Phosa: SMEs are pivotal to jobs drive

2012-05-24 14:21

London - Small businesses are more important to creating jobs in South Africa than the government’s huge infrastructure drive, ANC treasurer general Mathews Phosa said on Thursday, adding that the country must diversify to avoid “European flu”.

“I’m a believer in small and medium-sized businesses.

"I welcome the huge infrastructure project we have, but I don’t think it’s going to create the many jobs we are dreaming of,” Mathews Phosa told Reuters in an interview in London.

“It’s the small and medium-sized businesses that we need to put in place,” said Phosa.

Africa’s largest economy has set out a huge infrastructure programme to create jobs at home and increase trade on the continent, for which South Africa is currently seeking partners.

Unemployment in the country was 25.2% in the first quarter of 2012. Education at all levels will be a top priority at next month’s ANC policy meeting, Phosa said, as the country seeks to reduce poverty and create a large middle class.

Phosa, who sits on South Africa’s national executive committee, said the mineral-rich country must seek to diversify its markets as the debt crisis in Europe rages and said “we can only wish and pray” for economic recovery on the continent.

“The European flu will infect Africa so we should not be over-confident, ” he said, adding, “If we diversify our markets, find new markets as well where there is no such crisis, it may buffer the blow.”

Phosa was in London to encourage trade between Britain and South Africa and said the country wanted more investment from both East and West.

South Africa is a “very small player” in the Brics, the group of high-growth countries of Brazil, Russia, India and China it joined in early 2011 and is still trying to define its role in the club, Phosa said.

“The big strong economies could take advantage of us and eat us for breakfast,” he said.

South Africa must work out how to get the most out of trading relationships with countries like China, currently its biggest trading partner with which it had a trade deficit of about $3bn in 2011.

Phosa reiterated President Jacob Zuma’s view that the ANC will not back nationalisation of some parts of South Africa’s economy, despite some party members calling for nationalisation of industries like mining.

“I don’t think the ANC is likely to go for nationalisation. If people want to be populist, I will not join the choir.”

In earlier comments, Gwede Mantashe, the day-to-day head of ANC, said South Africa was increasingly looking East to China and India for investment.

The left-leaning ANC has been deeply suspicious of the West and distrusting of the United States, former European colonial powers and free market capitalism. 

  • Flavi - 2012-05-24 14:51

    Yes we know ,however when these small businesses do goverment work ,why does goverment take forever to pay them ?These same businessess are closing down at an alarming rate because of incompetence from goverment supply chain.

      Themba - 2012-05-24 17:21

      Forget about the government, service people directly. That's happen when you want quick money!

  • Richard - 2012-05-24 15:28

    Yes when you travel it is easy to say all these things to try and stimulate foreign investment, my companies approached your government numerous times with sustainable project in SME ranging from public transport to green energy to help Eskom, as a serial entrepreneur and businessman we dont have time for all the red tape, we have the money ourselves we just need the "approval" but it takes for ever, not interested anymore rather continue to do business overseas.

      Themba - 2012-05-24 17:22

      Why the government?

  • Alan - 2012-05-24 15:32

    Yes, Phosa, except that your ANC government - influenced by horribly outdated Communist philosophy - has chosen to make South Africa one of the most difficult countries in the world to start a new business in. Plus of course, as Flavi says, the government takes forever to pay SME's. I have personal knowledge of this. So in short, stop talking cr*p Phosa and can we see some action from the ever-yakking ANC? Or is that too much to ask?

  • Allan - 2012-05-24 16:38

    The first step is identifying the problem and the second doing something about it. It's a fact that all around the world 80% of jobs are created by SME's which Mr Phosa seems to acknowledge. The next step as member of the NEC of the ANC is to get it into their minds to do something about supporting the SME's to drive employment and growth. Stop talking about it and do something!

      tumelo.mabua - 2012-05-25 07:10

      100% true!

