SA Hostile to Small Business

SA Hostile to Small Business


The survival of South Africa’s SME community is under immediate and long-term threat.  This fact emerges from the SME Growth Index, released by business environment specialist SBP.

Nearly three quarters of the SMEs surveyed say it had become more difficult to operate a business in the year preceding the survey. Manufacturers are most negative about the business environment, with 81% feeling that things have become more difficult, followed by 71% of business services SMEs.

The general sense is of an increasingly unwelcome business climate, with serious implications for the ability of SMEs to generate the jobs that the National Development Programme expects of this sector.

Job creation not on the cards

The local SME community is shedding rather than employing staff. Of the firms surveyed, 22% of companies had decreased their staff numbers. SMEs are increasingly choosing to employ temporary staff and permanent employment has dropped 6%.

Barriers to employment include poor economic conditions (45%), lack of skilled people (16%) and unfavourable labour legislation (15%).

Survival vs growth

At present, South Africa’s SMEs are far more focussed on survival than on growth. Despite the government’s commitment to SMEs as the country’s growth driver, they are simply not in a position to do so. This is especially true of the manufacturing sector, which is the most negative about trends in the business environment.

What challenges do SMEs face?

SMEs are under pressure from several sources:

  • Rise in input prices (27%)
  • Market contraction (17%)
  • Increased red tape (14%)
  • Increased competition (11%)
  • Increased electricity costs (11%).
Alison Job
Alison Job holds a BA English, Communications and has extensive experience in writing that spans news broadcasting, public relations and corporate and consumer publishing. Find her at Google+.