SME ministry can drive a small-business revolution

2013-08-27 10:00

South Africa is at a crossroads economically and if no drastic action is taken to put the economy on a sustainable growth footing for the benefit of all South Africans, we risk unprecedented social upheavals reminiscent of the struggle against apartheid, if not worse.

This is why the National African Federated Chamber of Commerce (Nafcoc) welcomes the call by the ANC’s national executive committee for an end to unproductive debates about the economy and the announcement of a presidential task team to decisively deal with economic growth issues.

While slow growth at home is mainly due to the slowdown in the global economy, South Africa is yet to fundamentally deal with the bottlenecks in our economy the way other emerging economies have.

Countries such as Indonesia, with comparable economic features to ours, have realised the importance of small businesses in their economies and are giving the sector the support it deserves.

According to a recent study by the US Agency for International Development, small businesses account for 99% of all firms in Indonesia, employing more than 99?million people (more than 97% of total employment) and make up about 57% of the Indonesian GDP.

This is the type of a dramatic change we are calling for.

As Nafcoc, we have been calling for a small-business revolution for decades now.

The pre-2008 bull market has shown that the “out of the box” ideas we need will not come from big business, which raked in billions in profits with very little impact on joblessness, poverty and inequality.

While we acknowledge the serious economic strides made over the past 20 years, these efforts have not resulted in the critical mass of poor South Africans improving their standard of living – specifically black South Africans in the villages and townships.

The National Development Plan offers some solutions to these challenges and Nafcoc resolved to support the plan at its 49th conference last

month.

But at some point we need to stop the tinkering with economic policies and endless ideological debates, and completely overhaul the way we do things to bring about material change to the lives of citizens.

As part of this change, Nafcoc is calling for an establishment of a small and medium enterprise (SME) ministry to drive the small business revolution.

This is international best practice and it is high time we caught up with the rest of the developing economies.

Our challenges are immense: 4.6?million people are unemployed in South Africa, 2.3?million are discouraged from looking for a job and 12.7?million are not economically active.

With so many of our people not participating in the economy, it is clear that this is the time for South Africa to change course.

According to the Global Entrepreneurship Monitor’s (GEM) 2012 survey, only 14% of South Africans intended to open a business in the next three years, which is below the average of 27% for nations with similar levels of economic development (Malaysia, Brazil, Russia).

This situation is untenable.

We need to understand the underlying issues behind the stagnant growth and near-collapse of these economies.

To this end, Nafcoc is currently developing a township business study to track the performance of businesses in townships, small towns and rural areas.

The findings will form part of our recommendations to Nedlac and other multilateral forums.

We believe that our envisioned army of small to medium business owners will act as catalysts for faster economic growth with the potential to create millions of job opportunities and drastically improve the standard of living of millions of South Africans.

»?Hlongwane is the president ­ of Nafcoc

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