Hope for SMMEs in 2010

2009-12-31 13:18


THE country is steadily pulling away from the recession and small,

medium and micro enterprises (SMMEs) will be vital in helping the economy get

back on its feet.

SMMEs provide the best prospects of job creation but consumer

demand will have to increase to justify them going that route.

At this point SMMEs are sceptical about the near future and believe

the downturn will still haunt them in the coming months.

“The credit market will remain tight in 2010 and businesses will

experience a further decline in customer orders,” says Tony Balshaw, a managing

partner at Grant Thornton, an auditing firm.

Balshaw’s comments are informed by the finding of the Grant

Thornton International Business Report 2009, which surveyed small businesses.


says that SMMEs with relatively low levels of debt and cash resources will have

better prospects.

Balshaw says major challenges that were faced by small businesses

this year include:

Declining demand and waning customer confidence;
A shortage of consumer and business credit;

Crime and political uncertainty and;

Failure of government to align public sector procurement policy

with the broad-based BEE codes of good practice.

Small business analyst Septi Bukula is no less pessimistic about

the prospects of SMMEs.

“I think the demand conditions will remain weak and businesses will

struggle to secure credit until the end of the first quarter next year,” he


He says the recession has weakened a large number of small

businesses as it has shrunk consumer demand for goods and services.

“Consumers are going to remain cautious in terms of spending and

this is going to continue to affect small businesses,” says Bukula.

However, entrepreneurs in the tourism sector may need to swap their

raincoats for sunglasses.

Foundation for African Business and Consumer Services president

Mxolisi Zwane believes that small business prospects will start to improve

towards June.

“The indications are that 2010 and 2011 will be better for SMMEs,”

says Zwane. Part of his optimism is brought on by the month-long soccer World

Cup in mid-June.

But it will take a lot more than improved trading conditions for

small businesses to fly. The country is lacking in entrepreneurial spirit and


A study by Endeavor, a US-based non-profit organisation that

supports entrepreneurs in emerging countries, shows that South African rates of

participation in entrepreneurship stand at a low 5%.

The country trails behind other emerging market countries such as

Brazil (12%) and Indonesia (19%).

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