Zulu: Most SMMEs fail in year one

(Shutterstock)
(Shutterstock)

Johannesburg - Almost 80% of small, medium, and micro enterprises (SMMEs) fail in their first year, Small Business Development Minister Lindiwe Zulu said on Tuesday.

Around half of the SMMEs that survived the first year remained in business for the next five years, Zulu said in a speech prepared for delivery at the Consumer Goods Council of SA summit in Midrand.

Women were also adversely affected, as they owned the majority of SMMEs that failed.

"We are confident that together, we will be able to help reverse this trend," the minister said.

To enable SMMEs to play their role as articulated in the National Development Plan, an environment that promoted business entry and expansion was important.

"Private and public-sector procurement will improve access to opportunities for small and medium enterprises," she said.

"Human settlements and services will need to be conducive to small and medium enterprise expansion."

SMME regulations and standards would be reviewed, access to debt and equity finance would be improved, and business support would be segmented based on what type of business was involved.

For SMMEs and co-operatives to play their envisaged role in the economy, standards and quality had to be taken into account as they went hand-in-hand with sustaining and growing enterprises.

"Consumers will not buy goods that are not of good quality simply because they come from co-operatives or SMMEs," the minister said.

Government's responsibility was to help SMMEs and co-operatives to comply, rather than lament their lack of compliance.

The government wanted to see small enterprises complying with both local and international standards and competing in those markets. It would help create conditions conducive to growth, she said.

At the same time, government sought to protect local enterprises from low-quality, cheap imports.

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