The Importance of Small and Medium Enterprises (SMEs)
Small and medium enterprises (SME’s) are often overlooked when economic development and planning is done. Large corporations frequently have the advantage of being able to lobby politicians and government through their influence and size.
Yet the vast majority of companies locally and globally are in fact SME’s. Is it not time for our policy makers to focus more on this important segment of the economy? Should we not be rewarding entrepreneurship rather than enabling monopoly behaviour?
Germany is the second largest exporter in the world after China. The last decade was a golden one for the German economy, even showing growth during the COVID pandemic. Strong economic growth, record-high employment and record-low unemployment combined with a series of annual fiscal surpluses all marked and contributed to the best economic performance since reunification.
Much of this success is because of the structure of the economy. At the top you have some world class companies across technology, manufacturing, finance and services. However, below them is a large layer of small and medium enterprises. More than 99% of businesses in Germany are classified as SME. They employ more than half the population (58,5%), generate 35,3% of all sales locally and are responsible for training 82% of apprentices. The Germans are very proud of their SME industry and large businesses actively seek ways of protecting and supporting the SME role-players.
In South Africa, 98% of businesses are are SMEs.
Similarly, SMEs are the lifeblood of South Africa's economy—and the most at risk. SMEs across South Africa represent more than 98 percent of businesses, employ between 50 and 60 percent of the country's workforce across all sectors, and are responsible for a quarter of job growth in the private sector. However, it seems that neither government nor large business is doing much to look after the little guy locally. Payment to SME’s remains atrociously slow and the red tape businesses have to comply with makes it extremely difficult for entrepreneurs to be successful in our beautify country.
The Grabouw Development Agency (GDA) is passionate about supporting SMEs in the Grabouw and Elgin region, having helped with a myriad of challenges including land rezoning, licensing application enquiries, connecting private sector and government in an appropriate manner and helping to reduce red tape. We want to help small and medium enterprises in our region flourish. We want to understand what your challenges are and find ways to grow the local economy and help to create jobs.
We look forward to hearing from the SME industry in Grabouw.
About the author: Cornelis van der Waal is leading the Grabouw Development Agency that is tasked with helping to grow the Grabouw economy and help to create jobs. If you have a good business idea but need some help to get it off the ground you can contact him at cornelis@wesgro.co.za