By: Wendy Manjeya
SMMEs play a vital role in driving economic growth and development and South Africa’s new government must boost the sector, according to Prof. William Gumede. He was giving the keynote address at the Business Partners Ltd and Small Business Institute (SBI) SME Indaba in Johannesburg. Gumede, who is an associate professor at the School of Governance at Wits University, highlighted the importance of SMMEs in creating jobs and fostering new economic opportunities.
He noted that ideological rigidity was the primary constraint to economic growth in South Africa. With his focus on the outlook for South Africa’s SMEs in the next five years while the government of national unity (GNU) rules, Gumede pointed out on Wednesday that during various periods of economic transformation around the world, such as post-communism Poland or South Korea’s rapid development, small businesses played a pivotal role.
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These countries, alongside Brazil, emerged from decades of military rule and saw significant GDP contributions and job creation from small enterprises. “The rise of small businesses is a common denominator in these success stories,” Gumede noted. “When small businesses thrive, they create jobs and foster new economic opportunities. Unfortunately, the laws and regulations in many countries, including ours, often stifle small businesses rather than support them.”
His analysis suggested that focusing solely on large enterprises or allowing ideological biases to influence economic policy, would hinder growth. Instead, a commitment to fostering small businesses, such as in Singapore, South Korea, and Germany, was essential. “Small businesses are the engine of the economy,” Gumede stressed. “Unless we provide the right environment for them to flourish, we’re missing out on substantial economic growth and job creation opportunities.”
Reflecting on the broader economic landscape, Gumede expressed optimism about the potential for change through the GNU. “We have an exciting opportunity in this GNU to implement policies that truly support small businesses,” he said. “Despite past missteps, we can pivot towards a more supportive environment for SMMEs.” Gumede’s insights come at a critical time when South Africa is grappling with high unemployment rates and economic challenges.
The official unemployment rate stands at 32,9%, which is an increase of 0,8 of a percentage point in the first quarter of 2024 compared to the last quarter of 2023. Gumede called for a collaborative approach, involving both the public and private sectors, to develop long-term strategies that bolster small businesses.
