80% of SMME's fail

2001-07-11 14:36

Johannesburg - Aids, crime and a lack of managerial skills have been blamed for the high rate of failure among South African small, medium and micro enterprises (SMMEs), according to a new report by the University of Port Elizabeth.

"Up to 80 percent of small, medium and micro enterprises in South Africa fail every year as a result of Aids, crime and a lack of management know-how," the Southern African Entrepreneurship and Small Business Association said in a statement on Wednesday.

The statement said the authors of the report surveyed 209 SMMEs and compiled a list of interrelated issues that could lead to an SMME failure. Aids and crime figured prominently.

It said while crime and Aids often seemed beyond the control of business owners, they needed to plan and budget for these variables.

It said small businesses played a vital role in South Africa's economy, absorbing almost half of the people formally employed in the private sector and contributing about 37% to the country's gross domestic product.

It also said the survey's respondents showed an alarming lack of managerial skills and know-how.

Most of the respondents employed 10 people or less and reported an annual turnover of less than R1m.

South Africa has one of the world's highest rates of violent crime, fuelled by poverty and glaring income disparities, and one in nine of its population is estimated to be infected with the HIV virus that causes Aids.

Many businesses have suffered from Aids either through the premature deaths of skilled or experienced employees or through the growing number of Aids-related deaths among their demographic markets.

- Reuters