Support SMEs to combat SA unemployment, plead experts

South Africa’s unemployment rate has eased marginally to 32.7%, but the number of graduates and young people applying for social development grants is still significant. To address this issue, experts are calling for more support for small and medium-sized enterprises (SMEs) in the country.

SMEs have long been identified as crucial entities for job creation, but many struggle to grow substantially, particularly in the current economic climate.

Richard Rose, CEO of the funding business at Edge Growth, explains that the challenges facing SMEs include rising inflation and interest rates, the war in Ukraine, supply chain issues, and the effects of load shedding.

Despite these obstacles, there have been some great success stories over the past year, including Mpilenhle Recycling, which raised a R4 million grant from the department of fisheries, forestry and environment’s recycling enterprise support programme, and Lula Loop, a corporate ride-sharing app that was financed by various funds.

According to the Organisation for Economic Co-operation and Development (OECD), there are an estimated 2.6 million micro, small and medium enterprises in South Africa, of which about 37% are considered formal.

The contribution by small business towards South Africa’s economy increased from 18% in 2010 to 40% in 2020. Despite this progress, South Africa remains one of the most unequal societies in the world, and most SMEs fail within the first two years without adequate help.

Edge Growth believes that supporting SMEs is the key to changing this situation. Rose emphasises the importance of preferential procurement, improved entrepreneurial education and support, and raising and deploying money into the SME sector.

He says, “Going forward, we need to do more of what we are already doing in terms of educating small businesses about how to raise money, how to access markets, and how to position themselves well in terms of corporate supply chains. As a country, we need to continue to raise money and deploy money into this very important sector.”

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