Why SA’s small businesses continue to struggle

Small businesses are often hailed as the backbone of the economy, with the potential to create jobs and drive economic growth. However, in South Africa, the reality seems to fall short of the rhetoric. The Small Business Institute, in collaboration with the Small Business Project, has released early findings highlighting the challenges and opportunities faced by small to medium-sized companies in the country. Bernard Swanepoel, Chairman of the Small Business Institute and a seasoned mining veteran, shed light on the pressing issues hindering the growth of small businesses in South Africa. One of the key revelations from the discussion was the discrepancy in the number of small businesses reported, ranging from 1.2 million to 6 million, while official records only account for around 250,000 registered small businesses. This glaring gap raises questions about the true contribution of small businesses to the economy and the need for a more accurate understanding of this vital sector. Swanepoel emphasized that only 28% of formal jobs in the country are generated by small businesses, signaling a missed opportunity for job creation and economic development. So, what is holding back the potential of small businesses in South Africa? Swanepoel pointed to a myriad of challenges, including burdensome regulations, delayed payments from government and big businesses, and a lack of support for business growth beyond initial stages. He criticized the current environment, which he described as favoring big players and leaving little room for small businesses to thrive. Addressing these issues is crucial to unleashing the full potential of small businesses and driving sustainable economic growth. Swanepoel outlined three key steps that could be taken to facilitate change swiftly and effectively. Firstly, he called for prompt payment of invoices by government and big businesses, releasing much-needed capital back into the sector. Secondly, he highlighted the importance of shifting focus from constantly creating new startups to supporting existing businesses for long-term success. Lastly, he stressed the need to deregulate and cut through red tape that hampers small business operations and growth. In a thought-provoking statement, he raised the question of why groundbreaking companies like Google or Apple were not born in South Africa, prompting reflection on the barriers that may be deterring innovation and entrepreneurship in the country. The interview with Bernard Swanepoel underscores the urgent need for systemic changes to unlock the potential of small businesses in South Africa. By addressing the challenges faced by small businesses and implementing targeted reforms, the country can create a more conducive environment for growth and job creation in this critical sector.