Are small businesses the big answer?

Government has to do more to ensure small business owners are supported.

South Africa’s unemployment rate fell to 23.3 per cent in the second quarter of 2020 from 30.1 per cent in the previous quarter, according to Statistics South Africa (StatsSA).

StatsSA noted in September that this was the lowest jobless rate since Q3 2009 – the strict lockdown distorted labour force numbers with fewer people actively looking for employment. The number of people who have stopped looking for work reached 42 per cent from 39.7 per cent in the previous quarter.

Total employment dropped across all of the 10 industries, StatsSA reports. The largest decreases were recorded in community and social services (-515 000), followed by trade (-373 000), private households (-311 000), fi nance (-283), construction (-278), manufacturing (-250 000) and transport (-110 000).

CUE SMALL BUSINESS

The Small Enterprise Development Agency shows that there are around 2.55 million small, micro enterprise (SME) owners in South Africa. These currently contribute below 28 per cent of jobs.

Dylan Baxter, head of sales at Raizcorp, says this is far removed from government’s work include low economic

SMALL BUSINESSES AND JOB CREATION

Faced with an unemployment crisis and a depressed economy, South Africa is looking to small business to drive job growth, reports Denise Mhlanga

target of 90 per cent, hence there is an opportunity for small businesses. “SMEs have the ability to drive innovation and job growth. If there is a dent in the unemployment rate, smaller businesses are the ones who are going to deliver the knockout blow.”

He says if government addresses key challenges facing SMEs, the sector’s growth will spiral and employment creation contribution will increase. Some of these challenges include: • access to adequate infrastructure, business support and development of entrepreneurial skills • access to markets, quality research and development, funding and credit to support growth • a need for redefi ned labour laws for SMEs. “If ongoing improvements are made in these areas, SMEs certainly have the potential to grow and drive employment in this country,” Baxter says.

knockout blow.”– Dylan Baxter

Without a doubt, unemployment is a hindrance to economic participation and issues around transformation and equality. “COVID-19 continues to drive the unemployment numbers up, this has the potential to create social exclusion by creating negative effects on the subjective perception of social integration, life satisfaction and access to economic resources,” Baxter says.

And small businesses are in no better position, he adds. “They battle with fi nding customers and late payments, which negatively impact cashfl ow and creates a knock-on effect on the SME’s ability to retain or hire more staff.”

However, the pandemic has created an opportunity for businesses to revaluate their core offerings and to adjust their direction.

“Government should do more to ensure that SMEs have the means to take advantage of opportunities that are currently available and

“SMEs have the ability to drive innovation and job growth. If there is a dent in the unemployment rate, smaller businesses are the ones who are going to deliver the

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