The recently created Ministry of Small Business Development (MSBD) has been greeted with hope by the South African Institute of Chartered Accountants (SAICA), which sees it as an opportunity to tackle job creation and economic growth among small and medium enterprises (SMEs).
Two women are at the top of the MSBD, the minister Lindiwe Zulu, former special advisor to the president on international relations, and her deputy Elisabeth Thabethe.
On the creation of the MSBD Zulu told local media that the ministry was new, but not the SME sector. She highlighted how important SMEs are for the country’s economy and in particular, the important role it plays to empower black people excluded from the market.
This imbalance between black and white populations reflects also in the accountancy profession. Around 80% of SAICA’s 35,600 members are white, compared to the white 10% of South Africa’s total population.
SAICA project director of small practices Bridgitte Kriel said South Africa has pinned its hopes on the SME sector to boost growth and job creation.
"It is imperative that the focus of this ministry should be to identify ways of encouraging start-up businesses, but more importantly to encourage growth from micro to small business and from small business to medium-sized businesses, as this is where the largest positive impact on job creation and economic contributions could be felt," Kriel said.
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By GlobalDataReferring to the latest World Economic Forum’s report on global competitiveness, which ranked South Africa 147th out of 148 economies in terms of rigid hiring and firing practices, SAICA said easing rigid labour laws should also be considered.
In a statement SAICA reminded that the labour environment, access to financing and lack of skills are often regarded as the primary obstacles to growth of SMEs in South Africa.
According to a recent SAICA survey of SME lenders, respondents felt that the involvement of chartered accountants providing professional advice could make SMEs more attractive.
Respondents acknowledge that when SMEs owners lack experience the mentorship and expert assistance from the correct business partner could assist them to obtain financing.
As such SAICA said it would encourage the ministry to focus on facilitating and recommending SMEs to partner with the correct business partners and mentors.
Kriel said SAICA has launched a special SME survey to better understand the sector, which it will seek to share with the ministry. She added that the focus of the ministry should go beyond overcoming obstacles and ultimately encourage growth.
"The ministry should look into providing meaningful incentives to SMEs, especially where those could encourage businesses to invest in their own growth and to transition from small to medium-sized businesses," Kriel said.
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