The SME sector, which employs approximately two thirds of the workforce in South Africa, is vital to sustainable economic growth, social upliftment and job creation. Nedbank, which already actively supports small business through various initiatives and offerings, today announced another exciting concept which should see the nation rally behind small business.
At a media briefing in Johannesburg, Nedbank, in association with the National Small Business Chamber (NSBC), introduced Nedbank Small Business Friday. Themed Vote Small Business, the Nedbank Small Business Friday initiative seeks to drive awareness of the importance of the role of small business in the South African economy, building up towards Friday, 7 September, as the symbolic day for everyone – from consumers to large corporates – to support small businesses.
Nedbank Small Business Friday was inspired by Small Business Saturday SM, a successful initiative started in the US by American Express in 2010. In just two years, Small Business Saturday has grown into a coalition of hundreds of small business advocacy groups, public officials, corporations and small businesses across the U.S.that annually recognises the important role small businesses play in fuelling the economy. Most importantly, it encourages consumers to help strengthen their local communities by supporting the small businesses they love, and patronising their favourite local retailers and restaurants.
Nedbank, as the exclusive issuer of American Express-branded cards and merchant acquirer in South Africa, is building on American Express’ experience to ensure the success of this initiative in South Africa.
Partnering for growth
“We are delighted to bring the Small Business Friday movement to South Africa as part of our continued focus on partnering SMEs for growth for a greater South Africa. Notably, every small business on average creates employment for approximately ten people and for every job created there is a multiplier effect as the money spent from their income further stimulates economic activity in their local community,” says Ingrid Johnson: Group Managing Executive for Retail and Business Banking.
“Small to medium sized businesses are important to Nedbank and its client-centred strategy recognises the powerful virtuous circle of the entrepreneur as the influencer of the business, household, employees and community they serve. Providing a seamless banking experience for the entrepreneur, together with Nedbank’s Banking and Beyond TM philosophy ensures its clients have a choice of distinctive products and services, which add value to our clients businesses,” reflects Johnson.
“In addition to our free business seminars, through It’s MyBiz reality TV show on e.tv, the online networking & resource portal “SimplyBiz” and the Vuka Mentorship Programme for entrepreneurs, Nedbank supports various SME incubator programmes that focus on empowering businesses to become sustainable, job-creating enterprises. Over the past three years to December 2011, Nedbank has invested over R20 million in enterprise development assistance to emerging black SMEs, benefitting over 2 000 entrepreneurs,” explains Sibongiseni Ngundze, Managing Executive: Retail Relationship Banking.
Dedicated to SME success
The NSBC, an NGO dedicated to providing support, networking opportunities and relevant resources to small business, complements Nedbank as an experienced partner in this initiative. Nedbank understands that collaboration with relevant stakeholders such as the NSBC is vital to help galvanise the South African population to support small business.
“As one of the fastest growing organisations, the NSBC is dedicated to the success of small business in South Africa. We believe more needs to be done to support this sector as it is the engine for job creation and economic development. It is through interventions such as the Nedbank Small Business Friday that we can all make a difference. The time is now to mobilise society and go BIG by supporting small business,” says Mike Anderson: Founder and CEO.
“Through the Nedbank Small Business Friday movement, Nedbank invites the private sector, government, and the community at large to join us in celebrating small business. We believe collectively, we can assist in unleashing the entrepreneurial spirit of people and fuel economic growth in our local communities. This will enhance South Africa’s competitiveness and service levels in the SME sector- the time is now to call on your support and Vote Small Business,” concludes Johnson.
Top Sectors For SMEs In 2019
“As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
While the South African economy has been underperforming for a number of years, the first positive signs of turnaround started to become visible by the second quarter of 2018, and by the end of the third quarter, data supplied by Statistics South Africa showed that the economy had indeed grown by 2.2 percent, compared to the previous quarter. This uptick is expected to have a positive effect on business confidence in 2019.
This is according to Jeremy Lang, regional general manager at Business Partners Limited (BUSINESS/PARTNERS), who says that certain business sectors have already seen an increase in opportunities for small businesses and start-ups.
“While these sectors will not be without challenges, the following four industries are likely to offer the best opportunities for small and medium enterprise (SME) owners to grow their enterprises in the coming year.”
The World Travel and Tourism report 2018, revealed that the direct contribution of the travel and tourism sector to South Africa’s GDP has been projected to rise from R136bn in 2016 to R197.9bn by 2028 – set to make up a total of 3.3 percent of the country’s total GDP, says Lang.
“Although this sector experienced some setbacks in 2018, such as the drought in the Western Cape and stricter visa regulations for children entering the country, both the water restrictions and visa regulations have been relaxed and the sector is once again poised for growth,” he says.
