SMEs can only fulfil their potential if they can expand, because with expansion comes resilience, and a key focus of government should be to find innovative ways of enabling small, medium or new businesses to access capital more easily.
Studies have shown repeatedly that the inability to access capital is one of the key challenges facing all new businesses, and a major constraint for smaller businesses wanting to expand.
“Government has rightly identified SMEs as engines of growth and job creation. Resilience is important given the tough economic climate, and the opportunity to generate significant employment,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at the South African Institute of Professional Accountants (SAIPA). “Giants that employ thousands of people, like Pick ‘n Pay, began as family stores–they only grow if they can fund that growth.”
Deputy President Cyril Ramaphosa recently noted that Government is currently investing heavily into the South African economy, and called for ideas from the business community. Retief says that it is very important for government to ensure that any investment is carefully structured to make the most impact on the economy.
“Investment is good news, but we need to take a step back and ensure that we understand how to make this investment really work for the economy,” Retief says. “Just doing more of the same is not going to achieve the results the economy needs.”
Retief cautions against excessive focus on traditional industries such as manufacturing. Attention must be also given to stimulating growth in the services and skills sectors, as they form an increasingly important part of modern economies.
“My final point would be to ask that we also consider how to make these investments play a role in attracting foreign direct investment into South Africa. We need as much of this as possible in order to put the economy back on a growth trajectory. Thus, when we are working out how to make capital more accessible to smaller businesses, and which sectors to target, we should be thinking about supporting companies that will in turn make this country a more attractive prospect for international investors,” Retief says.