SMME Statistics in South Africa
According to the National Treasury Research on SMMEs (2008) South Africa has an estimated 2.8m small, medium and micro enterprises (SMMEs) which contribute 52%-57% of GDP. SMMEs also provide about 60% of jobs, and contribute more than 40% of the country’s total remuneration. This means that SMME’s in South Africa employ more people than private sector and government combined.
Unemployment Status in South Africa
Out of the 53 million population of South Africa, 5.1m people are unemployed, and 2.4m are discouraged from looking for a job. If the two figures are combined and we put both in the category of unemployed, this means that 13.2% of the entire population is not working. While 12,7m people are not economically active (students etc), about 15,1m people are employed in this country. (Stats SA Quarterly Labour Force Survey, Quarter 1: 2014). This is a scary situation.
The role of SMME’s
Now, I don’t want to bore you with statistics, or make this already more complicated than it already is, but we have a problem. A problem facing a lot of developing countries. To be able to get out of this problem, we need SMMEs, especially now when the private sector is shedding quite a lot of jobs. One only has to look at the growth booms in the East Asian economies in the late 1990s and early 2000s to realise that it was largely thanks to a strong SME sector. The reality is that SMMEs are critical to the economy of the country, and are an important link in creating much needed employment.
The World Bank identified the following key benefits of SMMEs
- SMMEs are the engine of growth: This means that SMMEs are key in creating jobs and employment in the country. Research from the National Treasury Research on SMMEs in South Africa, (2008) states that ‘eight out of every ten new jobs created in South Africa are in SMMEs.’
- SMEs are essential for a competitive and efficient market: Because SMME’s play the competitive game differently from the big corporates, their nimble approach to competition drives efficiency and productivity.
- SMMEs are critical for poverty reduction: The geographical location of SMMEs (mostly located outside of the big metropolitan areas) provides an opportunity to employ local people. This alleviates poverty and encourages economic activity.
- SMMEs play a particularly important role in developing countries: SMMEs are productive drivers of inclusive economic growth and development in South Africa and around the world, and they drive diversification through their development of new and unsaturated sectors of the economy.
If South Africa is to achieve part of the National Development Planning (NDP) Vision 2030, which is: ‘to reduce unemployment by 6% in 2030’ then SMME’s will be one of the key levers to help achieve the vision and the goal. But we cannot wait for the National Planning Commission to create those jobs for the country. It’s time that we moved in a different direction. Our country needs people to be innovative, to lead, to create employment, and to produce goods and services. Instead of expecting the government to create jobs for us, we need to create the jobs for ourselves. Instead of expecting the private sector to hire us, we need to become entrepreneurs. We need to become masters of our own destinies.
‘The best way to predict the future is to create it.’ Peter Drucker