder for them to be acknowledged, because they do not formal structures in place.
This is accompanied by further challenges: it is difficult for a company of this nature to, for example, open a bank account or register with CIPC, precisely because the economy still appears to favour established businesses.
The plus side, though, is that this is an obvious area where the broader business community and industry authorities can help: if established entities are prepared to mentor their less formal counterparts, provide assistance when it comes to matters such as registration and essentially walk their business journey alongside them, they may well fare better.
Support crucial
This points to the fact that…
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Read the full article by Professor Wiseman L Nkuhlu, Trustee Wiseman Nkuhlu Trust, as well as a host of other topical management articles written by professionals, consultants and academics in the December/January 2021/22 edition of BusinessBrief.
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