Statistics South Africa has credited this industry with being the biggest driver of growth in the country’s GDP, having expanded by 7.5 percent in September 2018, says Lang. “To bolster this, Government has made a concerted effort to stimulate small business growth in this area with initiatives such as the Black Industrialist Programme and the SA Automotive Masterplan.”
He adds that businesses in the manufacturing sphere could therefore likely see significant opportunities in the form of outsourcing contracts and new partnerships with large corporates.
“The debate around land expropriation has occupied most of the discussions surrounding the agricultural sector in 2018, with some questioning growth prospects of this sector. However, this industry has a lot of growth ahead of it, as demonstrated by its 6.5 percent growth over the last three months of 2018,” explains Lang.
“Further to this, the industry is also already taking significant advantage of seven climatic regions in South Africa, with the export of a wide variety of high quality fruit and vegetables increasing substantially,” he points out. The recent outbreak of foot and mouth disease that has resulted in the suspension of the country’s FMD-free status will however significantly impact meat exporters.
In terms of opportunities for SMEs, he says that these may most likely be found in the rural and underdeveloped regions, where the need for resources like efficient transport, state-of-the-art cold storage, better irrigation and private power generation will be key to making agriculture projects more productive and competitive in the export market.
Data and information technology
Connectivity and information technology infrastructure are both crucial to business and employment growth in South Africa, says Lang.
“With many municipalities and the Western Cape government committing to providing all of its residents with free data as part of a plan to expand public Wi-Fi network access, it is clear that this is also becoming a high priority on a state level.”
It has also been reported that South Africa is awaiting the arrival of three international data centres, and large players in the communications sphere, including Vodacom, Telkom and Vumatel, are making huge strides in drastically growing the country’s fibre optic backbone, he adds. “As such, SMEs in the construction, communications and electrical fields are all likely to benefit from supply and sub-contracting agreements over the coming years.”
In conclusion, Lang says that as South Africa’s economic growth has started to turn around, business owners should keep their ears to the ground as 2019 is highly likely to be a year of opportunity.
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SME Insurance Checklist For New Year
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers, advises SMEs to consider the following factors when reviewing their policies.
Business owners who are planning for the year ahead should not overlook the importance of reviewing their insurance policies to ensure they are adequately covered against insurable risks.
Malesela Maupa, Head of Product and Insurer Relationships at FNB Insurance Brokers says, every year businesses face unique challenges ranging from credit and market risks, technological disruptions, compliance, operational and regulatory risks, amongst others. As a matter of precaution, insurance policies should at least be reviewed or updated once a year.
He advises SMEs to consider the following factors when reviewing their policies:
- Employee movements – if there are any employees who have left or joined the company, ensure that your policy is updated accordingly.
This type of cover normally depends on the role and contribution of the employee to the business. For instance, directors may be covered for Key Person Insurance and Directors & Officers Liability insurance.
- Protest Actions – this year is the national election year and leading up to elections we can expect to see an increase in the frequency and severity of protest actions, riots and strikes. Thus, it is essential to ensure that adequate special risks cover is in place from the South African Special Risks Insurance Association (SASRIA).
SASRIA provides cover to both individuals and businesses against special risks like civil commotion, public disorder, strikes, riots and terrorism at affordable premiums.
- Cyber risks – it is essential to communicate with your insurer or broker and find out if there are any new risks that your business should be protected against. Cyber incidents continue to be a major risk for businesses especially in the SME sector. Over the last couple of years there has been a major increase in the number of reported cyber incidences.
More businesses are now facing increased cyber threats due to their increased dependency on technology, relating to their internal and customer data being compromised by fraudsters. It is therefore essential to have some form of cyber risk insurance cover and/or enhancement of data security protocols.
- Regulatory changes – every year there are a number of regulatory changes that impact businesses directly or indirectly, which may result in fines and penalties for non-compliance.
- Natural catastrophes – the increase in the frequency and severity of extreme weather conditions, coupled with intensifying natural catastrophes will continue to have a significant impact on businesses.
Businesses should ensure they are adequately protected against these risks to avoid incurring sever financial losses.
- Business changes – should a business consider moving to a new location, purchasing new premises or venture into new business activities, these types of changes could have a major impact on its risks profile. As a result, the policy needs to be updated accordingly.
- New and Enhanced products – An innovative culture has taken over the insurance industry and ever so often we see the introduction of new products or the enhancement of existing products. Get in touch with you broker to advise you on any new products that might add value to your existing insurance portfolio.
“Reviewing your policy regularly gives you peace of mind knowing that you can focus on running your business effectively, without worrying about unforeseen risks,” concludes Maupa.
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