This report presents a broad statistical overview of the Small, Medium and Micro Enterprises (SMMEs) of South Africa.
"The Department of Trade and Industry (dti) published a comprehensive report on the SMME sector of South Africa in 2008. Since then, the domestic, as well as global economy, changed significantly. The global financial crisis followed in 2008 and 2009, pulling the South African economy into recession. Domestic economic policies changed, interest rates were reduced significantly, a new political administration came to power and much more. All these factors of change impacted on the SMME landscape in South Africa, and we aim to identify those changes and evaluate the current situation. To do this, we used a two pronged approach. Firstly, we summarised some of the key issues from the latest literature on SMMEs. Secondly, we analyse and interpret the latest statistics on small businesses. In the literature study, we first set the scene by summarising the historical background of SMME policy in South Africa. This is followed up by a list of findings and lessons. We found that SMMEs are challenged by access to finance and markets, poor infrastructure, labour laws, crime, skills shortages and inefficient bureaucracy. In order to extract the latest statistical trends, we follow a similar methodology as the dti to estimate the number of SMMEs in South Africa over time. The statistical data should enable the reader and other researchers to take the next step and do an in depth analysis of specific topics on SMMEs.
To present the statistics, we table and graph the two major types of economic indicators that describe SMMEs. Firstly, we used demographic and geographic indicators to identify where SMMEs operate, who owns them, how educated their owners are and in which economic sectors they function. Secondly, we used financial indicators to compare the size of SMEs according to economic sector, their tax, wages, interest and rents paid.
We concluded that there is a significant distinction between the formal and informal sectors. The formal sector tends to be more educated, white, situated in Gauteng and the Western Cape, with a higher income generation. However, most SMMEs are black owned and operate in the informal sector, especially in the more rural provinces.
The main findings are that the growth in the number of SMMEs from 2008 to 2015 was lower than the economic growth rate. However, the contribution of SMMEs to GVA (gross value added) increased over the same period. Most SMMEs still operate in the informal sector. Provinces with larger economies tend to have the largest share of formal SMMEs. Though whites still own the largest portion of formal SMMEs, their share has declined. While the level of education of SMME owners improved during the last seven years, it did not seem to boost the number providing professional services. SMMEs in the informal sector provide a living for a great number of people in South Africa.
As expected, SMMEs are mostly found in those industries with a low start-up cost (low capital layout and ease of entry), namely trade and accommodation and other service-related sectors. Industries such as mining, with a large capital outlay, remain the territory of large enterprises."
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BER Research Note 2016 No 1, University of Stellenbosch, Commissioned by The Small Enterprise Development Agency, ,http://www.seda.org.za