  • Brad - 2012-05-24 16:51

    I agree 100% that SA need to stimulate small business. I just feel very sorry for Mr Phosa who has to try and improve trade relations with the west/britain after Mantashe just made such a big fool of himself and the ANC- us! How can a government succeed when none of the top bras is agreeing on anything? Can't wait for the day that one of the actual intelligent NEC members like Mr Phosa becomes president...

      tumelo.mabua - 2012-05-25 07:07

      Mr Phosa is an ANC NEC member. Meaning he has power and opportunity to change and influence policy. Stating the truth and doing nothing about it is equally ineffective. I don't think the audiance he adressed has the power to put what he said into effect. What use is it then? Furthermore presenting an ununited front doesn't help either since Gwede explicitly stated that nationalization is ANC policy.

  • danny.levin.351 - 2012-05-24 17:01

    Yes, we (I own an SME) are indeed important to the economy. the Guvement shows their appreciation by milking us to the bones with taxes, make it not viable to employ staff because if they turn out to be useless it is impossible to dismiss them, make us wait forever to get VAT returns? I feel sorry for those that have to deal with the govt. I will never do that, I need clients that pay ontime for goods and services.

  • John - 2012-05-24 17:22

    1) Remove the red tape in starting a new business. 2) Introduce simple yet effective tax breaks. 3) Revamp the Labour Act to stimulate employment. 4) Get rid of BEE. 5) Open up access to finance. 6) Encourage entrepreneurs. 7) Create proper mentorship programs. 8) Forget the "Large Bill" projects. Taskes too long to really be effective and us tax payers get screwed anyway due to serial fraud from the Government.

      mark.bradshaw.50 - 2012-05-25 11:01

      John, 100% agree. Look at steps to open a small business 1) CIPRO is running 6-9 months behind in registering a company 2) VAT you can no longer provide forecast to register which mean you cannot obtain a VAT # until you have turnover. Problem, no company will do business with you unless you have a Vat #. 3) Banks require personal surety in opening an account. Sort of defeats the purpose of a PTY. 4)Skillset in SA is so poor that when it comes to employing people you are left with clowns. 5) Number of public holidays great for employees but as cash strapped small business you are paying for someone to have a day off. I agree look at the issues creating barriers!

  • Themba - 2012-05-24 17:32

    These people who cry too much to the Government when they have to start and run SME's make me think that they relied too much from the Government before...

      danny.levin.351 - 2012-05-24 18:30

      Hi Themba, I've got news for you. I started a business from scratch without the help of the government or a bank. More than that, I have managed to start and run a business for more than 3 years DESPITE the hurdles that the government puts in front of me such as BBEEE and AA. If the Govt had policies that did not take away so much in tax and made it easier for me to employ COMPETENT people, not based on their race but only on their ability and had not made it a nightmare to get rid of bad apples I'd be inclined (and able) to employ more people. As it is, my business makes more than enough to sustain my family and my two employees. I'm not greedy so I'm perfectly happy and will not even try to employ more people unless a lot changes. Now, the people who really cry to the govt all the time are the unemployed, uneducated and less then clever masses that keep protesting in between elections, but keep voting the same bunch of corrupt mamparas to office every election, so they can carry on screwing hte whole of SA.

  • Eduard Marais - 2012-05-25 06:17

    well done Phosa, now convince your colleagues. Then LISTEN to what we, the entrepreneurs, have to say. Do a survey amongst us. Oh, and The Government's obsession with race alienates the peoples of SA.

      appietrader - 2012-05-25 08:48

      Strange the anc government don't particular like white businesses in SA. They obstruct and hassle business wherever they can with stupid policies, labor laws, bee crap an nationalization of mines, banks ect. Why do they run to white investors in Britian, strange people, very strange mindsets?? Do they really think these huge investors are stupid?

  • tumelo.mabua - 2012-05-25 07:17

    I think Mr Gordhan said the same thing earlier last month. Question is who is supposed to do something about it if the people in charge just preach it?

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