Thursday, August 16, 2007

Transforming the economy through Small to Medium Enterprises

The past month I have been working closely with emerging small to medium enterprises (SMME’s). In doing so, I have developed a strong appreciation of the role of SMME’s in fostering accelerated economic growth and economic transformation. I believe the SMME sector is critical to achieve the key national development objectives of economic growth, employment creation and equity.

The importance of the SMME economy for economic development and job creation cannot be undermined. Several important set of issues are being highlighted by entrepreneurs in terms of the key existing obstacles to improved business performance. The most clusters of issues relates to the growing competition from large companies, weakened by the lack of skills and capital.

As a result emerging small business enterprises in South Africa have a high mortality rate and usually fail to grow into larger businesses. I strongly endorse the perception that it is through growing the SME sector that sustainable growth can be achieved. While the large corporates are important to the country’s economy, they tend to be capital-intensive in nature. Clearly, it is through supporting Small to Medium Enterprises, which are labour-intensive and owner-driven businesses where trickledown economics can really make a difference.