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Johannesburg - The year 2013 has been a positive one for small and medium enterprises (SMEs), according to Sisa Ntshona, head of enterprise development at Absa [JSE:ABSP].
He said most beneficial for this sector in 2013 has been the realisation that SMEs are vital players in South Africa’s economy.
"This is not only as job creators, but as key partners that need to be consulted and co-opted in South Africa’s quest to emerge from its economic growth quagmire," said Ntshona.
"Although there has always been a general acknowledgement of the crucial role SMEs play in our economy, there has up to now been too little effort by both private and public sector entities in developing SMEs and fostering an SME friendly environment."
The year 2013 has in many ways represented a decisive break from this, according to Ntshona.
SME funding by both public and private sector has increased and is scheduled to increase threefold in 2014.
For instance, two of South Africa’s major public funding sources at the national level, the Small Enterprise Finance Agency (Sefa) and the National Empowerment Fund (NEF) disbursed a joint total of R1.5bn in the 2012/'13 financial year, compared to R1.3bn in the 2011/'12 financial year, effectively creating thousands of jobs.
The private sector is also starting to move decisively in contributing to the development of SMEs, he said.
"In 2013, we have seen a greater number of big businesses not only talking about supplier development programmes, but actually implementing them and as a result, procurement from SMEs by big businesses continues to increase."
The banking sector has also fully taken on its role in creating a more conducive environment for SMEs.
Absa has in the past year rolled out a total of nine walk-in entrepreneurship centres and earmarked a total of R250m towards SME development and several other players in the banking sector are doing the same.
"In the end, 2013 has been a positive year in terms of reinforcing the importance of SMEs for our development, SME funding and the creation of SME supplier development programmes, however, a lot more still needs to be done," he said.
"As a result, 2014 will be shaped by how we move beyond issues related to the creation and development of SMEs, to generating a sustainable environment for SMEs."
His view, and the assessment by Absa, has always been that it is not so much about funding, but about access to markets, and the requisite skills that small business owners need to develop, in order to create new markets or penetrate existing markets.
Capacitating small business owners with vital business skills such as the knowledge of legal matters, the compliance environment and general business acumen, remain the greatest challenges in 2014, he said.
"The year 2014 will also be dominated by policy and legislative developments, which could represent a great opportunity or stumbling block for SMEs."
The Davis tax review committee appointed by Finance Minister Pravin Gordhan in July 2013, will have wide-ranging ramifications for the country’s taxing regime and depending on its outcomes, may either bolster or stifle growth for small businesses.
The revised broad-based black economic empowerment (BBBEE) codes will also start to have an impact on SMEs in the latter part of 2014.
"While the new BBBEE codes will affect contributor statuses of most SMEs, they will in the main contribute to meaningful supplier development, if properly implemented," he said.
He said most beneficial for this sector in 2013 has been the realisation that SMEs are vital players in South Africa’s economy.
"This is not only as job creators, but as key partners that need to be consulted and co-opted in South Africa’s quest to emerge from its economic growth quagmire," said Ntshona.
"Although there has always been a general acknowledgement of the crucial role SMEs play in our economy, there has up to now been too little effort by both private and public sector entities in developing SMEs and fostering an SME friendly environment."
The year 2013 has in many ways represented a decisive break from this, according to Ntshona.
SME funding by both public and private sector has increased and is scheduled to increase threefold in 2014.
For instance, two of South Africa’s major public funding sources at the national level, the Small Enterprise Finance Agency (Sefa) and the National Empowerment Fund (NEF) disbursed a joint total of R1.5bn in the 2012/'13 financial year, compared to R1.3bn in the 2011/'12 financial year, effectively creating thousands of jobs.
The private sector is also starting to move decisively in contributing to the development of SMEs, he said.
"In 2013, we have seen a greater number of big businesses not only talking about supplier development programmes, but actually implementing them and as a result, procurement from SMEs by big businesses continues to increase."
The banking sector has also fully taken on its role in creating a more conducive environment for SMEs.
Absa has in the past year rolled out a total of nine walk-in entrepreneurship centres and earmarked a total of R250m towards SME development and several other players in the banking sector are doing the same.
"In the end, 2013 has been a positive year in terms of reinforcing the importance of SMEs for our development, SME funding and the creation of SME supplier development programmes, however, a lot more still needs to be done," he said.
"As a result, 2014 will be shaped by how we move beyond issues related to the creation and development of SMEs, to generating a sustainable environment for SMEs."
His view, and the assessment by Absa, has always been that it is not so much about funding, but about access to markets, and the requisite skills that small business owners need to develop, in order to create new markets or penetrate existing markets.
Capacitating small business owners with vital business skills such as the knowledge of legal matters, the compliance environment and general business acumen, remain the greatest challenges in 2014, he said.
"The year 2014 will also be dominated by policy and legislative developments, which could represent a great opportunity or stumbling block for SMEs."
The Davis tax review committee appointed by Finance Minister Pravin Gordhan in July 2013, will have wide-ranging ramifications for the country’s taxing regime and depending on its outcomes, may either bolster or stifle growth for small businesses.
The revised broad-based black economic empowerment (BBBEE) codes will also start to have an impact on SMEs in the latter part of 2014.
"While the new BBBEE codes will affect contributor statuses of most SMEs, they will in the main contribute to meaningful supplier development, if properly implemented," he said.
